New health insurer thinks an ounce of prevention will mean a pound of profit

Eric Wahlgren

That health insurers don't like it when you actually use your insurance is an open secret. In fact, industry veteran Martin Watson freely admits that avoiding member phone calls and insurance claims is standard industry practice. The former executive with Aetna (AET) and United HealthCare (UNH) says traditional insurer thinking goes something like this: "I really hope you don't call and you don't go see the doctor and I will make lots of money off of you in the first year." Of course, by the time the year is up, there's a good chance that you'll have already switched to another insurance plan, becoming someone else's problem.

So why is Watson bashing the very industry that has signed his paycheck for the last 17 years? (There are surely plenty of people willing to do that for him, including doctors, patients, consumer advocates, DailyFinance's own physician-columnist Russell Turk and most recently, the White House.) The truth is, Watson is starting up a new insurance company that, he says, actually wants you to call -- and to see a doctor. How will SeeChange Health make a profit like its bigger rivals? Watson says the trick is using financial incentives to encourage members to get treated for problems sooner rather than later. In theory, that means claims -- when they're filed -- would cost less.