What Luigi could have done instead, solving healthcare
Earlier this month, I was at a café in downtown Austin with Andy Schoonover, the CEO and founder of CrowdHealth.
I’m a big fan of his startup, which offers a replacement for health insurance. I haven’t felt this way about a young company since I found Tesla, 9 years ago. It feels like the Tesla of healthcare. A fundamentally different, superior product (at least for me), at a superior price. Growing fast. Changing the game.
“When I saw Tesla,” I told Andy, “I saw how disruptive it would be. I thought they’d kill Elon.”
“Dude, the UnitedHealthcare guy got taken out. Did you see that?”
“No, I didn’t see that.”
“You didn’t see that?”
“I’ve been busy.”
“The CEO of UnitedHealthcare got gunned down in New York, like assassination style.”
“Wow,” I said. “They’re not going after you, I hope.”
Allegedly, Luigi Mangione murdered Brian Thompson, the CEO of UnitedHealthcare, an insurance company notorious for denying health insurance claims. Mangione is innocent until proven guilty.
I’ve never met anyone happy with the American health insurance system. I don’t think Luigi is, either.
But the bigger the problem, the bigger the opportunity.
I’ve never purchased health insurance, and I don’t think I ever will. It looks awful. Sky-high monthly fees, huge deductible, “co-pay”, and they often don’t want to pay for what you want or need to survive. Insurance companies deny 10-20% of claims.
I had insurance through Tesla, as an employee. Then I went self-employed and had nothing for a while. I called it the preventative care plan. In 2022, I heard about CrowdHealth when they sponsored
’s podcast. I talked on the phone with them for 45 minutes, and signed up.18 months later, I was in a mountain biking accident and they funded my healthcare bills. Then again when I had a triple stomach infection. They connected me with amazing doctors [Shoutout to Boston Holistic]. I made friends with Andy, the CEO, and Taryn, my care advocate. And perhaps most importantly, I’m actually excited about the future of healthcare in America.
Luigi Mangione and I are the same age, born a month apart. We both went to top-rated schools, worked in tech, and traveled the world. Now, unfortunately, he is in jail. I am in a beautiful private library, writing about ways of paying for healthcare. Meeting with CEOs, instead of murdering them.
In an alternative universe, Luigi heard the same podcast I did, and is helping build the new system.
A new way to pay for healthcare
Ways to pay for healthcare include self-pay, government insurance, private insurance, Health Care Sharing Ministries, and now, a crowdfunding membership.
The latter was brought to market by Andy and CrowdHealth the team in 2021. I joined the following year.
As a member, I go to any doctor or healthcare provider and pay the cash-pay price. I upload the bill to the app. CrowdHealth gets funding from other members and reimburses me. There is a $500 initial commitment (deductible), per health issue. I pay a $55 monthly membership fee to CrowdHealth, and a variable monthly contribution toward other members’ healthcare bills, up to $135. If the crowd is healthy, bills are low, and my monthly payment is low.
An illustration of the CrowdHealth system, by
CrowdHealth boasts that 99.8% of bills have been fully funded. Which is amazing. Insurance companies are around 85%. But what CrowdHealth doesn’t say is that the .2% of bills that didn’t get fully funded came from members with “generosity scores” under 90%. Those few members are denying funding requests, then asking for funding, and not getting fully funded. That’s how it should be. The system is working.
Every month I get an email like this one:
This month it’s a bit higher than usual at $119. I don’t always check the email; I have it set so if I don’t do anything, it automatically approves the request. My favorite thing to see that I’m funding a pregnancy.
Unfortunately, this month, it’s for stage 4 melanoma.
Instead of nameless, faceless, insurance company algorithms, approving funding, it’s me. It’s the members in tandem with CrowdHealth employees, who make sure the bill is fair-legitimate, fair-market price, and eligible for funding based on the member guide.
The dual payment model is the key. A flat rate to CrowdHealth, and a variable rate straight to healthcare bills. It’s a win-win system. When we are healthy, we pay less, and Crowd makes more money, because more people are keen to join and stay.
I don’t think I’d be be a member if it wasn’t effectively a 100% chance that I receive full funding for my eligible healthcare bills.
When I submit a bill, I know it will be fully funded because my generosity score is 98%. In three years, I denied one funding request. And that was just to see what would happen. When a member denies a request, it goes to another member, and that bill can still get fully funded. I won’t deny any more requests.
Origin story
Ironically, the US healthcare system got so twisted and painful that it catalyzed the creation of new way.
After selling his first company, Andy moved from Ohio to Texas. “I thought I was going to play a lot of golf and eat a lot of tacos,” he said on a podcast with Bridget Phetasy.
“Because I sold my company, I didn’t have health insurance. I went on Obamacare thinking that was my only option. I joke, It worked until I had to use it. My little one, who was 1 at the time, was having recurring ear infections and needed tubes in her ears. She had a hole in her eardrum. The ENT said go get tubes in her ears, it will correct it. So we went and got tubes. We got the bill, and it was $8,000. For a 15-minute procedure.
I was like Holy crap, 8 grand for 15 minutes? That's nuts! And then I got a note later from the insurance company that said they weren't going to pay for it. It was “medically unnecessary”.
On the CrowdHealth website, Andy writes:
I realized the system was broken and decided to create CrowdHealth, a more compassionate and reliable alternative to pay for healthcare.
Traditional health insurance is often impersonal and unreliable, with twisted incentives. At CrowdHealth, we're changing the narrative. We treat our members like family, assisting them on their health journey, and managing their bills at an affordable cost. We're creating a system where the focus is on keeping our members healthy, rather than profiting from their illnesses.
Price gauging, double-billing, and deceptive business practices have become commonplace in the healthcare sector. Somehow, business people in the legacy healthcare system have the audacity to not tell customers the prices, then make up an insane number just to see if they will pay it. It happens in every state in America, every day. Taking advantage of people when they are at their weakest.
I didn’t understand how the healthcare system got so messed up until I hosted a podcast with Andy. He explained that:
In the private insurance model: the buyer of healthcare (insurance) and the seller (hospitals) both want a high prices. Higher and higher, every year.
How that happened:
Insurance corporations legally must make more and more profits for shareholders. This is the “fiduciary duty” of the executives and board of directors.
The Unaffordable Care Act mandates that insurance companies spend 85% of premiums on healthcare, effectively capping their profits at 15%.
The only way for profits for shareholders to keep going up (which legally they must do) is for healthcare prices and doctor visits to keep going up. More and more. Every year. As required.
The United States stumbled into a system of regulations and warped incentives where we have artificial insurance prices increasingly deviating from the self-pay market price. For example, in 2022, I went to a pharmacy for prescription pills. They said it would be $225. But that was the “insurance” price. I didn’t have insurance, so they told me the actual market price. $10.
There is a “gag clause” in the contract between pharmacists, pharmacy benefit managers, and insurance companies, preventing pharmacists from telling customers that the self-pay price is substantially less. In some cases, the market-price is less than the customers co-pay. Only after a customer says that they don’t have insurance, can the pharmacist reveal the self-pay price. This is to protect the profits of insurance companies and PBMs.
“Insurance is the crux of the problem”
Brigham Buhler, founder of Ways2Well, is a former pharma salesman and former pharmacy owner. He explained the system to Joe Rogan. This is an incredible clip.
There's the insurance company, then there's the pharmacy benefit manager. Pharmacy benefit managers are a middleman between the insurance companies and big pharma. They were put in place to negotiate the price of pharmaceutical drugs for the average American because so many drugs were coming into the marketplace the government couldn't decipher what drugs make sense, what should we cover, what should we not cover. So they allowed Pharmacy Benefit Managers to do that. Within a decade the big insurance companies went out and acquired Pharmacy benefit managers. Within a decade from that date, the PBMs began to negotiate rebates to themselves, not discounts to the patient.
The margins are made in the mystery.
The more confusing the insurance companies can make it and the more convoluted they can make it, the more profits they can make.
My buddy [an employee] who has MS, his treatment is $14,000 a month. I have 260 employees across both organizations. We met with the insurance company. They're raising our rates because they claim they paid $14,000 a month for his drug. He had a huge out- of-pocket burden on that drug but was happy because he thought, Well hey man, it was going to be 14k and I only had to pay X. And then they never paid the 14k because they negotiated a rebate on the back end. And then they turn around and they mark up my insurance plan for all my employees every year, year after year.
It is a profit driven system, not a patient outcome driven system. That's all I'm trying to hammer home with patients. [They] say, Why don't you take insurance? Because insurance is the crux of the problem. You cannot operate in that ecosystem and provide quality care. You can't. Everything's controlled, everything's dictated. It’s terrible.
A lot clinicians don’t know about PBMs. The only reason I know is because I’ve been in every aspect of this business. I would get into it and go, now I get the magic trick. I understand what your doing here, how your moving and shifting profits, monetizing disease states.
If I can monetize your diabetes. Why would I cure or prevent your diabetes?
The insurance system incentivizes exorbitant prices and chronic illness, and that’s the result we got, and what we will keep getting until a new system supplants it.
The dual payment crowdfunding model (flat rate to CrowdHealth, variable rate to health expense) is the best new system I know of, for getting better patient outcomes, at a lower price. The healthier we are, the less it is per month, per member. The better of a job CrowdHealth does, the healthier we are, the less we way pay, the more people join and stay, and the more money CrowdHealth makes. They are financially incentivized to keep members healthy. This is important.
Incentives drive results. Show me the incentives and I’ll show you the results.
I don’t know of a system with better aligned incentives. This structure is not patented by CrowdHealth. And frankly, it’s working very well. The crowd has 10,000+ satisfied members and it’s only three years old. As far as I know, no one else is doing this. It’s just a matter of time before a competitor comes along, and I hope that they do soon. Competition is a good thing. If I were an audacious entrepreneur looking for what to work on, I’d consider a competitor to CrowdHealth.
Similar to how Tesla can’t convert the entire world to EVs, CrowdHealth can’t serve the entire market. Other people can do this and innovate. There might be an even better way that we haven’t discovered yet. In fact, there almost certainly is.
CrowdHealth is not legally classified as insurance, which means it can exclude metabolically unhealthy people: Fat people and smokers. If you’re over 260 pounds, you can’t join. You have to lose the weight to get in. And people do it.
There’s a clear-cut massive financial benefit to losing the weight because CrowdHealth is so much less expensive than an insurance policy. If the person drops from 280 to 260, and they aren’t a smoker, they can save thousands of dollars every year, and get a better healthcare service.
Building a new ship
America’s health has been in decline for fifty years. Reports from the failing CDC are tragic. People are dying prematurely. People are going bankrupt unnecessarily. The legacy system is irreparable, and that’s okay.
We are building a new ship, and taking it to the moon.
America will once again live among the healthiest countries in the world. We are seeing to it.
As Tesla was the catalyst for the electric vehicle market, CrowdHealth could be the catalyst for draining the insurance swamp, and putting power and capital back in the hands of patients and providers.
The crowdfunding model, or something even better, is essential for the future of amazing healthcare. This model motivates placing preventative, functional, and naturopathic medicines before allopathic medicine. As opposed to shunning the former and going straight to the latter.
There are dozens of emerging health technologies and healing modalities, from digital super-intelligence to OTC CGMs. I will write and publish about them here.
But applying new tools to a system with misaligned incentives is adding fuel to a fire that isn’t cooking what we want. Like upgrading the hardware of a system that lacks software to do what we want it to do: keep us healthy, and make us healthy when we aren’t, efficiently. The current dominant system is not optimized for that.
Changing the underlying software is the key.
I tell a lot of people about CrowdHealth. The number concern: would this work for large bills?
At the cafe in Austin, Andy said, “Did I tell you about the guy in Montana who shot himself?”
Part 2 is coming soon.
You can join CrowdHealth at discount with this link.
Epilogue
I shared a draft with a group of writers in a workshop hosted by
. Someone emailed me after: “Just wanted to say thank you for sharing the info about CrowdHealth. This is what I’ve been wanting my whole life.”I shared a draft with my friend, Emily. She told me her daughter’s prescription medication is $10,000 per month.
I blurted out laughter. That’s just so ridiculous.
It’s a fake price. They just make that up. If left unchecked, they’ll make the price $100,000 per month. They pass it along to customers by raising premiums. They need to do that to increase profits.
In wrote about this in my book All Outcomes Are Acceptable:
The premium, the deductible, the co-pay—they want you to pay three times. They want you to pay absurd medical bills.
I went to the pharmacy to get prescription pills. “$225,” they said.
“For some pills?”
“Who’s your insurance?”
“I don’t have insurance.”
“Oh, okay, hold on… It’s $10.”
“What is this insane business you scammers are running?”
I’m not fighting the old system, I’m opting out. Self-pay. The future of crowdfunding large health expenses is crowdfunding large health expenses.
Other Resources:
met Mangione wrote about the him and the murder. argues it’s the providers screwing us because they are overcharging.“The actual people charging you an arm and a leg for your care, and putting you at risk of medical bankruptcy, are the providers themselves”
But insurance companies actually need and want higher and higher prices to increase profits shareholders, as they are legally required to do. They like the high prices, which is why they pay them.
Matt points the finger at insurance companies in this article.
“I think it is totally fair for people to identify private insurers as the key bad actor in our current system. They are directly responsible for over half a trillion dollars of administrative waste and (at the very least) indirectly responsible for the provider rents that are bleeding Americans dry. The quicker we nationalize health insurance, the better.”
Much of health insurance is already nationalized via medicare and medicaid. Nationalizing the entire market (if that were even practically possible at this point) would run the risk of gaining the problems that Canada and England struggle with. Large governments are often bad at running things. There is no competition or incentive for greatness. Do you like your DMV experience?
I think, before advocating for total nationalization of insurance, writer Matt Bruenig could consider the CrowdHealth’s crowdsourcing model as part of the solution.
If I was to point a finger, it would be toward the people wrote and voted for the Unaffordable Care Act, specifically the people who wrote the clause mandating that for-profit insurance companies must spend at least 85% of premiums. I would suggest deleting that part, immediately. And deleting Pharmacy Benefit Managers. And make enforce price transparency and no double billing in healthcare, just like any other industry.
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Loved this article, learned new things about the health care system in the U.S.
Check out Unhealthcare, solid book. Very much along these lines. Thanks for sharing man!