CrowdHealth: An alternative to health insurance

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andy headshot

Written by: Andy Schoonover, CEO of CrowdHealth, a more simplistic, affordable, and community-driven alternative to health care built by a group of people tired of being ripped off by insurance.

We’ve seen over and over and over again that entrepreneurs, like real estate agents in particular, have had trouble with health insurance because they have to go to healthcare.gov and there just aren’t many sources. That’s when we decided to build an alternative to health insurance specifically for people who are trying to change the world’s entrepreneurs. That’s why we’re offering this special offer to the first 1,500 people to sign up.

Special Offer: Get One Free Month of CrowdHealth + Apple Watch (after 3 months)apple watch

Steps to claim: Go to this link

Click “Claim Offer”

Enter promo code: AgentAdvice

Origins of CrowdHealth

First, let’s go back a little bit so that I can explain what the Genesis of this company was and what caused us to find a solution to this growing problem. Of course there’s always a founder story behind companies like this, right? Well, mine ,unfortunately, is pretty sad.

I was running a health technology company back in 2014, and sold that to a private equity firm. As a result of that, I was just doing some private investing and doing some non-profit work, so I didn’t have health insurance through an employer. I ended up doing what a lot of entrepreneurs and agents probably do, I went to healthcare.gov and really at the time thought it was the only option.crowdhealth

I got myself, my wife, and my two girls a plan that was $1,200 a month and an $8,000 deductible. It seemed to work, until I actually had to use it. My little one, who was one at the time, was having recurring ear infections. We go to the pediatrician once again, and she says, ‘you need to go and get tubes in her ears’.

That’s when we went to the ear, nose and throat doctor. He concurred, so we headed over to the local hospital. It was a 15 minute procedure to get tubes in her ears and it came out to $8,000. I was like, wow, $8,000 for 15 minutes. Wouldn’t all of us want to sign up for that hourly rate, right? Anyways, I was just thinking I guess this is how the healthcare works in our country. I just assumed our health insurance was gonna pay for it.

Then, I got a note about 30 days later from my health plan that says it was medically unnecessary, and so that they weren’t going to pay. Despite the fact that my ear nose and throat doctor delays his vacation by a day because he was worried about long-term hearing loss when my daughter had a perforated eardrum, basically a hole in her ear drum because all this fluid building up, they still said some random person in New York City says that it’s not medically necessary.

As you can imagine, I was not happy, and decided I was not doing health insurance anymore. That’s when I actually moved over to a health sharing organization, which many real estate agents are probably familiar with. It’s basically taking the middleman out of health insurance and you’re paying each other directly.

I’ve been on that organization for two years and have loved it. The problem with some of these organizations is they’re primarily faith based organizations, so there’s a couple of Jewish ones, a bunch of Christian ones, etc. So I said, you know, why don’t we take what they’ve done really, really well over the last 25 years and open it up to everybody. At this time there were about 2 million people on these types of plans, so it just made sense.

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Our idea was people of faith, people who don’t have faith, or really anyone can access our system. We’ve changed some things around as well because there are some things in the health sharing ministries that just don’t work very well. We wanted it to be a little bit more tech enabled, so that’s the backstory to kind of give you a sense of how we came up with this idea.

 

How CrowdHealth Works

In the long and short of things, it is a payment method. It is as a method of payment for health care expenses that is different than how we have historically done it. If I’m a real estate agent and I don’t have insurance where I’m paying $1,200 a month with a really high deductible, that is very restrictive on what doctors I can and can’t go see. I hear this and go, wait a minute, I can pay $175 a month. I’m then responsible only for the first $500, and then every other bill I submit I get reimbursed. Yeah, what’s the catch, right?

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Well, here’s the really interesting thing about real insurance is that there’s nothing in the market place to impact pricing other than increased pricing. I’ll be specific here, so I’m in Austin, Texas. We have two big hospital systems here: Ascension Seton is one and St. David’s hospital being the other. Those are the two big, big hospital systems. So, if you imagine yourself being a health insurance plan, you can’t lose one of those systems or else you’re basically out of the market in Austin, Texas, right? So you have very little negotiating power against the hospital systems in that local area. If you’ll lose one of those you’re toast in that city. You can’t lose one of those, and therefore, the hospitals are actually acting as duopolies in that market so the costs are rising.

Me as an individual, I don’t really care if Ascension is in a network or not in a network, I’m going as an individual and can negotiate directly with Ascension or St. David’s for my health care costs. They’re actually willing to negotiate with me. It’s one of the very few areas in the United States where me as an individual, I have more negotiating power than some of the largest corporations on the planet.

What are we finding is that the Aetnas, United, and Blue Cross Blue Shield of the worlds are paying two or three times as much than if you went in and paid with cash. Right? So that’s why this is super interesting. I would assume most people don’t know that if I didn’t have insurance and I needed to go into the hospital, I could actually negotiate a better rate.

Yes, I can negotiate your hospital bill down about 60% from what a health insurance plan would pay. Let me give you an example: There was a cardiac arrest bill for $500,000. That’s what the health insurance plan would bill you, but we know that we could negotiate that down to about $100,000.

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If you also think about the hospitals, right? The hospital is negotiating with you as an individual, so the hospital has this conundrum where it’s like, look, I can either try to get $500,000 from Andy, which they know that that’s just going to put Andy over into bankruptcy, or they can actually negotiate with me for $100,000.

Basically, it’s really introducing consumerism into the healthcare space that is going to significantly drive down costs. That’s why we think it’s not only really great for real estate agents, but it’s also changing the landscape of healthcare.

The great thing is CrowdHealth does all of the hard work for you, so the consumers aren’t doing any of the negotiating.

All we ask you to do is just ask for the cash price. When you go to the doctor, that’s all we ask. So, let’s play that out. I go to the doctor, I go to the hospital, and I asked for the cash price. Now I’ve paid my $175 a month. I then get a bill for $2,500. I assume I pay that and then submit it for reimbursement to CrowdHealth. The good thing is you don’t have to pay it, so what you do is you actually go on our app. It’ll take a picture of that bill, and then we will engage the hospital. We will negotiate that bill down to something that’s more reasonable.

Let’s just say we negotiate it down to a thousand dollars from $2,500. You will be responsible for the first $500, and the remaining $500 will be submitted to the community.

Doctors office visit

What is the community’s role? 

The pricing is about 20-25% higher than the average price, or the average amount of bills that we should see over a long period of time.

So, when I say it’s $175 for somebody between six and 54, it should be actually lower than that. If there are times where the big bills come in, we will actually put it in, ramp it up to that map, so that we will be able to pay those bills. The other great thing about the hospital is we can negotiate with the hospital, and say, listen, we’ll pay $500 this month and $500 next month. So we can fit it in without having to go over that cap. We’re basically using modern finance, as opposed to old school stuff.

It’s similar to agents loving when interest rates are low, it means more people are buying because they’re leveraging finance and that’s what we’re doing here too.  We’re just leveraging financial instruments to allow us to stretch out some of those payments over a period of time, so we’ll never have one huge catastrophic claim. In one month, that’s the beauty of what we can do versus what an insurance plan will do.

The other thing to think about is that the $500 is sort of like a deductible, right? So let’s just say that your daughter went to the emergency room after injuring her foot. That’s kind of the first step in the health event. She’s probably going to have multiple follow-up doctor visits. She’s going to have to remove the pin. She’s going to have to do all those things. So that’s a series of eight to 10, or maybe even more doctor visits. She’ll probably have physical therapy on top of that. That’s all one health event. So, any kind of series of events that are related to the same core health issue is considered a health bet, which is capped at the $500.

doctors meeting in a hospital

What makes CrowdHealth different? 

Most people think that if I give my money to United Healthcare, or Cigna, or Aetna there, I’m guaranteed to have them pay the bills. In fact, CMS center for Medicare came out and said 17% of the claims that were submitted on plans associated with healthcare.gov were denied.

That’s almost 1 out of 5 claims that were submitted were denied by the health plans. I actually think you’re more at risk going with a health insurance plan if your claims not being denied than if you were to go with someone like CrowdHealth.

The other thing is health insurance companies make their money by bringing in premiums and then paying out claims. The difference between that is profit, so they actually are incentivized to reject claims.

Instead, it’s a subscription fee for us. We have zero incentive to say no to any of your claims. That would be awful marketing for us and it doesn’t make us any money.

The other thing to note is we will accept anyone except smokers and folks who are over 300 pounds. If you have a preexisting condition, you are responsible for the pre-existing condition and the cost of that for the first year. Then the second year we’ll share $25,000 of it, 30 years old share $50,000 of it, and the fourth year we’ll share a $100,000. So, if you have high blood pressure and high cholesterol, and you’re taking those medications, which might be $100 a month, you’re still saving $800- $900 a month depending upon the size of your family.

baby getting check up in hospital

Are prescriptions included? 

If we go back to maybe your daughter injuring her foot, she’s going to be on meds probably for some time, so that is covered as a part of that same health event from her hospital visit. Again, she’s going to be responsible for the first $500 of that. Prescriptions, PT doctor, all that is included in that same health event.

We also give access to folks to something that’s similar to GoodRX. It’s basically a way to get your prescriptions at about 40 to 50% of the costs that your health plan gets them for.

If I get my prescriptions filled at the Rite Aid down the street, or Walgreen’s, what am I doing with CrowdHealth? Well, we have a digital prescription card. So on the app, you just pull up that prescription card, you hand it to the pharmacist, they will pull up the price, and again it is significantly lower than you would pay under any health insurance plan. Then you would pay that prescription, you would take a picture of the bill and then that would go into that app.

I know my daughter is overwhelmed with the amount of bills, she’s trying to figure out what insurance is covering, what it’s not covering. How easy is the app to use besides taking the photos? Are you categorizing, are you lumping them in, at different health events or does that all happen on the backend? Those are all things CrowdHealth takes care of, so all you have to do is take a picture of a couple things. Those are thinks like the date of the bill, just to make sure that our optical character recognition on the backend is pulling all that information in as accurately as possible.

Everything else is categorized for you on the back end, so we’re letting technology take care of those pesky bills that you get in the mail.

 

Can you set this up for a team? cloudhealth

Yes, absolutely that’s something you can do. We are working with really large teams around the country that are taking on CrowdHealth for their agents, because traditional insurance was too expensive.

When I was reaching out and started talking to owners and heads of brokerages, I started with the assumption that this would be just a good fit for their agents.

But what I found is a lot of brokers are seeing this as a competitive advantage to attract and retain agents and ultimately bringing it in as a service, which is great.

We are already nationwide, so we will go all over the country. There are no limitations on where you can be. In fact, even if you travel outside of the country, you’re CrowdHealth travels with you. Not that we’re looking for people in Tokyo or anything, but it is one of those things that people do question when we, does this travel with you? And it does, we won’t airlift you out of the country, but we will take care of your medical bills while you are in the country.