June 16, 2014
By Joe Lonsdale
Healthcare consumes more than 17% of US GDP, and our government is on course to go bankrupt based on promises it’s made in the space. This is nearly twice what other major countries spend, and those countries aren’t exactly efficient either – but we in the US are worse. Whether or not you blame companies, our regulatory framework, or both, this is clearly a huge problem.
Health insurance is the main system we use to manage healthcare, and realistic solutions from both political parties acknowledge that the nearly 1 trillion USD in market cap of these companies is not going away. Insurance companies will continue to play a central role in our health system for years to come. Healthcare is a giant ecosystem with a lot of players and interests, and in the US, insurance companies influence which new practices are applied and when. A lot of us in the technology world are immensely frustrated because conservative and tech-backwards insurance giants are often slow to implement advances that could save people money and improve patient experiences and outcomes, such as data-driven preventative medicine apps or emerging IT-enabled genomic tests.
On the bright side for entrepreneurs, like many other big industries at the moment, there is a giant gap between how insurance companies work today and how they could work if they were more technology-savvy and efficient. Frankly, I’m surprised at how wasteful and archaic a lot of the industry is – for example, many of these companies still hire thousands of fax operators and data transcribers. It’s as if nobody told them the ‘80s are over. Don’t get me wrong, there are a lot of smart and highly motivated doctors in the system, and great hospitals pushing key innovations – but they aren’t able to drive the kind of change needed without the insurance industry playing its part.
Oscar, the first new for-profit insurance company in 15 years, is working hard to do just that. By creating a technology-driven culture and pairing it with some of the most experienced forward-thinking experts from the industry, Oscar is just starting to scratch the surface of what’s possible. From utilizing telemedicine to make doctors more accessible, to showing customers the data they need to make more informed care decisions, Oscar is already using new techniques to allow patients to get great care more efficiently and enable doctors to deliver a better experience at the same time.
This role is especially important as new advances emerge over the coming years that will change the healthcare landscape: synthetic biology, genomic IT, big data-enabled diagnostics and new forms of preventative medicine. As these new technologies are proven out, it will be critical for the healthcare system to adopt them correctly to cut waste and ensure better outcomes.
Insurance sits at base of our whole system and decides on the incentives for every player. Simply put, more efficient, more accessible and smarter insurance companies will help make that system better. Oscar is the first health insurance company to combine great technology (a truly elite group of hackers and designers) with forward thinking industry veterans. The company is well positioned to play an important role in the evolution of our health system, and Formation 8 is proud to be part of the mission.