News & Analysis

Can an Insurance Company Transform Healthcare?

Portrait of Dawn Carter

Dawn Carter

A blue butterfly and green cocoons illustrate the concept of transforming healthcare. Photo by Håkon Grimstad via Unsplash.

If we want to transform healthcare, nearly everyone agrees that more primary care – especially preventive care – is the key. When patients see their PCP more often, minor health issues get caught earlier, allowing for cost-effective treatments that slow or prevent escalation to major health issues.

Medicare understands that. As the primary insurer for older Americans, Medicare for several decades has pushed payment innovations that encourage more primary care. And because Medicare has “customers for life,” it makes economic sense to pay up earlier for primary care that achieves lower costs far into the future.

But 66% of Americans are covered by private health insurance – typically younger, healthier workers who might not feel driven to see their doctors regularly. Because insurance comes through the workplace and Americans change jobs often (the median tenure is under four years), private health plans don’t have the same long-term economic stake in the people they cover. Why front-load the cost of preventive care for seemingly healthy workers, knowing that they wil probably be someone else’s problem by the time they develop expensive health issues?

I’ve said for years that private insurance would be the tipping point in healthcare transformation, but it would take a true disruptor focused on long-term profitability rather than tomorrow’s stock price.

It looks like that disruptor may have arrived.

One Preventive Visit, Zero Out-of-Pocket Costs

Curative is a new health plan debuting in January 2023 with a handful of corporate clients in the Austin, Texas area. Such a small launch might not qualify as “news,” except that the business model is so revolutionary.

Workers with a Curative plan will pay exactly zero dollars for all in-network healthcare, as long as they complete one preventive care visit each year. But for workers who skip their preventive visit, the math looks very different: a $5,000 deductible and 80/20 coinsurance.

In an interview with STAT, co-founder Fred Turner says the idea is to offer “one big carrot and stick. Show up once a year and engage in preventive care, and everything will be free; or don’t show up, and you’ll have a $5,000 deductible. That’s the one big incentive that everybody can understand.”

Curative made its name in Covid-19 testing, and the company is funding its new health plan with a $27 million investment. Essentially, Turner is betting everything on this effort to transform healthcare. If regular preventive care drives down costs, then the company should profit over time. But if not, then Curative will end up with higher initial costs and higher long-term claims – not exactly the recipe for a sustainable health insurance business.

High Deductible = Low Utilization

I’m glad to see a private insurer making such a big commitment to preventive care. Regional powerhouses like Kaiser and Geisinger have been leaders in this area, but the big national plans put their focus on short-term costs with high-deductible plans that actually decrease primary care utilization.

“When you raise people’s deductibles, that saves a bit of money in the first year on utilization,” Turner says. “But when you dig into what’s actually happening, people are putting off preventive care. They’re not doing colonoscopies or mammograms. They’re not getting their checkups. When you start looking at two- and three-year cost data, costs start to go back up again because all of those things people put off are now more expensive to deal with.”

For companies with very high employee churn rates, Curative might not make sense because the investment in preventive care starts to pay off after two to three years. Then again, by offering robust healthcare with zero out-of-pocket costs, employers might just be able to reduce their turnover and keep a lid on healthcare expenses at the same time.

That would qualify as a major win/win.

The Business Case for Hospitals

Turner believes that Curative will have a lower medical loss ratio due to the emphasis on preventive care – but only if his small health plan can get the same provider rates as large carriers. Why would providers play ball? As a longtime healthcare strategist, I have to admit his sales pitch for providers does sound intriguing:

“It’s a lot easier for the providers if you don’t have to collect any cost-sharing. If you know that you’re getting 100% of the bill paid, and you’re not worrying about collecting a copay for this or a deductible for that, it is a significant admin reduction on the side of the provider. So we have been able to use that to negotiate better rates with some provider groups.”

Curative is doing something radical – and risky – in a space that’s ripe for disruption. Turner says his goal is to be the next UnitedHealth. If he's successful, it might just be a tipping point in the long effort to transform healthcare.