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Collective Health Introduces a New Model for Employer Health Insurance

Launching today, Collective Health introduces a new solution for employer-sponsored health insurance. Collective Health provides companies with a simple solution to sponsor health care on their terms by extending the benefits of self-insurance to companies of all sizes, without the complexity or expense that is traditionally associated with the self-insurance process. The company has raised a series A venture investment led by Founders Fund with participation from Formation 8, the Social+Capital Partnership, and prominent angel investors including Scott Banister, Max Levchin, Jeremy Stoppelman and Amr Awadallah.

Health care spending, and health insurance premiums in particular, are increasing at an unsustainable rate, with spending on health care growing twice as fast as overall GDP1. With over ninety percent of private health insurance paid for by employers, companies have borne the brunt of these increasing costs and have until now been held hostage to rapid and unpredictable increases in traditional health insurance premiums2. Collective Health was created to offer companies a better way to control and manage health care costs, while offering superior health coverage uniquely tailored to the needs of American workers.

“While insurance is supposed to be a risk-sharing business, health insurance has increasingly become a middleman business ­ devised to generate profit for the health insurers above all else. As a result, there is a fundamental disconnect between the incentives of traditional health insurance companies and people’s and organizations’ health insurance needs,” said Ali Diab, co­founder and CEO of Collective Health. “At Collective Health we have created a complete replacement for employer-sponsored health insurance: a replacement that is focused on people's and organizations’ health and happiness, not on health insurer profits.”

Collective Health’s cloud-based self-insurance platform extends the benefits of self-insurance to businesses of all sizes, bringing technological innovation and efficiency to an industry infamous for its opaque business practices, antiquated technology and processes, and unpredictable price increases. Additionally, Collective Health’s solution is underscored by a user experience that is built from the ground up for the people it was designed to serve – employees and their dependents.

Delivered as a software-as-a-service (SaaS) solution with a flat-fee pricing structure, Collective Health provides employers of all sizes with a fully integrated health self-insurance platform – including actuarial analysis, customized health plan design, legal and regulatory compliance, plan funding, claims administration, health provider network access and real­time data analytics – all in one seamless package.

Self-insurance provides true transparency into the real costs of health care and substantial financial savings and cost control compared to traditional health insurance, as evidence by the ninety-four percent of large US employers that self-insure their employee health plans today3. Yet, until today, self-insurance has not been a viable option for most businesses due to the complexity and high fixed costs associated with establishing a self-insured employer-sponsored health plan. Collective Health makes self-insurance easier than buying a fully-insured health plan, giving employers a clear path toward health insurance independence.

Through Collective Health, employers and employees have access to a single, unified platform to view and manage their health care activities and costs, direct access to real-time customer service, and health plan features and descriptions that are presented in clear, unambiguous language. Collective Health self-insured plans are optimized by employers to meet the unique needs of their employees and can be integrated with popular perks such as telemedicine, nutrition programs, gym memberships, free rides to doctors’ appointments and more.

"Fundamental reform is long overdue in the health insurance industry,” said Scott Nolan, Partner at Founders Fund. “Collective Health is challenging the status quo of the entire private health insurance industry, using technology to dramatically bring down costs for employers of all sizes while providing higher quality care to employees and their dependents."

Collective Health was founded in late 2013 by Ali Diab, previously Vice President of Product Management and Business Operations at AdMob, acquired by Google in 2010, and by Dr. Rajaie Batniji, a physician and political economist on faculty at Stanford University. The company is headquartered in San Mateo, California. Collective Health is currently enrolling companies for a January 1, 2015, health plan coverage start date. For more information, please visit collectivehealth.com.

1 National Health Expenditure Projections 2010-2020, Centers for Medicare & Medicaid

2 2013 Employer Health Benefits Survey, Kaiser Family Foundation

3 2013 Employer Health Benefits Survey, Kaiser Family Foundation

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