If you were reinventing health insurance, how would you do it?
Maybe you and your friends would put money in a shared account for a year. Anyone who needed healthcare could take some out. If money was left at the end of the year, you might each take a share, or just leave it in for next year.
Now imagine that a few of you went skiing. Remarkably, you all fell and hurt yourselves and needed MRIs. Your friends went to hospitals that charged $2000, and they each took $2000 out of the account. You went to a top-rated imaging center that only charged you $1000, and better yet, they said they’d offer the same deal to everyone else with your “insurance.”
What if you took $1000 out of the account to pay for your MRI, and also got to keep a portion of what you saved the group — say $200 — for finding a place you could all get more affordable MRIs in the future?
Everyone wins. Economists would call this incentive alignment. Your friends would just call it a good deal.
You’d be helping to make healthcare more affordable, transparent, and fair.
Isn’t that how healthcare should be?
U.S. healthcare today isn’t affordable — it’s so expensive that people stay at jobs they hate just to keep their health benefits. It’s not transparent — it’s impossible to predict what you’ll pay before leaving your house. And when 47% of Americans can’t cover a surprise $400 medical bill, it’s not fair. No wonder Americans hate their health insurance more than everything but Comcast.
Making healthcare affordable, transparent, and fair is why Decent exists.
As of April 1st, 2019 in Austin, Texas, we are administering comprehensive health insurance plans at below market rates, initially for self-employed people who buy insurance for themselves. Designing and administering affordable health insurance plans is what we do.
Blockchain is a big part of how we do it. Decent is a healthcare company using blockchain, not a blockchain healthcare company: in fact, members will be able to use Decent without needing to understand or even think about blockchain. Technology is valuable only if it solves real problems. It should always be part of how.
The biggest problems with incumbent insurers — too little trust and too much waste — mirror the natural strengths of blockchain. Only 7% of Americans trust their health insurance company, in part because incumbent insurers have deeply misaligned incentives with the members they serve. There are one trillion ($1,000,000,000,000!) dollars of waste in U.S. healthcare every year, and 75% of spend goes through insurance payers — the money-moving middlemen of healthcare.
So how will Decent use blockchain? To align incentives and reward smart choices; to make price and quality data transparent; and to cut waste and take the middlemen out of health insurance.
Short term: to align incentives and reward smart choices.
The root cause of healthcare’s problems is that all key stakeholders, except the patient, benefit when costs go up. Most health insurance companies are governed by a medical loss ratio: they have to spend 80 cents of every premium dollar on care, and can hold up to 20 cents back to cover administrative costs and profit. This means they actually make more money when the total cost of care goes up — they’re taking a fixed percentage of a growing pie. They pay lip service to value, but their incentives reward cost escalation.
Decent isn’t a health insurance company — we help groups of people band together and self-insure for better rates. We aren’t governed by a medical loss ratio, and because of that, cost escalation isn’t part of our business model. Like the members and direct primary care (DPC) doctors we serve, we benefit when members get affordable and high-quality care. Members will play an essential role in making Decent work, and they should be compensated for it. We will use blockchain tokens to reward smart health choices (like in the MRI example above). Savings will be passed back so everyone wins when members get high-value care, and used to expand into new geographies and demographics so we can realize our vision of affordable healthcare for all.
Medium term: to make price and quality data transparent.
The lack of price and quality data in healthcare makes sense once you realize that the incentives of most hospitals and insurers reward cost escalation. They have little economic incentive to promote high-value care, or to understand the relationship between costs and outcomes.
At Decent, we want to make price and quality data transparent, so all patients and doctors can make smart care choices.
We will collect and publish price and quality data to a distributed ledger so no one can hide it, tamper with it, or shut it down.
As we expand, we will be able to draw statistically significant correlations between prices and de-identified outcomes data to find the highest-value options for care.
Long term: to cut waste and take the middlemen out of health insurance.
The operations of a health insurance company are fundamentally a series of simple decisions: Is this enrollment form complete? Should this claim be paid? Is this doctor credentialed? Some of these decisions are already being automated to cut waste: most claims management today is done by software. Where human judgment is required, people making these decisions need to be qualified, and they need to be compensated. But in the future, they won’t need to work for a centralized insurance company. Blockchain technology will let them prove their qualifications, get paid, and operate independently.
Decent will use blockchain to streamline and automate core administrative functions like billing, payments in near realtime, and claims management, to cut the costs of administrative overhead, fraud, and human error. As continued development pushes blockchain technology forward, we will cut waste relentlessly to deliver more value to members.
The deeper problems with America’s health insurance oligopoly come from its centralization. Centralized decision making lets a small group of companies decide who and what gets covered, with the world’s largest industry lobbies pushing a one-size-fits-all model. These monoliths enrich themselves by trading key healthcare data — from prices and quality to sensitive and valuable health records — and keeping it out of the hands of patients. And their centralized operations siphon hundreds of billions of dollars in profit and admin overhead — money that would be better used to pay for care.
Over time, Decent will use blockchain to responsibly decentralize core operations: to add flexibility in who and what gets covered, to give you access to key healthcare data, and to pass savings back to you. All using transparent infrastructure so you can see where your money goes and don’t have to trust a middleman.
You should be able to join a plan that covers what you want. You should have the data you need to make smart choices. And when you choose high-value care, you should be rewarded too.
Our goal is to build an increasingly decentralized organization that lets anyone in the world set up and run a legal health insurance pool with no middleman (including us) required.
If you have questions, email us at [email protected].
If this all sounds crazy to you, stay tuned.