The news: Digital health start-up Sesame takes place Sesame for employers—a supply of low-cost health services for small and medium-sized enterprises. Previously, Sesame primarily offered direct-to-consumer (D2C) health services where uninsured customers could prepay for care.
A key differentiator: Open Call for Employers allows employers to customize health benefits for their employees for as little as $20/employee/month and claims to be 95% cheaper than the cost of insurance.
- Since the offer is customizable, employers can choose the benefits that best suit their budgets and needs, as opposed to traditional insurer benefits that offer predefined options.
- Sesame benefits for employers can include same-day appointments, unlimited telehealth appointments, access to Sesame’s network of specialists, mental health services and digital prescriptions.
- Employers can set up their workers with Sesame’s health benefits in days. This is very different from the traditional process with insurance, in which there are short and static enrollment periods.
How does he keep his prices low? Sesame’s cash payment model avoids insurance altogether and it has its own network of over 16,000 healthcare providers.
Because of this, it can keep its operating margins low since it doesn’t have to pour money into all the administrative functions of traditional insurers (like negotiating prices with suppliers and handling claims ). Instead, it offers a direct, transactional model and does not require navigating an administrative maze to determine care costs and what is covered/not covered.
In addition to healthcare, last year he launched his low-cost online pharmacy, where he offers more than 200 FDA-approved generic drugs for $5, free shipping across the United States — no insurance required.
Why it might work: By targeting small and medium-sized businesses, Sesame touches a market segment that is sometimes overlooked by employer-sponsored health plans.
- Most U.S. Employers (87%) believe that the cost of health benefits for their employees will not be sustainable in the next 5 to 10 years, by a 2021 KFF-PBGH survey – and smaller employers are worse off.
- This means that the 60.6 million US employees working for small businesses are at greater risk of losing their access to health care.
Small businesses are also scrambling to meet employee demands, and turnover rates are rising amid the big quit: 8 in 10 employees said health care was among the top three benefits, by Marathon Health 2021 survey of 1,100 US employees. This means that employees will weigh heavily on health benefits when considering whether to stay or leave a job in a competitive job market.