Sidecar Health has emerged as a significant player in the rapidly growing field of healthcare technology startups, achieving a valuation exceeding one billion dollars.

This assessment follows a recent funding round of $125 million, which the company intends to utilize for the continued development of its innovative approach to health insurance. Sidecar Health’s insurance options empower individuals to directly cover their healthcare expenses, frequently at considerably lower rates than those offered through conventional insurance plans.

The average cost of a Sidecar Health plan is $240 per member each month, and its adaptable nature has resonated with the estimated 20 to 30 million Americans who currently lack health insurance, as stated by chief executive officer Patrick Quigley.

A central feature of Sidecar’s plans is the ability for policyholders to directly pay for medical services and actively seek out the most affordable providers, utilizing price information readily available through the company’s mobile application.

The Sidecar app delivers up-to-date, location-based pricing details for a wide range of medical services, consultations, and medications, enabling users to identify the most cost-effective options. In certain instances, the company will even reimburse users if they discover a lower price.

While this system may appear unconventional, it reflects the realities of the American healthcare landscape.

Ideally, affordable medical care would be universally accessible, and a fundamental level of healthcare would be guaranteed to all, including fixed pricing for services and prescriptions. However, in the current U.S. system, actively seeking out affordable care may be the most effective way to manage rising healthcare costs—at least for the time being.

Although Sidecar’s services are designed for a broad audience, the typical member is 33 years old, according to Quigley.  “Individuals with annual incomes between $45,000 and $75,000 are commonly represented within our member base,” Quigley explained regarding the company’s customer profile.

The process involves Sidecar providing its members with a debit card to directly pay for care, prescriptions, and consultations. Funds are drawn from Sidecar’s claims accounts and disbursed directly to healthcare providers. By bypassing traditional insurance companies, Sidecar reduces overhead for providers who prefer direct payment and are willing to offer discounts for immediate funds.

“This represents a 40% reduction in cost compared to what traditional commercial insurance companies would typically pay,” Quigley stated.

Sidecar’s coverage encompasses approximately 170,000 medical conditions and procedures, ranging from therapies like equine therapy for anxiety to complex treatments such as heart transplants and chemotherapy, as noted by Quigley.

Currently, Sidecar is operational in 16 states and aims to expand its availability nationwide with the support of its latest funding.

Beyond serving the uninsured population, the company intends to integrate with government-sponsored healthcare programs and extend its services to employer-sponsored health insurance plans.

The service is still in its early stages, having completed only two open enrollment periods for prospective members. While the company does not publicly disclose its membership numbers, Quigley indicated that it anticipates exceeding 30,000 members by the end of the year.

“We are still in the very beginning stages,” Quigley added. 

Despite its early stage, investors are confident in the potential of the business model to reshape the health insurance industry in the United States. 

“The exceptional transparency that Sidecar Health introduces to the market has the capability to significantly alter how millions of Americans approach healthcare purchasing,” remarked Molly  Bonakdarpour, a partner at Drive Capital, an early investor in the company. “We believe Sidecar Health’s team, comprised of experts in consumer technology and healthcare, is well-equipped to capitalize on the substantial insurtech opportunity within the healthcare sector.” 

Drive Capital was joined in this funding round by new investors including BOND, Tiger Global and Menlo Ventures, as stated in a company release.

Sidecar Health will allocate the investment to broaden its geographic reach, expand its team, and develop new insurance products building upon its success within the uninsured market. The initial focus will be on offering an ACA, or “Obamacare,” plan for 2022, followed by a product tailored for the self-funded employer market. 

“We are confident in our ability to eliminate $1 trillion in waste from the U.S. healthcare system,” Quigley concluded.