Minneapolis-based Bind Benefits says it has raised $105 million to support the startup company’s continued growth in the market where employers buy health insurance.
Last month, Bind announced plans to start selling coverage to employers with 50 or more workers seeking “fully insured” coverage — a new set of customers beyond the company’s initial business providing administrative services to “self-insured” employers that take the risk for health plan costs.
The coverage is sold in partnership with Minnetonka-based UnitedHealth Group, which operates the giant health insurer UnitedHealthcare. The company is one of three previous backers at Bind who also are providing the latest round of financing, said Tony Miller, Bind Benefits chief executive, in an interview.
“We call it a Bind plan, and the [fully-insured] coverage will be sold as Bind, but in terms of the compliance and regulatory requirements, United really acts as our muscle there and they also will be our risk-based capital reserve,” Miller said. “So, as we build membership … United builds the risk-based capital so the regulator knows that the insurance company is solvent.”
Regulators monitor risk-based capital levels to make sure health plans have enough money to pay claims. Whereas other startup health insurers have used venture money to build capital reserves, Miller said he believes the partnership with United is a more efficient capital strategy.
During a call this month with investors to discuss third-quarter earnings, UnitedHealth Group chief executive David Wichmann mentioned Bind as one of a “growing set of consumer-centered, innovative and flexible offerings” at UnitedHealthcare.
Bind structures coverage according to a “personalized health plan approach,” Miller said, where consumers don’t face deductibles or coinsurance fees that leave them unsure what they’ll ultimately pay out of pocket. Instead, enrollees in Bind health plans pay different copays based on the services they need and the clinics and hospitals they want to use.
“As they start to use coverage, we’re showing them where is it that you could find more affordable care or what kind of care should you be consuming given the condition you have,” Miller said. Compared with standard health plans, “that very personalized journey that we build as they use the benefit is very different,” he said.
Consumers use an app to consider care options and prices. Bind also provides claims processing and service to health plan members.
As part of the UnitedHealthcare partnership, Bind health plans use a network of health care providers established by the large insurer. The startup also uses United’s data, Miller said, for structuring consumer subsidies to steer patients toward providers based on their cost and quality performance.
Miller co-founded and was chief executive at Definity Health, a St. Louis Park-based company that developed what are called “consumer-directed health plans.” They were part of a movement in the 2000s that eventually coupled high-deductible health plans with health savings accounts.
UnitedHealthcare’s parent company agreed in 2004 to acquire Definity Health for $300 million.
In total, Bind says it has raised nearly $250 million, excluding debt. The company is now selling fully insured health plans in Florida and expects to offer the coverage in more than 30 states by the end of 2021.