I’ve heard people joke that Google only has a few successful businesses, mostly advertising. But it may have found another hit: insurance other companies against the potentially expensive medical care of their employees.
The information reports that its healthcare business, Verily, has more than doubled its revenue to become Alphabet’s largest subsidiary after Google — and that its health insurance business, Granular, is the biggest contributor to that growth. Granular’s revenues “increased nearly sixfold to $151 million in the first nine months of last year, from $27 million a year earlier,” it writes. The information.
But Granular doesn’t sell health insurance to employees. It sells “stop-loss” insurance employers who fear that their own employees’ medical claims could harm them.
Look, not every company helps their employees pay traditional insurance premiums, where your doctors bill UnitedHealthcare or Anthem or Aetna for your care (although those companies can be intermediaries anyway). Some think it would be more cost effective to “self-fund” and pay for employees’ medical claims out of pocket.
Anyway, Google/Alphabet/Verily’s Granular Insurance is one of several stop-loss insurance companies that promise to pay claims above a certain dollar threshold in exchange for their own regular premiums. Yes, that means companies that sign up for insurance pay instead of insurance — they’re betting that most employees won’t have enough claims to justify traditional insurance premiums, but they’re also betting that some employees might have huge ones.
What makes Granular different from other stop-loss providers? That is less clear. The company advertises that “Granular uses an intelligent framework to better protect self-funded employers from the cost volatility of a workforce with diverse health-related needs,” but I think that just means it’s cheaper. I dug up some local government meeting materials from the San Joaquin Valley Insurance Authority in Fresno County, California, and they mostly seemed to consider Granular to replace their existing stop-loss provider because the offering was competitive.
But maybe it’s more competitive because Google thinks its data makes for more accurate bets. The San Joaquin Valley Insurance Authority notes that Granular would provide its service alongside “Point6,” which appears to be this company that says it provides “executable and integrated solutions aimed at the 0.6% of the workforce that makes up 35% of the employers control “health care spending.”
Either way, it’s not exactly the image I typically associate with Google’s health efforts. Originally, Verwaar was most closely associated with the dream of a smart contact lens that has long since been shelved.