Personalization is something that people seek and embrace in all aspects of their lives. A startup is betting that this will extend to health insurance consumption as well.
Bind Benefits, an operator of personalized health plans that recently entered the full insurance market in Florida, has lifted up $ 105 million in a new round of financing. The same union that ran its Series A financing round in 2018 ran the last round. The investors were Ascension Health Ventures, Lemhi Ventures and UnitedHealth Group.
The funds are intended to power this fully insured product, which will now be launched in more than 30 states by the end of 2021. After announcing his entry into the fully insured market in Florida in September, Bind applied for approval in Ohio, Texas, Virginia and Wisconsin, and plans to expand to 30 states by the end of next year.
Founded in 2016, the Minneapolis-based company started by offer personalized health plans for large employers with their own insurance. Bind provided its self-financing administrative services platform only to companies such as Best Buy, Lumen and Medtronic.
The plans include basic coverage for certain services, such as primary and specialized care, emergency and hospital care, preventive care, as well as the option to add coverage for services outside basic coverage at any time. Think about buying coverage for a planned knee replacement surgery for a few months, in the same way that a consumer can choose to hire HBO for a while to watch Game of Thrones.
While this on-demand aspect of purchasing health insurance may be attractive to people, Bind also expects its emphasis on price transparency – the plan allows members to compare treatment options against price levels – to resonate with consumers. In addition, there are no deductibles or coinsurance fees – terms that are inextricably linked to health insurance and represent a universal cause of frustration and concern for consumers.
In a broad telephone interview, Bind CEO Tony Miller expanded on this new vision of health insurance and discussed the future of the employer-based insurance market, among other things.
Note: the responses were edited for length and clarity.
MedCity News: Let’s talk a little bit about the future of the employer-based insurance market. In a recent interview with MedCity News, Mark Bertolini, former CEO and president of Aetna, said that the future of employer-based insurance is defined contribution. Do you agree or disagree? Can your model fit this future?
Tony Miller: This concept of defined contribution is not new. It has been around for almost 30 years. The challenge really is the execution of making this exit ramp happen. That’s where I think it gets a little sticky.
Employers are [already] place and finance the term cost of your benefit liability on your balance sheets. So employers have basically been, as I call it, the ‘dad’ in health insurance. In fact, they created a budget for us. And so, what is really difficult about this shift to defined contribution is – would people still allocate that money so they could be covered by a health insurance product? And that for me is one of the tricky parts of how you would make it work.
I had the opportunity to speak at a major health benefit event shortly after the ACA’s approval in New York City. There were 50 Fortune 100 benefit leaders and CFOs, and I was invited to speak about defined contribution. I kept asking people at that meeting, ACA takes the exit ramp, why are none of you accepting? ACA allows you to create vouchers and allow people to participate in individual grants and, as we have seen, almost no employer has done so. And what was so interesting at that point is that there was no interest in even thinking about it. It just shows how important [insurance] benefits are an attraction / retention / compensation tool for these big employers.
Employers recognize how valuable health benefits are, and if you want to be strategic in attracting and retaining, you will probably want to think about how to offer this product. It won’t be a one-size-fits-all contribution, and it won’t be a defined contribution for everyone. I think there will be this combination, and what’s amazing about Bind’s product is that we have this opportunity for you to project how far you want to go by allowing consumers to define their own benefits and how much you still control as a plan sponsor.
Question: How did the Covid-19 pandemic influence Bind’s growth this year?
Tony Miller: For us, just when the pandemic hit and everyone started to recognize that we needed to take shelter there, we needed to close, so what people immediately realized is, ‘Oh my God, the current insurance project does not support to deal with a pandemic. . ‘We had to pass legislation to say, you know what, tests for Covid, some treatments for Covid, diagnoses for Covid, they all need to be pre-deductible and are now a preventive qualified health expense in the context of an HSA / HDHP [Health Savings Account/High Deductible Health Plan] plan design.
It was a big highlight on how the insurance design is broken. If you’ve taken an approach that prioritizes the condition, like Bind’s, [and in this case] the picture is an infectious disease, you look at the intersection of the clinical reality and the actuarial reality of the infectious disease. And it is very clear that you must provide advance and reliable testing for free as soon as possible. Bind’s plan did that. We did not need Congress to act to improve our insurance project.
[Also, employers] are not interested in buying a new benefit [right now]. The whole industry is basically in this, well, I’m not going to do anything in 20 because I’m just trying to survive the pandemic, I want to see what will happen, a vaccine will arrive, the economy will open again, and then there was this freeze of ‘Don’t change its benefits, I have bigger problems to worry about. ‘ Plus, benefits aren’t a cost issue this year. I think what will happen is when we open it, and as everyone thinks there will be a new surge in use, which I don’t know if I believe in yet, so you really want a plan that looks more like Bind, where we conducted you for better health journeys.
Question: As Bind expands into the total insurance market, what role will UnitedHealthcare play?
Tony Miller: The plan we gave investors in 2018, when we did the Series A round, we wanted to prove three things – customers are going to buy, consumers are going to like it and it really makes health more accessible to everyone – sponsors and consumers of the plan . And we wanted to prove that based on self-financing first, because that is the most efficient way in terms of capital. What people don’t realize are employers, especially big employers – big employers are insurers. So instead of [Bind] having to raise risk capital with risk-based capital reserves to offer a fully insured product, all we had to do was raise the administrative services to deliver this new benefit design.
Now, we want to enter the fully insured market and really offer this solution to the people who need it most, you know, where premiums are increasing, deductibles are increasing, coinsurance is increasing and healthcare seems very unaffordable. And we wanted to do that again with capital efficiency.
So we could raise a lot of risk money and put it into our own risk-based capital reserves and our role, but instead we approached United and said, hey, we would like to be efficient in terms of capital here, you have some safe shelves on which we could offer our product and, as we gain membership, you have scale to place risk-based capital reserves, not using risk money, but using other sources of capital more efficiently and cheaper, and would be willing to do that to us. And the answer was yes, for sure.
And so, we are saving, compared to the other startups that are trying to make it totally safe [products] themselves as risky startups, we’re saving hundreds of millions of dollars, compared to having to block that capital to allow regulators to believe that you have a solvent insurer. The insurer that the regulator sees is the role we are filling, and that role is a license from UnitedHealthcare.
Question: What will happen to Bind if the ACA disappears after the Supreme Court decides on it and what will happen if Medicare for All becomes a national reality in the future?
Tony Miller: We are confident that our solution will work in any future scenario on how we structure and regulate health benefits and insurance.
Photo credit: Bind