Lessons - Why Healthcare Is Broken | Andy Schoonover - CEO & Founder of CrowdHealth

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All listeners can save 30% off their first order. Just head to cornbreadhemp.com slash success and use code success at checkout. That's cornbreadhemp.com slash success code success for 30% off your first order of these amazing gummies. In this lesson's episode, discover why the U.S. healthcare system remains broken and profit driven incentives drive up costs. Understand why insurers and hospitals thrive on rising premiums. Explore how opaque claimed denials burden families with crippling debt and uncover innovative community based models offering a more sustainable approach to health care financing. Why is insurance still broken? So you know I'm Canadian and when I came down here, I had to navigate all of this because yes some things are covered in Canada but obviously nothing is covered down here. So I'm still learning as I go. So I don't have the 30, 40, 50 years of experience dealing with this system. So it's very near to me and it's something that's obviously very topical. So why is why is healthcare so broken in the U.S. First like walk me through that because I think that's interesting and even that one thing that you mentioned where I'm paying $1200 a month for insurance and then I go to the hospital. I get a procedure done for my daughter and then it's not covered. How is that justifiable? How is that something that hasn't been rectified in the history of the United States? It doesn't make sense to me. No it doesn't make sense to me either unfortunately. I think you know look the problem with healthcare to answer your first question is you know some a lot of people think the rising healthcare cost is a result of a very complex system but it's not all that complex. If you think about the fact that health insurance plans actually have no incentive to reduce costs and in fact they're and they have an incentive to increase costs in the affordable care acts. So what is that seven, eight years ago? They maxed out the amount of profit that a health insurance plan can make to 15% of premiums. So if you think about just using easy math my premium is a thousand dollars they can only get a hundred and fifty dollars worth of profit out of that profit and administrative cost. So they actually have to raise premiums to be able to raise their profits. So they are incentivized to see your monthly premium to go up. So in essence you have the buyer of healthcare, the health insurance plans, wanting healthcare costs to increase. You have the seller of health in big hospital systems. Clearly they want the price to go up because they want their profit to go up. So now you have the buyer and the seller of healthcare both wanting the price to go up. It doesn't take a brain surgeon to figure out why healthcare costs go up. And here's the other thing too is even if United Healthcare wanted to negotiate right now our system is ruled by big hospital systems. So I live in Austin, Texas. We have two hospital systems. United Health Group, even if they wanted to negotiate with the local hospital they can because they have a duopoly. If they lose one they lose access to most of the companies in Austin so they have no negotiating power. So there's this mutually beneficial thing that the hospital systems and health insurance have going on here that they just raise prices every single year and there's no market forces to actually reduce those prices. And that's why healthcare expenses are so high. And so there's just perverse incentives within our system to increase prices. And that's ultimately what the problem is. So it's not great. I understand that we live in a society that is driven by profit and that's something that is pretty standard with business. Now I'm not saying it's good but I mean it is the fact that it's kind of how the US, how the US works people want to make more money and they have to find ways to make more money and that seems to be unfortunately something that is going to impact somebody's health while being but the part that I really don't understand is even if they are making money off you how can they justify denying that claim. So that like I'm already upset that they're they're making a lot of money that's fine. I can't complain about that. You know everybody needs to make more money they'll stay colders that they have to to make happy fine. But how do they justify when you are paying something like that? What's the what's what what would make it a medical necessity versus a non medical necessity? It seems like somebody having a constant recurring significant health event should be something that could be considered a medical necessity. Yeah it's so opaque like there's no clarity and transparency into why they will agree to pay some medical bills and and not agree to pay other medical bills. And I think it kind of goes back to this you know 15% if they're hovering at that 85% of of your premium being paid on bills they get pretty stingy with that you know that last amount of dollars so they got to keep it to to 85% the maximize their profit. Here's the here the crazy stat that I didn't know before really diving in one out of every six healthcare claims from plans on healthcare.gov which is where most people go and get their their healthcare if if you're not getting it through your company are denied one out of six are denied right if you live in Tennessee it's one out of three if you live in Texas it's one out of five I mean one out of six doesn't seem super high but if you have an eight thousand dollar bill and there's a one out of six chance that they're not going to pay for it the vast majority of the American population is not going to be able to pay that eight thousand dollars you don't have eight thousand dollars laying around in an account somewhere that's like oh just in case I have a big medical bill my insurance plan will pay for it I have this eight thousand dollars like it just doesn't exist right and so that's why we're seeing 250 thousand people last year who had health insurance when bankrupt due to medical bills like the whole point of health insurance is so if you have a big catastrophic event you won't get into financial distress and we had 250 thousand families last year go bankrupt even though they had health insurance because of medical bills that just doesn't seem right right and that's just entirely the progative of the insurance provider and there's is there no is there no like um ombudsman or anything you can do to appeal that decision or stew them like what's is there any recourse whatsoever there there is fortunately I mean there you can take it to the state um you know if this if most of these plans on an individual level are regulated by the state and so you can take it to the state but that's just a big pureocratic you know regulatory agency and so to pay you to pay a rat next month and yeah and if and if the bill collectors are calling you right and and are just going to want to ding your credit score like I mean all that happens before us the state can typically engage right and so you're you're you're having sucked into a big bureaucratic you know black hole um so there are some but it takes a long time and and oftentimes it's you know you never hear and things like that so it's it is not an efficient process for sure I just want to take a second and thank cornbread ham for supporting today's episode now cornbread ham CBD gummies have been this really nice addition to my wellness toolkit I don't use them every day just when I want to win wine after those extra busy weeks but they're perfect for those moments when you want to take the edge off and just find your balance really just shut off from work now what makes them special is how cornbread ham perhaps them they only use a flower of USDA organic hamplants that's the best part for the purest most potent experience no fillers no artificial fluff just clean full spectrum goodness and delicious watermelon berry and peach flavor I keep them in my night stand for those moments when I just need a little extra help relaxing and I love how transparent they are too every batch is third party lab tests it's you know exactly what you're getting and they put together a special offer for all success story podcast listeners all listeners can save 30% off their first order just head to cornbread ham.com slash success and use code success at checkout that's cornbread ham.com slash success code success for 30% off your first order of these amazing gummies so you you after that event with your your daughter okay I'm done with this I'm not paying for insurance does not do anything for me but I have to figure out something in case yeah a 500,000 or a million dollar bill happens then I do have to figure out how to to deal with that event in my life so this is this is the inception of proud hell correct this is this is you were figuring that on your own you actually tried to do your founder you realize there's an obviously a huge opportunity there but that's still not in a salad easy anywhere we were talking before we started recording like building out this category so walk me through building out a category and then building out a company in that category sure and so yeah so one of the things I was thinking about is like okay so what happens if I get a big bill you know what happens if I have cancer or you know a big surgery or whatever you know basically 2% of people you know have those big catastrophic feel so it's so it's a very low probability but it could happen right and so you know as I was thinking about how other people get their bills paid you know when they don't have the money to do that you know a lot of people go on these crowdfunding websites like go fund me you know and so you submit your bill and and so and most of the time those bills get paid I think it's probably the number one category and go fund me as these big medical bills because people can't pay for them again L insurance plan a lot of times are not paying for these things and so they go to and so what if we can build a a crowdfunding site that has some incentives for people to actually go and fund these right like a young child having cancer is you know much more emotional and you know worthy of giving right then my five-year-old has a broken arm or you know my two-year-old or one-year-old means that your tubes are yours those aren't nearly as emotionally kind of and they're not as they quote unquote sexy problems that yeah as somebody who has says cancer right exactly exactly so but what have we built a system where if I give to you right when you need help you're more likely to give to me what I need help so we build in a system where there's a law reciprocity right so the way that ours works is you will submit money into an account that account is yours every month and so if you're between the ages of of six and fifty four it's 175 bucks a little bit more of your old or a little bit more if you're younger and then you can use that money to fund others when they have needs and so organite will ask you every month is like hey here's ten people that have needs this month will you fund them yes or no so it's totally voluntary if you say yes to everybody then you are one of those people that will step up when others are in need if you say no to everybody you are one of those people that is stingy and will not step up when everybody else is in need and so when you have what I have a bill right and I've been stingy the probability of other people being like yeah I'm going to give to the stingy guy is really low right the probability of somebody giving to me if I'm this super generous guy is really really high and thus far everybody who's been generous has gotten their bills paid right and so you build this reciprocity and it's actually look it's the way communities have worked for thousands of years right if I'm in a community of people and something happens to me and I'm the Grinch then there's not a whole lot of other people stepping up and unless you're you know Lucy Lou or whatever her name is in the Grinch I don't know if I ever do what her name is but but if you are the nice person on the block who will who brings you cookies when you moved in like the probability of me coming and helping you is much much higher and so we're using that that reciprocity within a crowdfunding type of platform to pay for medical bills and the beauty of this is we're getting bills paid at about 50% of what health plans are paying for bills so that $8,000 tubes in my daughter's ear I put that out on LinkedIn and somebody a doctor and your nose and throat doctor read it and came back to me and says we do those all day long for $1,500 if you'll pay in cash right so if I paid in cash I could have got once this your nose and throat doctor and save $65 a box right that's you know 80% savings and so these doctors are willing to take significant discounts to what the health plan will pay them if you pay them in cash at the point of sale and so that's where we're getting the vast majority of our our savings is physicians hate health insurance as much as we do and and so they will take significant reductions so they don't have to wait 90 days to get paid they don't have to haggle with the health insurance company 30% of their time is spent with health insurance companies and so they now have 30% more time to focus on patients which is as opposed to paperwork which is what they really love right and that's where we're getting our savings so you're doing two things so the so the crowd health is a community it's a platform and it's not only leveraging the fact that you're speaking directly with physicians and specialists to give a reduced cost but then it's also a crowd funding component that allows other people in the network to to pay for pay for whatever it is that you need and and I guess you know if I'm if I'm trying to the the concept is great it makes a lot of sense I actually think that when somebody dives into this for for the first time I sort of take my perspective and I look at it the first time I always think like well to love reciprocity and it's not guarantee but there seems to be almost an incorrect assumption that insurance is guaranteed that insurance is safe because it's a it's an entrenched institution that has been there forever so there seems to be like a false sense of security with insurance based and if you haven't been screwed like you've been screwed then you won't understand that that that nothing is a hundred percent so that's that's where I see people looking at this alternative form of I don't know what you call it is it's not insurance because insurance is it's a different thing so that's own category yeah it's its own category I mean it's it's really an alternative way to play for healthcare right it's it's a you're taking personal responsibility over your your healthcare bills as opposed to you know giving that responsibility to a health insurance plan and as a result of that you're going to save 50 percent right and it is a guarantee that your bills are paid no you know is the probability really high we think so we think it's way higher than you getting your bill paid from a health insurance plan given the one in six that I just mentioned and that's from the Kaiser Family Foundation like that's not my number it's a legitimate you know think tank coming up with that number so that's where I think people are really not misunderstanding or the other thing is you've got these masses massive deductibles that you have to pay before the health insurance plan pays a dollar right so many of them are six eight ten twelve thousand dollars before you pay before the health insurance plan plan pays a dollar for promars you know one of our key metrics is we want zero people going bankrupts using crowd health due to medical bills right as opposed to 250 thousand using health insurance and so the the what we'll ask you to do is you pay the first 500 bucks and so you step into the hospital you pay the first 500 bucks right and then everything else we're going to submit to the crowd for funding and so you don't have to worry about how much is this going to cost what is my co-pay what is my co insurance what is my deductible what is my thing it's like it's five hundred bucks right and you can have solace in the fact that you know most people have five hundred bucks in the bank that this is not gonna bankrupt you and that's the whole point of health insurance and so that's what we're really really trying to push is is that just kind of simplicity I know that the mechanics on the back end are a little more complicated because this is the first time people have heard of this probably but in essence it's super simple you pay the first 500 bucks you everything else is submitted to the crowd for funding you can choose whatever doctor you want there's no doctor networks anymore which is a huge benefit right and so it's just way easier to use after you used to it than your typical health insurance plan thanks for tuning in if you found this valuable don't forget to hit that subscribe button so you never miss an episode and if you want to dive deeper into this conversation check out the links in the description to watch the full episode see you in the next one