(Bloomberg) — Startup Bright Health is betting it can compete in the lucrative market of covering seniors as congressional debate keeps the future of the individual major medical market in limbo.
Bright Health is preparing to offer Medicare Advantage plans in three markets next year in close collaboration with local health systems: Birmingham, Alabama; Phoenix, Arizona; and the Denver-Boulder area of Colorado. The company offered individual major medical plans in that area of Colorado this year, but is holding off on expanding amid doubts over the Affordable Care Act's future.
"We've been reticent to jump into that individual marketplace, but the Medicare marketplace we think is perfectly suited for this type of option," said Bob Sheehy, the company's co-founder and chief executive officer. "We can offer better benefits for consumers at a better price."
Startups are increasingly betting on Medicare Advantage, as they see a growing population of senior citizens opting for the privatized version of the government's traditional Medicare program. That pits the young companies against major insurers like UnitedHealth Group Inc. and Humana Inc., which already have millions of customers in the government-funded program.
Investors have rewarded the newcomers. Startup insurer Clover Health, which offers Medicare Advantage plans in New Jersey, was valued at $1.2 billion in a recent funding round, Bloomberg reported. Closely held Bright Health, which sold its first health plans for this year, has already raised $240 million from investors, most recently announcing in June that it landed $160 million to help fuel its expansion plans.
Sheehy said Bright Health may also begin offering individual major medical plans in the Birmingham area for 2018, if it can gain enough clarity on health policy. Republican lawmakers are currently working to repeal and replace portions of the Affordable Care Act, often called Obamacare, fostering uncertainty about the shape of the markets next year.
To start its health plans, Bright Health partners with a local health system, which takes on responsibility for caring for the company's customers. In Colorado, the company teamed up with Centura Health for its Affordable Care Act and Medicare Advantage plans. It's partnering with Arizona Care Network in Phoenix and Brookwood Baptist Health in Birmingham.
