Medicare / Medicaid / Advantage -- Where Are The Opportunities For Startups? -- Part 1 of 2
1) Medicare 2) Medicaid 3) Medicare Advantage (MA) 4) Opportunities for Startups Article from Sharon S. Huang and Amit Garg at Tau Ventures in #SiliconValley. First published on DataDrivenInvestor.
Medicare, Medicaid, Medicare Advantage. The words often get thrown around and are mixed with generalized association of government social programs for the underserved and those over 65, but what are they actually? In part I of this article we discuss the difference between them, as well as potential white spaces that open up opportunities for startups:
1) Medicare – Started in 1965 as part of the federal health care program, Medicare originally was intended as a program for parts of the US population that were over the age of 65. In 1972, the program extended to cover patients with disabilities and patients with kidney failure who needed either dialysis or transplantation. The program as it currently stands covers inpatient hospital stays, hospice, and nursing care. Medicare includes four different sub plans categorized as A, B, C, and D. A and B are often bundled and referred to as Original Medicare, and rely on area of service for eligibility and are federally funded. Though A and B cover hospital insurance, it does not cover vision and dental coverage, among other things. In a more recent expansion, Medicare Advantage has become a larger point of discussion; also known as part C, it extends coverage to a larger population and will be discussed later.
2) Medicaid – Medicaid was founded alongside the Medicare program in 1965 and focused on health coverage for low-income families and individuals. However, Medicaid is differentiated in that it is jointly funded by both the federal government and state government, which implies that it varies in the range of benefits offered across different state borders; basically, the design and administration of each states’ programs are individually and independently structured and practiced. Medicaid generally covers specific doctors’ services, outpatient care, medical supplies, and preventative services. Currently, Medicaid provides health coverage to around 97 million low-income patients each year and two fifths of enrollees are children.
3) Medicare Advantage (MA) – Part C, otherwise known as Medicare Advantage, is an optional enrollment service that is available to those eligible for and enrolled in Medicare part A and B, and can extend to cover vision, hearing and dental services. Similar to Original Medicare Advantage, these plans are region-specific and sold through insurance firms that are contracted with the federal government. Part D incidentally covers prescription drugs through private insurers and requires a monthly premium in exchange for covering local or mail-order pharmacies. It is often received through MA, combining parts C and D.
4) Opportunities for Startups – We have seen a trend in startups migrating into Medicare oriented fields, with the notable examples including Oscar Health and insuretech shifting market focus and setting sights on MA. Despite these recent trends, we continue seeing significant white space within both Medicare and Medicaid:
- tools for billing and coding
- streamlining signups– friction reduction
- increasing accessibility within health centers and matching plans
- increasing transparency of bundled payment pricing of insurance companies to give hospitals systems more leverage in negotiations
At the same time MA specifically has received so much attention from companies that we worry it’s reaching saturation. Part II of this article will explore a deeper dive into opportunities as well as case studies.
Note from Amit Garg: Primary author for this article is Sharon Huang at Tau Ventures. Originally published on “Data Driven Investor," am happy to syndicate on other platforms. I have 20+ years in Silicon Valley across corporates, own startup, and VC funds. These are purposely short articles focused on practical insights (I call it gl;dr -- good length; did read). Many of my writings are at https://www.linkedin.com/in/amgarg/detail/recent-activity/posts and I would be stoked if they get people interested enough in a topic to explore in further depth. If this article had useful insights for you comment away and/or give a like on the article and on the Tau Ventures’ LinkedIn page, with due thanks for supporting our work. All opinions expressed here are the authors’.
I have built my career in technology over 20 years in Silicon Valley. As a venture capitalist I focus on seed-stage applied AI investments in Digital Health, Automation (cars and robots) and Enterprise. Some of my key successes are nuTonomy (seed, sold for $450M) at Samsung NEXT Ventures and Misfit Wearables (seed, sold for $260M) at Norwest Ventures. My operational background is in product and analytics at my own startup (currently valued at $450M) and at Google. I was born and raised in Brazil, speak 3 languages natively and 2 others fluently, and have lived significantly in 5 different parts of the world. I have also cofounded and been leading a non-profit since 2000, we crowd-funded and built a high school lab, a library and a hospital in rural India serving a community of 100,000 people, here is a bit more of the story: https://www.linkedin.com/pulse/how-build-hospital-your-20s-using-crowdfunding-amit-garg. I have spoken more about my work in technology and in non-profit at 3 T