A health plan that incentivizes employees to use health care services wisely can lower costs for employers and workers alike. Everybody agrees with that basic idea, but a Minneapolis-based insurance company is showing how it actually works. Gravie, founded by serial health care entrepreneurs Abir Sen and Marek Ciolko, offers a health plan called Comfort that covers most common health care services at 100%.
“Not just preventive care, but office visits, specialist visits, urgent care visits, generic drugs, labs, imaging, X-ray, blood work—all of those things are covered services for free, with no cost-sharing under Comfort,” says Ben Simmons, Gravie’s chief strategy officer. “It gives a lot more value to everybody on Day One, so people don’t feel like they’re getting nickel and dimed from copays and deductibles.”
The health plan, which launched in 2018, seeks to help employers grapple with the ever-increasing challenge of health benefits. According to the most recent Employer Health Benefits Survey conducted by Kaiser Family Foundation, the average annual premium for employer-sponsored health insurance in 2021 was $7,739 for single coverage and $22,221 for family coverage.
Premiums increased 4% over the previous year, although inflation increased just 1.9%. Because most people do not reach their annual deductible, they see little value from a benefit that costs so much, says Libby Johnson, Gravie’s marketing director.
“Most traditional plans are actually only serving something like 10% or less of the employees who are on the plan,” she says. “So a whole bunch of people are paying a lot of money but only 10% are getting value.”
In the Comfort plan design, the deductible concept is replaced with an out-of-pocket maximum. While doctor visits and other routine care are covered in full, employees must pay for hospital care, procedures, and surgery, up to an out-of-pocket maximum. Most of Gravie’s clients offer their employees three out-of-pocket maximum options, corresponding to varying premium levels.
“Depending on the client, we have a range of options all the way from $500 out-of-pocket maximum per person on the rich end to $7,900,” Simmons says.
The plan design encourages employees to use services wisely. An urgent care visit is free; a trip to the emergency room carries a $250 copay. Generic drugs are free; brand-name prescriptions have a $75 copay. Specialty prescriptions carry a $125 copay until the out-of-pocket maximum is reached.
An employee with a bad cough, for example, is incentivized to get treated at an urgent care clinic for free, instead of waiting until pneumonia develops, requiring an emergency room visit and hospital admission.
“By encouraging people to get care for free, we are actually saving the plan money because they’re not getting more expensive types of care,” Simmons says, citing one customer that saw emergency room use drop by 80% after moving to Comfort. “Even though they were paying a little bit more on urgent care, they saved so much money on emergency room visits that the plan saved money.”
Meanwhile, most covered employees experience lower out-of-pocket costs.
“On average, employees save over $100 per month when they’re on a Comfort plan versus a traditional plan design because Comfort provides more comprehensive coverage,” he says. “Being able to do that at a more competitive premium price point makes the financials really work for both the employer and the employee. That’s a dynamic that we’re proud of.”
How We Got Here
Gravie is one of several health care companies that Sen and Ciolko have launched to innovate in the complicated health benefits space. In 1998, Sen co-founded Definity Health, which offered a high-deductible plan with a medical savings account; UnitedHealth Group bought the company in 2004.
Two years later, Sen co-founded RedBrick Health, a digital health and engagement company that merged with Virgin Pulse in 2018. Along the way, Sen and Ciolko co-founded Bloom Health, a private exchange for health insurance, which was sold to Empyrean Benefit Solutions Inc. in 2016.
In a 2020 interview with Thrive Global, Sen says none of the companies he has founded ended up with the same business model envisioned when the company launched. “The business model is not what makes the company,” he says. “Rather, it’s thoughtful, resourceful people that are determined to solve problems for an industry.”
Gravie continued that pattern. Started in 2013 shortly after the Affordable Care Act passed, the company launched as a marketplace of fully insured individual-market health plans. Employers made a defined contribution to their workers, who used the marketplace to choose the plan that best suited their needs.
That concept lost its luster when carriers started pulling out of some markets and premiums rose dramatically.
“We quickly realized that if the product set did not have the innovation and the price point that we were looking for, we weren’t going to be able to deliver on the experience that we wanted,” Simmons says. “That was the impetus for us to start our own insurance company and become our own health plan.”
How It Works
Depending on the market, Gravie partners with a regional insurer—for example, PreferredOne in Minneapolis—or a national company like Aetna or Cigna to gain access to a provider network for employees covered by Comfort.
Comfort’s “sweet spot” is employers with between 50 and 500 employees. Gravie’s customers, on average, save 19% on premiums when they switch to Comfort, Simmons says. He attributes that to the plan design that incentivizes use of lower cost services, as well as the company’s underwriting approach.
“We invested in a lot of analytics to help us give credit where credit is due for employers that have good risk profiles,” he says. “That allows us to get more competitive because we can more precisely assess employers’ risk than some carriers do.”
Because workers perceive Comfort’s plan design to be of more value than traditional plans, employers typically see more workers opt into the insurance program.
“They want more people to participate in the health plan, and that also stabilizes the risk pool,” Simmons says. “So Comfort is a tool for employers to make their employees happy and to stand out in the workforce.”
Employers can add an additional benefit for their workers through Gravie Pay, which allows out-of-pocket bills to be paid over time with no interest.
“Oftentimes, having a health event where they have some liability can be a real financial hardship because people just don’t have the reserves to be able to pay,” he says.
Gravie Pay allows Comfort members to create a payback schedule, and payments to providers are made via payroll deduction. Paytient serves as the technology partner and credit source for Gravie Pay.