Market/Industry Overview
The healthcare market in US is huge, 18% of 2019 GDP or $3.8T huge! And it is growing at a faster rate than GDP. Medicare makes up a substantial portion of that market ~$900B, with 10,000 new individuals becoming Medicare eligible every day.
For those who are not familiar, Medicare is the U.S. federal health insurance program for Americans aged 65 or older and certain younger people with disabilities, this "Original Medicare" program is operated via the Centers for Medicare & Medicaid Services (CMS) agency. Government allows private companies to contract with CMS and provide coverage to that population through Medicare Advantage (MA) plans. These MA plans provide good value vs Original Medicare as they often include prescription drug coverage, reduced cost-sharing and out of pocket maximums unlike Original Medicare.
Currently 36% of the total Medicare-eligible population is enrolled in MA plans, and according to L.E.K. consulting that percentage is expected to rise to 50% by 2025 and 70% by 2040, resulting in the Medicare Advantage market to grow from $270B in 2019 to $590B by 2025 i.e. 14% CAGR (source: Clover Health S1).
Defining the Problem
The main criticism on the healthcare system is the that despite the huge spending the outcome has not necessarily improved, be it in terms of life expectancy (US life expectancy has barely budged over last 10 years @78 yrs, source: U.S. Life Expectancy 1950-2021) or in terms of general health of the population (chronic illness, obesity continues to grow).
Healthcare is also riddled with lot of criticism on wasteful spend, according to National Academy of Medicine 30% of healthcare expenditures in 2019 were wasteful i.e. $1.1T. No wonder Warren Buffett compared healthcare spending in the US as a "tapeworm on the economic system".
The view is that better use of data
