How health insurance companies embrace technology to serve the real people

The U.S. health insurance industry (a $12.29 trillion giant) is under pressure. Healthcare costs, rising policies and long-term access gaps are squeezing not only the insurers, but also the people they should serve: patients, providers, and employers. Premiums for household coverage have increased by 22% since 2018, falling close to $24,000 in 2023 (Kaiser Family Foundation). It's not just statistics. That's how much it costs to a used car or community college for a year – it's kept every year.

For many, even “insurance” does not mean they are protected. Last fall Wall Street Journal Amanda King, a dental hygienist, mother is fighting stage 4 breast cancer. Despite the insurance, she was stuck in medical expenses. Amanda's story is not uncommon – it reflects the level of disruption of the current system. It's also a wake-up call: people want something better, they want it now.

This urgency is creating a headwind for innovation. Insurtech startups, legacy carriers and policy leaders are rallying around technology as a tool (perhaps a tool) to reduce friction, include costs and make care more accessible. Things that were once a slow industry began to change.

There are reasons for optimism. Insurance companies, entrepreneurs and policy makers respond to market pressures by adopting novel technologies and innovative business models. In particular, Insurtech is revolutionizing the way in which insurance companies manage risks, control costs, and provide care – bringing new solutions that promise to improve the scope of healthcare.

Dynamic Benefit Plan

Dynamic Benefits Programs represent a transformative shift in health insurance, highlighting value-based care and price transparency. Surest, a product launched by UnitedHealthCare, is eliminating traditional copay-based networks and allowing consumers to choose providers based on value (a combination of price and quality) rather than being restricted by in-network restrictions. According to a recent AON study, employers who adopt Sirest save an average of 10% on health insurance costs.

This model not only reduces costs, but also gives consumers greater flexibility and transparency. As Brad Otto points out, dynamic welfare plans are attracting attention, especially in the commercial insurance sector. Over the next few years, many brokers believe that these plans are expected to become the primary option for employer-based coverage, providing a win-win situation for both employers and employees.

Reinsurance

Reinsurance is a key safety net for insurers, helping them manage the financial risks associated with catastrophic claims. Although traditionally conservative, the reinsurance sector has experienced a wave of innovation through precise underwriting and data analysis. These advances allow insurers to assess risks more accurately and reduce costs through predictive modeling.

Startups leveraging these technologies disrupt the market by providing more complex solutions for healthcare nuances. The result is a more flexible system that can adapt to the financial challenges posed by rising medical expenses and complex claims.

Health Reimbursement Arrangements (Ichras)

Health Reimbursement Arrangements (ICHRAS) are another example of innovative reshaping insurance technology. Ichras originated from bipartisan policy changes to help employers provide tax reimbursements to employees to cover personal health insurance premiums and qualified medical expenses. This approach provides cost predictability for employers and provides employees with flexibility to make it an attractive alternative to traditional group plans. For example, home health care provider Gallagher Home Health Services recently moved to the ICHRA model with the help of Take Command Health. This transformation allows companies to reduce administrative burdens, achieve cost predictability and provide personalized health plans for employees. Experts say Ichras has the potential to become a major model of employer-sponsored benefits over the next decade.

Insurtech Innovation is expected to redefine healthcare by addressing some of the most pressing issues in the U.S. health insurance market. From dynamic benefit planning to innovations in reinsurance and growth in Ichras, these advances highlight the potential of a more transparent, patient-centric system.

For industry insiders, the information is clear: now is the time to innovate. By embracing these transformative solutions, insurers and employers can not only address systemic challenges, but also create a future where health care is equitable and sustainable. Whether through investment, entrepreneurship or policy support, the opportunity to drive meaningful change has never been more compelling.

Photo: Feodora Chiosea, Getty Images

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