Can Silicon Valley Fix America’s Ailing Health Insurance System?

Eager to leap in where so many others have stumbled, Silicon Valley investors have been pumping capital—$1.2 billion in 2015 alone—into startups taking on the task of improving health insurance for individuals and employers. It’s not for the faint-hearted: The industry is rapidly consolidating, making it harder for new companies to gain traction. But the payoff could be huge. “It’s a big, juicy opportunity with a lot of market cap,” says Sequoia Capital’s Mike Dixon. Here, four of the biggest bets on the future of health insurance.

Oscar Health

What it is: Consumer-friendly alternative to traditional insurance—with a $750 million war chest.

Big idea: Use technology to make health care less confusing, more fun for millennials.

Secret weapon: An intuitive app that allows members to find and chat with doctors, access their medical history, and refill prescriptions.

Members: 135,000 in New York, New Jersey, Texas, and California.

Biggest hurdle: In the Affordable Care Act era, profit margins are slim if you don’t have scale: Oscar lost $105 million in 2015 alone.

Survival strategy: Offer a narrower range of providers to keep premiums low enough to entice new users.

Clover Health

What it is: Affordable, easy-to-navigate insurance for seniors enrolled in Medicare.

Big idea: Mine data to reduce the cost of caring for high-risk patients with chronic conditions.

Secret weapon: Algorithms that anticipate which members need preventive care, such as in-home nurse visits.

Members: 18,000 across New Jersey.

Biggest hurdle: Large incumbents—Aetna, UnitedHealthcare—will not cede this space without a serious fight.

Survival strategy: Attract customers by generating health outcomes too good to be ignored.

Stride Health

What it is: Insurance-plan marketplace with concierge-style services for individual buyers.

Big idea: Make it pleasant and efficient for users to find plans that meet their specific needs.

Secret weapon: A well-designed app that translates insurance lingo into layman’s terms and helps users buy a plan in under 20 minutes.

Members: 125,000 in 50 states, plus D.C.

Biggest hurdle: Federal and state insurance exchanges are improving their user experience, creating new competition. Sign more partners like Uber to become the go-to broker for gig-economy workers.

Survival strategy: Sign more partners like Uber to become the go-to broker for gig-economy workers.

Collective Health

What it is: Tech tools to help smaller companies cut out the middle­man and self-insure workers.

Big idea: Take the hassle—and risk—out of offering health benefits directly to employees.

Secret weapon: A sophisticated platform that helps companies design and administer plans, manage claims, and anticipate costs.

Members: Half a dozen companies, with about 35,000 beneficiaries.

Biggest hurdle: Big employers tend to self-insure, but smaller ones are still more likely to buy off-the-shelf plans from insurance carriers.

Survival strategy: Demonstrate the efficiencies—and lower costs—of going the self-insured route.

A version of this article appeared in the November 2016 issue of Fast Company magazine.