Thanks for writing this Nat, very helpful overview.
Thinking of making the switch myself and working through it. Dropping a thought here with the hope someone else knows more than I do about it.
You noted in the black swan risk about them shutting down or not being able to make payments. I believe there is some history of this with these organizations. Liberty Health Share shut down and didn't pay out claims I think in 2020 and Trinity similarly did.
As I understand it, there was some fraud (or close to fraud behavior like spending contributions on things other than medical cost sharing).
Ultimately, I'm not sure how to underwrite this for a private, unregulated company. I love the dashboard showing they are paying things out, but that doesn't really give you a sense of the backstop.
I get that you could switch back to an ACA plan, but my understanding is that CrowdHealth going out of business would not be a qualifying event so you're waiting until open enrollment.
The concerning scenario is they go out of business or stop paying claims in March and you're basically uninsured for 9 months until Open Enrollment hits again. If you were already comfortable self-insuring then maybe not an issue.
In my mind, health insurance's purpose is to help an individual turn an uncapped, but diversifiable risk into a capped risk by pooling with other individuals. The odds of getting cancer at 40 are low, but it would be devastating financially so spreading that risk around is a win, win. The traditional model does this but pools you with a lot of higher risk people (among other issues).
It's fair to say that insurers can also deny claims anyway if they want, but there is some regulator body to appeal to and I believe most states have guaranty funds to backstop them.
This seems like the most critical issue, but I really have no idea how to underwrite it. If CrowdHealth was larger and had a publicly audited backstop of some sort, that would make me a lot more comfortable. Most anecdotal stories from both camps are good, it's all about what happens in the tails and I'm not sure how to evaluate that.
I could be wrong here, but I'm assuming most of CrowdHealth's existing & potential customer base are people who are getting their insurance through the Marketplace (i.e. people that don't have access to lower cost, employee-sponsored health insurance).
As a business owner, my fiancee and I get our existing health insurance through Marketplace. We are currently deciding between sticking with normal health insurance ($14-15k for a high deductible plan covering two people) and CrowdHealth. When you consider 1) tax deductibility of health insurance premiums to the business and 2) ability to contribute to an HSA (also tax deductible), the decision becomes a bit less clear. Especially if you're in the 32-37% federal tax brackets. This is obviously unique to my own situation, but if you're a business owner, I think some consideration to 1 & 2 above is relevant when making your decision.
Separate, I've had a call with CrowdHealth and didn't get adequate answers to the following questions, so I'm wondering if you or anyone else knows the answers:
1. How is "Bills Funded" being calculated? In the scenario where 100% of bills requested to be funded in a certain month are actually funded, BUT some were not fully funded & paid off, would this statistic still read 100%? If so, I think a statistic reflective of the % of total requested fundings that were actually paid off (I'll let more creative people think of a more succinct term) is more illustrative of what we as the end consumers actually care about. Not to mention it seems like something that can't be gamed so much - if 100 members request funding for bills of $100 each, but each receive only $1 and the "Bills Funded" stat shows as 100%, I think that's misleading.
2. I'm kind of skeptical about the "volunteer panel of five members from the community" who assist in the appeal process. Who are the five members? Did CrowdHealth send a blast email to all members asking for volunteers at some point? Or did these five members just randomly reach out expressing interest in volunteering for the a new appeals panel? Do they take new volunteers? Does the panel change? Are they are truly, 100%, unpaid volunteers with no incentive to deny appeals?
3. This one is my biggest area of concern & unfortunately, I think, can only be answered by becoming a member. Pre-existing conditions. For example, I go to a dermatologist for yearly skin checks. If I get diagnosed with skin cancer a year after becoming a member, are they going to say it's considered pre-existing because it falls under their "Symptomatic" bucket ("Previously Documented, Diagnosed, or Symptomatic")? If I had an EKG three years ago for chest pain I was experiencing & then have a heart attack in 1 year, is it going to be uncovered because it was "pre-existing"? The canned answer I've received from CrowdHealth is that their is no profit incentive for them to deny funding in these scenarios, but I'm asking the question from a downside perspective. If CrowdHealth has a black swan month of funding requests, it seems to me that they'd have a very high incentive to deny requests by finding very loose or non-existent relations between something in one's medical history & their current funding request.
The above questions probably make it seem like I'm anti-CrowdHealth, but in all reality, I still think it's likely the best course of action for my situation. Would just love to hear some discussion on the above, as I haven't seen it in the public sphere and it would go a long way in assuaging my key concerns, as well as hopefully help others.
Great, informative write up. Thanks for taking the time. Two things people will want to consider when doing the math for themselves if considering a switch:
1. If you are self-employed (i.e. S-Corp owner-employee), then your healthcare premiums are actually lower than the top line thanks to the tax rules (exemption from Social Security, Medicare, or FICA taxes + deductibility on personal return)
2. If you have a HDHP with an HSA, and you are making contributions to that HSA, then you are able to lower your taxable income by ~8500 per year (for a family) with those contributions (which can also grow tax free).
So, while traditional insurance sucks, depending on how you set it up, the real cost is often lower than the "top line"
Similar age / life stage here. US resident. We’re young and healthy. First kiddo was a textbook, easy birth. A few years later my wife got pregnant again (identical twins!) and developed twin-to-twin transfusion syndrome. It’s not genetic — just terrible luck. Without treatment, both babies would have died.
She had fetoscopic laser surgery in utero, where they go in with a tiny scope and laser to seal off the abnormal shared blood vessels. Even with that, she went into labor at 25 weeks.
One baby died less than 24 hours after birth. The other twin spent over 100 days in the NICU.
Total bill was about $2,500,000. You read that right.
I love the idea, but be careful — never in a million years did I think something like this would happen to us. I’m incredibly grateful we had solid health insurance. We probably paid under $10k out of pocket for the whole ordeal.
was about to comment with a similar story. i’m sorry about your baby. similarly our newborn was diagnosed with a rare, aggressive cancer at 3 months old and died at 6 months old after chemo and then hospice. obviously a black swan event but wonder what would have happened without insurance.
The province eliminated medical payments for residents of the province.
If you were working for a company that paid health insurance, they would have previously foot the monthly premiums. The bill is paid by a tax on all employers in the province and general taxes from residents.
Our healthcare system is not perfect and many people do not have a doctor because in some areas there are not enough doctors.
So there is a wait for some services like MRI's or speciality tests.
Dental is usually covered by private insurance, as are prescriptions.
The only people who run into trouble with healthcare are people who do not have doctor, too poor to afford additional non covered services, or people who travel without health insurance to places like the US and encounter a health event.
Not having the possibility of bankruptcy or huge obligatory health plan bills is a huge relief for Canadians.
Our governments have taken to advertising to American health professionals to work in the great white north. Paperwork streamlined.
I live in Colombia, an underdeveloped country. Nobody here has to worry about any of these conditions. Every person is insured even when they don't have a job. Everybody. Paid by the taxes on payroll and using most of the VAT.We are not communists. It is not perfect but it works. It is crowd health insurance but using the tax system. There is no VIP treatment. Everyone gets in the line to access the system. Drugs are covered. All of them. All procedures, all preexisting conditions. No exclusions. Once I was on a vacation in the US. My daughter had an abdominal pain. We took her to the ER. We were there for 3 hours. Nobody examined her. I had a $1,500 bill for nothing. Horrible. And every vehicle owner must have a special insurance for accidents. Beyond that insurance coverage, we rely on the national health system. Transplants, dialysis, open heart surgery. Everything is covered It is not perfect but it works.
Beware if you cancel your insurance. I tried that, had a minor procedure that should have cost $4000. The hospital charged $20,000. They did so gleefully because they have agreements in place with insurance companies. If you have some random insurance company a hospital can and will jack up the price.
Great writeup. One question - why is funding other people bills optional? Seems like it would be easier to just make this mandatory and collect the full amount each month. Plus, they could build up a fund to cover "bad months" in the future.
Sounds interesting but unfortunately this product is illegal insurance. There is a reason that insurance companies can't discriminate against pre existing conditions. I expect that they either change their policy to allow everyone to join or they could be shut down.
Let me make a different suggestion: Since you work online and not physically tied to the US for work reasons, why not move to Europe?
We live in Cyprus. Not only we pay no capital gains tax (it's capped to a maximum of $4k/year), no estate tax, and basically no income tax, health insurance is really great and costs nothing.
I pay 190 EUR ($220) per month for social security which includes health insurance, for my entire family.
Even if I had 10 kids, it would still be only 190 EUR per month. It includes everything, also child birth, and the country can't refuse to treat for any reason as long as you're in the system.
If I travel anywhere in the European Union, I also don't pay anything out of pocket, it is charged to my Cypriot national insurance. You could save on health insurance alone, not to mention a fortune in tax.
Great write-up! I'm a little disappointed it doesn't work for California yet. If a family were to do a standard hospital childbirth would you recommend them having insurance and then switching off to CrowdHealth or other crowd-funding sources after they've finished having all their kids?
I canceled health insurance about 4 years ago. One of the best decisions I ever made
Thanks for writing this Nat, very helpful overview.
Thinking of making the switch myself and working through it. Dropping a thought here with the hope someone else knows more than I do about it.
You noted in the black swan risk about them shutting down or not being able to make payments. I believe there is some history of this with these organizations. Liberty Health Share shut down and didn't pay out claims I think in 2020 and Trinity similarly did.
As I understand it, there was some fraud (or close to fraud behavior like spending contributions on things other than medical cost sharing).
Ultimately, I'm not sure how to underwrite this for a private, unregulated company. I love the dashboard showing they are paying things out, but that doesn't really give you a sense of the backstop.
I get that you could switch back to an ACA plan, but my understanding is that CrowdHealth going out of business would not be a qualifying event so you're waiting until open enrollment.
The concerning scenario is they go out of business or stop paying claims in March and you're basically uninsured for 9 months until Open Enrollment hits again. If you were already comfortable self-insuring then maybe not an issue.
In my mind, health insurance's purpose is to help an individual turn an uncapped, but diversifiable risk into a capped risk by pooling with other individuals. The odds of getting cancer at 40 are low, but it would be devastating financially so spreading that risk around is a win, win. The traditional model does this but pools you with a lot of higher risk people (among other issues).
It's fair to say that insurers can also deny claims anyway if they want, but there is some regulator body to appeal to and I believe most states have guaranty funds to backstop them.
This seems like the most critical issue, but I really have no idea how to underwrite it. If CrowdHealth was larger and had a publicly audited backstop of some sort, that would make me a lot more comfortable. Most anecdotal stories from both camps are good, it's all about what happens in the tails and I'm not sure how to evaluate that.
I could be wrong here, but I'm assuming most of CrowdHealth's existing & potential customer base are people who are getting their insurance through the Marketplace (i.e. people that don't have access to lower cost, employee-sponsored health insurance).
As a business owner, my fiancee and I get our existing health insurance through Marketplace. We are currently deciding between sticking with normal health insurance ($14-15k for a high deductible plan covering two people) and CrowdHealth. When you consider 1) tax deductibility of health insurance premiums to the business and 2) ability to contribute to an HSA (also tax deductible), the decision becomes a bit less clear. Especially if you're in the 32-37% federal tax brackets. This is obviously unique to my own situation, but if you're a business owner, I think some consideration to 1 & 2 above is relevant when making your decision.
Separate, I've had a call with CrowdHealth and didn't get adequate answers to the following questions, so I'm wondering if you or anyone else knows the answers:
1. How is "Bills Funded" being calculated? In the scenario where 100% of bills requested to be funded in a certain month are actually funded, BUT some were not fully funded & paid off, would this statistic still read 100%? If so, I think a statistic reflective of the % of total requested fundings that were actually paid off (I'll let more creative people think of a more succinct term) is more illustrative of what we as the end consumers actually care about. Not to mention it seems like something that can't be gamed so much - if 100 members request funding for bills of $100 each, but each receive only $1 and the "Bills Funded" stat shows as 100%, I think that's misleading.
2. I'm kind of skeptical about the "volunteer panel of five members from the community" who assist in the appeal process. Who are the five members? Did CrowdHealth send a blast email to all members asking for volunteers at some point? Or did these five members just randomly reach out expressing interest in volunteering for the a new appeals panel? Do they take new volunteers? Does the panel change? Are they are truly, 100%, unpaid volunteers with no incentive to deny appeals?
3. This one is my biggest area of concern & unfortunately, I think, can only be answered by becoming a member. Pre-existing conditions. For example, I go to a dermatologist for yearly skin checks. If I get diagnosed with skin cancer a year after becoming a member, are they going to say it's considered pre-existing because it falls under their "Symptomatic" bucket ("Previously Documented, Diagnosed, or Symptomatic")? If I had an EKG three years ago for chest pain I was experiencing & then have a heart attack in 1 year, is it going to be uncovered because it was "pre-existing"? The canned answer I've received from CrowdHealth is that their is no profit incentive for them to deny funding in these scenarios, but I'm asking the question from a downside perspective. If CrowdHealth has a black swan month of funding requests, it seems to me that they'd have a very high incentive to deny requests by finding very loose or non-existent relations between something in one's medical history & their current funding request.
The above questions probably make it seem like I'm anti-CrowdHealth, but in all reality, I still think it's likely the best course of action for my situation. Would just love to hear some discussion on the above, as I haven't seen it in the public sphere and it would go a long way in assuaging my key concerns, as well as hopefully help others.
Great, informative write up. Thanks for taking the time. Two things people will want to consider when doing the math for themselves if considering a switch:
1. If you are self-employed (i.e. S-Corp owner-employee), then your healthcare premiums are actually lower than the top line thanks to the tax rules (exemption from Social Security, Medicare, or FICA taxes + deductibility on personal return)
2. If you have a HDHP with an HSA, and you are making contributions to that HSA, then you are able to lower your taxable income by ~8500 per year (for a family) with those contributions (which can also grow tax free).
So, while traditional insurance sucks, depending on how you set it up, the real cost is often lower than the "top line"
All great points.
Similar age / life stage here. US resident. We’re young and healthy. First kiddo was a textbook, easy birth. A few years later my wife got pregnant again (identical twins!) and developed twin-to-twin transfusion syndrome. It’s not genetic — just terrible luck. Without treatment, both babies would have died.
She had fetoscopic laser surgery in utero, where they go in with a tiny scope and laser to seal off the abnormal shared blood vessels. Even with that, she went into labor at 25 weeks.
One baby died less than 24 hours after birth. The other twin spent over 100 days in the NICU.
Total bill was about $2,500,000. You read that right.
I love the idea, but be careful — never in a million years did I think something like this would happen to us. I’m incredibly grateful we had solid health insurance. We probably paid under $10k out of pocket for the whole ordeal.
was about to comment with a similar story. i’m sorry about your baby. similarly our newborn was diagnosed with a rare, aggressive cancer at 3 months old and died at 6 months old after chemo and then hospice. obviously a black swan event but wonder what would have happened without insurance.
I’m sorry for your loss too. Yeah, health insurance sucks - so many problems - but after my experience I would never be without it.
I live in BC, Canada.
The province eliminated medical payments for residents of the province.
If you were working for a company that paid health insurance, they would have previously foot the monthly premiums. The bill is paid by a tax on all employers in the province and general taxes from residents.
Our healthcare system is not perfect and many people do not have a doctor because in some areas there are not enough doctors.
So there is a wait for some services like MRI's or speciality tests.
Dental is usually covered by private insurance, as are prescriptions.
The only people who run into trouble with healthcare are people who do not have doctor, too poor to afford additional non covered services, or people who travel without health insurance to places like the US and encounter a health event.
Not having the possibility of bankruptcy or huge obligatory health plan bills is a huge relief for Canadians.
Our governments have taken to advertising to American health professionals to work in the great white north. Paperwork streamlined.
I live in Colombia, an underdeveloped country. Nobody here has to worry about any of these conditions. Every person is insured even when they don't have a job. Everybody. Paid by the taxes on payroll and using most of the VAT.We are not communists. It is not perfect but it works. It is crowd health insurance but using the tax system. There is no VIP treatment. Everyone gets in the line to access the system. Drugs are covered. All of them. All procedures, all preexisting conditions. No exclusions. Once I was on a vacation in the US. My daughter had an abdominal pain. We took her to the ER. We were there for 3 hours. Nobody examined her. I had a $1,500 bill for nothing. Horrible. And every vehicle owner must have a special insurance for accidents. Beyond that insurance coverage, we rely on the national health system. Transplants, dialysis, open heart surgery. Everything is covered It is not perfect but it works.
Beware if you cancel your insurance. I tried that, had a minor procedure that should have cost $4000. The hospital charged $20,000. They did so gleefully because they have agreements in place with insurance companies. If you have some random insurance company a hospital can and will jack up the price.
How do they know if you smoke or not? Sounds like a good faith question.
Great writeup. One question - why is funding other people bills optional? Seems like it would be easier to just make this mandatory and collect the full amount each month. Plus, they could build up a fund to cover "bad months" in the future.
Sounds interesting but unfortunately this product is illegal insurance. There is a reason that insurance companies can't discriminate against pre existing conditions. I expect that they either change their policy to allow everyone to join or they could be shut down.
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Jesus I didn’t know we could add another level of fuckery to the American debt peonage system, I mean healthcare system but we did it.
Medicare for All actually solves all these problems.
We’re already in “Medicare for All”. Lol.
Americans most certainly are not.
ACA is an expansion of private healthcare, not a single-payer system of universal healthcare.
How long has crowd health been in operations?
Very interesting.
Let me make a different suggestion: Since you work online and not physically tied to the US for work reasons, why not move to Europe?
We live in Cyprus. Not only we pay no capital gains tax (it's capped to a maximum of $4k/year), no estate tax, and basically no income tax, health insurance is really great and costs nothing.
I pay 190 EUR ($220) per month for social security which includes health insurance, for my entire family.
Even if I had 10 kids, it would still be only 190 EUR per month. It includes everything, also child birth, and the country can't refuse to treat for any reason as long as you're in the system.
If I travel anywhere in the European Union, I also don't pay anything out of pocket, it is charged to my Cypriot national insurance. You could save on health insurance alone, not to mention a fortune in tax.
Great write-up! I'm a little disappointed it doesn't work for California yet. If a family were to do a standard hospital childbirth would you recommend them having insurance and then switching off to CrowdHealth or other crowd-funding sources after they've finished having all their kids?