HoneyInsured uses economic algos to broke Obamacare plans
HoneyInsured has launched to the general public, offering users the optimum health insurance plan using algorithms developed at Harvard, and published in the journal Technology Science, to ensure users gain maximum economic utility, and offering the purchaser a clear and transparent choice between plans. The startup is one of over 50 web brokers that hooks up to the Healthcare.gov API and offers consumers an alternative route to getting insurance under the Affordable Care Act. 

The world is glutted by economic research. How do you help people use it?

Earlier this year, Grace Gee and Eugene Wang, two math undergraduates at Harvard, sorted though data recently released from health-insurance marketplaces opened under the Affordable Care Act. In the 34 states they examined, they distilled a disturbing trend: Between 2014 and 2015, the largest insurance company in every state increased premiums by more than 75 percent compared to smaller insurers.

This effect didn’t seem to correlate with increased benefits for the consumer. “The largest insurance companies do not appear to be paying for higher medical costs per premium dollar versus smaller insurers in the reported experience period of 2013,” they found. Gee and Wang’s paper was published in a Cambridge-based journal, Technology Science, and it’s since been cited in Congressional testimony.

But wait! You, the reader, know their finding implies bad things. Yet already your eyes are glazing over—health insurance is important, and you maybe even buy it through Healthcare.gov or a state-level exchange—but this kind of macro-level finding is difficult to include in your insurance comparisons. Are you even buying from a “large” company? If so, is your company even part of the trend?

Gee and Wang anticipated this problem, and they did what any two STEM-inclined Harvard-trained Millennials would do. They made a startup.

Their company, HoneyInsured, launched last week. In its current form, it’s a website that ties into the Healthcare.gov back-end API, meaning that consumers can order insurance from it like they would the government’s more famous site. There are more than 52 of these “web brokers,” as the government calls them, independent sites and companies that mirror Healthcare.gov functions.

Many of these brokers tout their simplicity: Instead of asking people a lot of questions upfront, they only ask about the information absolutely needed. (Over the past two years, Healthcare.gov has adopted a similar tack.)

HoneyInsured is unusual in that it recommends a health-insurance plan at the end of that process. This suggestion takes Gee and Wang’s research into account. It’s also alone among web brokers, Gee said, in displaying the size of a plan’s network. (Like Healthcare.gov, HoneyInsured can also check to see if specific doctors you already use are included in the plan.)

But HoneyInsured has other features that might make it more appealing to a comparison shopper. On its page of suggested plans, it tells you how much you would additionally pay out of pocket under a plan for certain ailments, like a broken limb, depression, and cancer. It also sorts plans by different kinds of medical costs: If most of your medical costs are via drugs, HoneyInsured finds a plan with a less expensive drug co-pay.

“We have a currency type of calculation trade-off so if you prefer lower risk, we can find you a plan that has a lower max out-of-pocket and deductible,” Gee told me.

And in a feature that mirrors the popular travel site Hipmunk, it plots all plans available to a buyer on a two-dimensional graph, with deductible vs. premiums. This lets buyers emphasize what they would prefer, and it avoids a common pitfall where “a plan [is] worse off than another in terms of deductibles and max out of pocket, but may just be a dollar cheaper.”

What originally got Gee and Wang interested in health insurance was the amount of data there. “A lot of ACA data has been open since it started, but it hasn’t been put together in a real reusable format,” she said. “We got the data, we wrote the paper on it, and now we wrote the website based on that data.”

HoneyInsured will take a commission for selling insurance. Gee told me commissions aren’t factored into the algorithm that suggests plans for users. She also said that user data was temporarily stored and encrypted on its servers before being sent to Healthcare.gov, and that then it was deleted.

HoneyInsured is open now to users in Texas, Florida, Georgia, Ohio, North Carolina, Virginia, Pennsylvania, and Missouri.

This year, more companies than ever before are “web brokers” for the Department of Health and Human Services—hooking into its API and presenting it under a different interface. Popular web brokers include HealthSherpa and GetInsured. Though it may seem like many in government would oppose this trend, they tend to support it. In the future, many open-government advocates see running the API as the government’s role, and running actual interfaces as the role of private developers and companies.

Startups and supporters of open government imagine a world where the government handles data and programming calls, but where private companies make the interfaces to access them. (Healthcare.gov would continue to function as a basic marketplace.) That will allow for many overlapping interests and priorities to factor into web design—presenting an opening for other research-based companies like HoneyInsured.