Telemedicine explosion during COVID should cut insurance premiums: startup CEO

A surge of inflation amid COVID-19 has raised the price of just about everything, including eggs, jewelry, and furniture. But a pandemic-driven trend in medical care should reduce the cost of one essential item that bedevils many household budgets: health insurance.

The rise of low-cost, high-convenience telemedicine in recent years will cut health insurance premiums, said Jonathan Bush, the CEO of a health care software startup called Zus Health.

Insurers will increasingly offer "crossover" insurance that pairs the reduced cost of telemedicine with more costly in-person exams or procedures, said Bush, a 25-year health care industry veteran who formerly served as CEO of the firm Athenahealth.

When asked whether the explosion of telemedicine during the pandemic should reduce health insurance premiums overall, Bush said, "For sure."

"A lot of great companies are stacking the full product that we're used to seeing, but with digital offerings in the stack that change the price point," he said.

The shift to telemedicine doesn't result in "less care" for patients but affords flexibility for doctors, he added. Instead of seeing patients for every appointment, physicians can "whip [up] a text during a red light," he said.

The use of telemedicine increased dramatically during the pandemic. In 2020, the share of medicare visits conducted through telemedicine jumped 63-fold, from about 840,000 in 2019 to 52.7 million the following year, according to a report from the U.S. Department of Health and Human Services.

By February 2021, telemedicine appointments had leveled off but still accounted for a share of U.S. insurance claims 38 times larger than it had pre-pandemic, a McKinsey & Company report found. Virtual medicine could become a $250 billion industry with "sustained consumer and clinician adoption," the report said.

"The difference in being able to stream in the right specialist just the information needed, as opposed to send them off and take a half a day off of work and fill out the forms and do the old way is really profound," Bush said.

In response to the shift toward telemedicine, 22 states changed laws or policies to require improved insurance coverage of virtual medical visits, according to a report from The Commonwealth Fund.

Bush, who chairs the board of health insurance company Firefly Health, said the firm sells coverage "for 30% less than the prevailing market" due to its focus on telemedicine. Though patients covered by the insurance can seek in-person treatment as needed, he said.

Firefly Health is "licensed in 50 states and their whole deal is if we can deliver it to you virtually, we'll give you no copay and no deductible," he said.

"If you let us book the things you need, you can still use the network and pay your regular copay and deductible," he added.

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