

Ask HN: So I want to start a health insurance company - kbelbina

There are so many annoyances and problems w/ modern health insurance that surely someone can do better. After reading PG's crazy startup ideas I've been thinking more and more that its worth a shot. Something like:<p>Setting up a health insurance company for only SF or NYC and focus on making it data driven, and the pricing completely transparent to the customer. They can easily pull up an app in the doctors and see exactly how much things will cost, and why. Focus on simplicity and taking the pain out dealing with providers.<p>What do people think the biggest hurdle (and there are many). Is it:<p>- Negotiating rates w/ doctors and service providers.
- Getting round the legal red-tape.
- Having enough money to actually run an insurance company.
- Something else?
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brudgers
_"Something else?"_

Re-insurance.

That may stand in for a raft of domain expertise.

An insurance company doesn't stand alone. It is integrated into vast financial
networks in the same way that a bank depends on being part of an industry from
providers like appraisers to institutions like the Federal Reserve.

Insurance companies have to operate in ways that interface with the rest of
that system. You can't set one up that goes bankrupt if the 1:1000 chance of
four people getting cancer occurs - or rather doing so is not likely to be
successful across common definitions of what it means to be a successful
insurance company.

Insurance and the startup mentality of fail fast are keenly at odds.

Finally, Insurance is the wrong problem to work on. Healthcare is the problem,
and one which might be disrupted. However, once you try to solve it with
insurance you are neither disruptive nor likely to get something radically
dissimilar to the current system.

Swapping buggy whips doesn't make a Model T.

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thejteam
The one thing you have going for you is that health insurance tends to be
localized anyway, not necessarily at the city level, but at the state. One
thing you have going against you is many people will want coverage beyond this
local region.

The "knowing how much things will cost" is probably the biggest problem. I
would love it, unfortunately it is completely different than how medical
providers are used to working. That will make it very difficult to negotiate
with doctors. And you will be new. Meaning that you have no current members.
Meaning that they have absolutely no incentive to negotiate with you.

Then there's the fact that insurance in the US will change in unknowable ways
on January 1. Have you looked at how you can interact with the health
exchanges in these states?

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calgaryeng
Insurance is a very complicated business. Given you've listed negotiating
rates with doctors as your first bullet, I imagine you should do some reading
first on just how complicated the financial and regulatory side of the
business is.

You can't just "charge more in premiums than you pay out". That is how
insurance USED to work. Nowadays it's all about carry on people's money. If
you are posting on hacker news about insurance I think you are in over your
head :(

~~~
kbelbina
Yeah, I certainly am in over my head but I look at Stripe as an example of how
everyone knew PayPal integration sucked for years but everyone thought it
would be 'too hard' to compete. They came a long and took a developer focussed
approach and have hit out of the park.

Certainly starting a health insurance company is an even greater challenge,
but everyone acknowledges what currently exists is painful for the end-user
and because it's so hard the rewards are potentially massive.

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keywonc
I'd imagine #3 would be the root of all difficulties: Having enough
money/resources to solve other legal, logistics, and credibility issues.

We're working in the finance/investing space and we hear "$1B in management"
thrown out as an example entry threshold. I'm guessing getting a legal review
of our idea alone could also cost a large amount of money -- not exactly a
lean startup fit. I'd be interested in hearing how you overcome this issue.

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t0
Insurance is naturally a ponzi scheme (which isn't a bad thing). You hope
people pay you more in premiums than they claim. The hard part is getting the
math right. You want to be able to cover all claims AND offer the lowest
premiums AND still profit.

~~~
HorizonXP
While people generally look for the lowest insurance rates, do you think that
the OP's idea may warrant charging a higher premium?

~~~
kbelbina
I'd pay higher premiums if I knew I was going to get the least painful and
most transparent experience when I actually USED the insurance. Knowing how
much things will cost and why ahead of time would be fantastic, among other
things.

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oneiric
I've thought about doing this too. I'd be curious to know you're thoughts or
any resources you've found.

