Decent likes to mix things up. Instead of just putting out a press release about their fundraise, they decided to take it in a different direction.
First off - who am I?
I don't work here - I’m just a healthcare nerd writing the foreword to Decent's next chapter (for money, obviously).
The moolah
Look, most people read a press release to figure out how much a company raised and what they do. Let’s get the first part out of the way: Decent raised $10M in a Series A round. And no, there’s not going to be a valuation in this press release, get real.
But it’s not just the people reading a press release who have demands, investors have them too. So there’s always a long list of people that need to be thanked for their money.
inhales deeply
This round was brought to you by QED Investors, Foundation Capital, Vulcan Capital, Santander InnoVentures, Asset Management Ventures, Core Innovation Capital, Future Positive, Sure Ventures, Healthy Ventures, Meridian Street Capital, Precursor Ventures, Maverick Venture, AirAngels, Unpopular Ventures, Work Life Ventures, Necessary Ventures, Digital Currency Group, various angels, and CEO Nick Soman’s mother (who invested emotionally).
Now we can get into the fun part of the press release - what does Decent actually do and why do they need $10M to do it?
How Traditional Health Insurance Works
Decent is making health insurance plans cheaper for small businesses and entrepreneurs. But to understand why Decent can do this, It’s worth stepping back and talking about health insurance in the US:
- Health insurance carriers have to follow a requirement called a “Medical Loss Ratio”, which says they’re only allowed to keep up to 20% of the money they collect in premiums while the other 80% has to be used to payout claims. The intent was to make sure insurance carriers didn’t hoard the money and deny claims. The unintended consequence is that in order to increase revenue they have to keep increasing premiums (20% of a bigger number is bigger, math!). So that’s what they do.
- 90% of large companies have realized they can save a bunch of money if they actually pay for the medical costs of all their employees themselves instead of using a health insurance company. They have lots of employees, so they can spread the risk out themselves (they usually buy something called stop loss, which is like insurance for insurance, in case lots of employees get sick from something like, oh I don’t know, a global pandemic). This is called self-insurance, and it’s governed by a different set of rules than regular insurance, including not needing to deal with that medical loss ratio stuff.
Here’s the thing that sucks. If you’re a small business or entrepreneur shopping for health insurance, you don’t have access to those same benefits that large companies have.
This is where Decent comes in.
What Does Decent Do?
Decent is making health insurance affordable for small businesses and entrepreneurs by offering plans that have premiums that are 40% cheaper than existing health insurance carriers. Decent plans also include unlimited primary care in the cost of your monthly premium.
Heres’ your immediate next step:
Decent is cheap for two big reasons.
The first is by giving small businesses the same exact tax and insurance plan benefits that large companies get when they self insure. Decent does this by partnering with an association (the Texas Freelance Association) to form a legal structure similar to what large companies use to enable “self insurance”, just this time small businesses everywhere can get in on the action.
Just like a self-insured company, Decent makes more money when you save money on healthcare. This means their incentive is to lower your costs, not raise them.
Second, Decent invests more in primary care to keep you healthy, and has a narrower network of specialists, vs. large health insurance carriers that are focused on having a broad network so you can see any doctor. Decent thinks you shouldn’t have to put pants on to go see the doctor, and neither do their members. 64% of members choose plans built around virtual primary care.
Decent has strong network partners including Costco Health Solutions and HCA (that’s Hospital Corporation of America AKA the biggest hospital system in the US), to get you what you need (lab testing, surgeries, drugs, etc.) for a cheaper price than you could get on your own.
When you do those two things you can cut the cost of insurance without discriminating against sick people or limiting coverage of goods and services. Patients and doctors seem to like Decent so far, with a Net Promoter Score of 73 and plan sales tripling in the last several months.
The bets being made
I can already hear it now.
Every startup is essentially making a few critical bets that they hope pan out. Here’s what Decent is hoping.
Short-term
- Small businesses will be willing to choose a plan with a small, but vetted specialist network and a larger focus on primary care.
- They can cut the cost of insurance without discriminating against sick people or limiting coverage.
- They won't get squished by massive insurance incumbents with the country's 2nd largest lobbying body.
- Universal healthcare isn't right around the corner.
Long-term
- Primary care in the future is going to be mostly virtual.
- America will join every other developed nation in decoupling healthcare from employment.
What’s next?
Now that they’ve raised funding, the first thing Decent is going to do is throw a party. Just kidding - we’re all social distancing and there’s a ton of work to be done anyway.
Decent is expanding to offer its plans Texas statewide for 2021 open enrollment. They believe everyone should have access to affordable plans, and we have never felt it more acutely than right now.
Today, we’re seeing the long overdue deconstruction of the current American health insurance system, and Decent thinks it can be part of the solution. Will it be easy? No. Will it be meaningful? Definitely.
If bringing affordable health plans to the small businesses and entrepreneurs is something interesting to you, you should reach out to nick@decent.com. There’s never been a better time to rethink health insurance.
