Andy Schoonover: Health Insurance Is in a Death Spiral

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I've been a CrowdHealth member (a TFTC sponsor I'd use either way) for five years. I joined as a family of three, I'm now a family of five, and my monthly cost has gone down roughly 30% in that time while conventional health insurance premiums have gone up 40-50%.

My estimate is I've saved over $100,000. So when Andy Schoonover comes back on the show and starts laying out the structural case for why health insurance is heading toward a genuine death spiral, I'm not a neutral observer. I've already run the numbers on my own family. I know what I'd be paying if I hadn't made the switch.

Andy is the founder and CEO of CrowdHealth. We've had four or five conversations on this show over the last five years, and every time we talk, the gap between what CrowdHealth costs and what traditional insurance costs has gotten wider. This time, the conversation went further than the product, into the mechanics of why the incumbent system cannot fix itself, what Canada's single-payer system looks like from the inside, and why the conditions that push people toward an aha moment are compounding faster than most people realize.

The parallel I keep coming back to is the fish-in-water problem. Most people assume health insurance is the only way to pay for healthcare, the same way most people spent decades assuming fiat was the only money. That assumption is both wrong and expensive, and it's getting harder to sustain at $50,000 a year.

Key takeaways

• Health insurance is in a structural death spiral. Healthy people exit first, stripping the cross-subsidy. The remaining pool is sicker and more expensive. Premiums spike. More healthy people leave. Andy's read is that this is not a rough patch, it's a mechanism that cannot reverse itself.
• The cost gap is already enormous and widening. A family of three in Alabama is now facing roughly $50,000 a year in premiums and deductibles, according to a case shared in Alex Berenson's Substack. Andy puts a comparable CrowdHealth cost at around $5,000, $5,500, roughly a 90% difference, and CrowdHealth's prices have fallen since 2021 while insurance has risen sharply.
• Cash-pay rates demolish insured rates. A $500,000 NICU bill negotiated to around $30,000. A $950,000 bill brought down to roughly $75,000. Healthcare isn't expensive outside the insurance system, the insurance system is what makes it expensive.
• The incentive problem is the whole problem. Insurers profit when they deny claims. Hospitals have oligopoly pricing power because insurers can't walk away from the only two hospital systems in town. Doctors are paid more for C-sections than vaginal deliveries. CrowdHealth built its subscription model specifically to invert these incentives, Andy changed it from a percentage-of-bills fee after reading Satoshi's white paper.
• Canada is the warning, not the model. Six-to-nine month surgery waits, cash billing largely prohibited under the public system in most provinces, and the MAID program as the endpoint of that logic. Medicare for All points in that direction.
• This is a moral decision, not just a financial one. The incumbent system funds an extractive cartel that writes its own regulations, captures media with pharma ad dollars, and lobbies legislators into submission. Continuing to pay premiums means continuing to fund that apparatus. I have moral qualms with it. I think there have been crimes against humanity waged on the populace by some people in this industry.

The Death Spiral in Plain Numbers

Andy estimates healthcare is inflating at 12-13% a year. General CPI is running around 3-3.5%. That gap compounds fast.

The number that made me stop scrolling last week: a reader shared with Alex Berenson that their new health insurance plan for a family of three in Alabama runs $50,000 a year once you add the premium and the deductible together. Blue Cross Blue Shield effectively has a monopoly in Alabama, Andy says. When there's no competition, they charge whatever they want.

Andy's figure for a comparable CrowdHealth family last year: around $5,000, $5,500. That's a 90% difference.

The death spiral logic is straightforward once you see it. The people most likely to drop a $50,000-a-year plan are the healthy ones, the people who aren't consuming much healthcare. They're the ones whose premiums were cross-subsidizing the sick people in the pool. Once they leave, the pool gets sicker, the claims go up, and premiums have to rise again to cover the new reality. That pushes the next wave of healthy people to the exit.

Repeat until collapse.

Andy puts CrowdHealth's member count at around 1,000 when we first talked roughly five years ago. He expects to be at about 50,000 by end of year, 50x growth. That growth is the exit starting.

Why Healthy People Leave First (and Why the Pool Can't Recover)

The monopoly dynamic Andy describes in Austin is the same one playing out in markets across the country. There are two big hospital systems in Austin. UnitedHealthcare, whatever its scale, can't negotiate hard with either of them because it has to have both in its network to function in that market. The hospital systems know this. So they price accordingly, and the insurer has no real power to push back. It becomes a price-taker, not a price-maker.

The result: hospitals bill whatever they want, insurers pass the cost through in premiums, and the people paying those premiums, particularly the healthy ones who rarely use the system, eventually do the math and ask why they're paying $30,000, $40,000, $50,000 a year for something they barely use.

What Andy has built is the alternative path those people can walk toward. No network restrictions. You go to whoever you want, pay cash or card at the point of care, and CrowdHealth negotiates the bill down and submits it to the community for funding. Andy says his members are getting about 50% better rates than UnitedHealthcare, which he describes as one of the top 10 largest companies on the planet.

Cash-pay patients are desirable to doctors who are otherwise spending, by Andy's estimate, about two days a week on insurance administration just to get paid. Eliminate that overhead, give them a patient who pays immediately, and they'll take less per visit to fill the calendar.

Andy's math on the freed capacity: going from three productive days to five is a 60-66% increase in revenue potential. At that point, doctors have room to lower cash rates and still come out ahead.

What CrowdHealth Actually Does (and Why It Gets Cheaper at Scale)

When Andy launched in 2021, he says the family-of-four rate was either $850 or $875 a month. My family paid $555 last month. Down about 30%, while comparable insurance costs have gone up 40-50%.

The reason it scales down rather than up is the data flywheel. More members means more cash-pay transactions. More transactions means more pricing data: what did a knee surgery cost at this practice in Austin versus that one in Philadelphia, what did imaging cost at this facility, which OB in this city has the lowest C-section rate. That data feeds back into the app so the next member making the same decision has real information to act on.

More data drives better decisions, better decisions drive lower bills, lower bills let CrowdHealth lower the monthly rate and attract more members.

Andy changed the business model explicitly to make this work. His original plan was to take a percentage of crowdfunded bills. As he was reading Satoshi's white paper in 2020 and thinking through incentive systems, he realized a percentage-of-bills model incentivized bills going up, more dollars funded means more revenue. So he switched to a flat subscription.

Now CrowdHealth's incentive is to see bills go down, because lower bills mean healthier members who stay on the platform. That's alignment.

On the catastrophic end: Andy shared on tape a NICU stay billed at around $500,000 that his team negotiated to approximately $30,000. Twin NICU babies with a combined bill approaching $3 million, funded. A member currently going through glioblastoma, a very aggressive form of brain cancer, with costs Schoonover estimates at $1.3, $1.5 million, being funded.

The community has saved, by Andy's internal accounting, about $115 million since founding. These aren't edge cases being swept under the rug. They're the evidence that the catastrophic-bill objection is wrong.

The Incentive Problem Is the Whole Problem

Andy's line on this is clean: banks are to Bitcoin as health insurance companies and pharmaceutical companies are to healthcare. They pull the strings. They have the regulators' attention, the legislators' attention, and they write the rules.

He gave me one example he can't detail because of an NDA. CrowdHealth put out a spoof of a well-known comedy show owned by a media conglomerate that takes hundreds of millions of dollars from pharmaceutical companies. The spoof was about pharma. They got a call threatening a lawsuit if they didn't take it down.

The tentacles reach into media, into the regulatory process, into every part of the system. You don't see it until you're living it, Andy said.

The doctor incentive problem runs the same way. C-sections pay more than vaginal deliveries. So some OBs push toward C-sections. Under a traditional insurance model, the patient has no idea what her OB's C-section rate is relative to the average, no idea how her surgeon's error rate compares to others in the area. CrowdHealth is building that data layer. You can open the app, look up an OB in Philadelphia, and see whether their C-section rate is 3x the average before you book the appointment.

If that data is visible and patients act on it, it starts to pressure physician behavior, not through regulation, but through the market working the way it's supposed to.

The same applies to administrative load. Doctors who opt out of insurance and go cash-pay get immediate payment, no prior authorizations, no claim denials, no appeals process. The best doctors are already making this move in primary care.

Andy expects to see it spread to specialty care. And cash-pay specialist visits are eligible for CrowdHealth funding, so members can follow the best doctors wherever they go.

Canada as the Warning

The week before this conversation I spoke with Mira and Mike, the director and producer of Broken Country, a documentary about Canada's healthcare system. Their explicit message: this is a warning to Western countries, particularly the United States. Do not go in this direction.

Andy gets feedback constantly from Canadians looking for a different path. The problem is that Canada's public health system largely prohibits direct cash billing for covered services in most provinces, so CrowdHealth can't simply operate there the way it does in the US. His response has been to start building a product for Canadians, a low monthly rate that covers the cost of flying to the United States to get surgery rather than waiting six to nine months in Canada.

The concrete cases from the documentary conversation: patients waiting months for imaging, bones that healed wrong because imaging wasn't available in time to set them correctly, requiring the bone to be re-broken. And then there's MAID, Medical Assistance in Dying, Canada's assisted-death program. When the system can't help you and you're desperate, the offer on the table is to help you end your life.

That's where Medicare for All points. The government becomes the only buyer, the only negotiator, the only decider. When it can't deliver, there's no alternative because competition has been legislated out of existence. Free in name, inaccessible in practice.

The Moral Case for Opting Out

I want to be direct here because I think the financial argument undersells what's actually at stake.

Yes, I've probably saved over $100,000. Yes, my family has had every eligible bill funded, including two births. Yes, the monthly cost has fallen while conventional insurance has gotten obscenely expensive. The numbers are real and they're compelling.

But the moral dimension matters separately. Every premium dollar paid to a health insurance company funds a system that, by Andy's account, denies 1 out of every 5 bills submitted under ACA marketplace plans, 120 million denied bills in the ACA alone in 2024, by his account. The insurers make more money when they deny. That is their actual incentive structure.

You are paying into a system that is literally designed to deny you.

On top of that, those premium dollars flow through an apparatus that buys regulatory capture, funds lobbying operations, places ad dollars with media companies, and writes the guidelines that the FDA and others enforce. The pharma-media NDA story Andy described is one data point. The bigger picture is a system where, in my view, there have been crimes against humanity waged on the populace by some people in this industry.

Opting out is how you stop feeding it. I've actually done it for five years, and it's the reason I'll keep talking about it regardless of what people think.

About Andy Schoonover

Andy Schoonover is the founder and CEO of CrowdHealth, a crowdfunded healthcare platform he launched in 2020. CrowdHealth lets members pay cash for healthcare services, submit eligible medical bills to the community for funding, and access bill-negotiation support through a personal care advocate. Schoonover has spoken publicly about the influence of Bitcoin's incentive design on how he built CrowdHealth's subscription model. He is based in Austin, Texas.

Sources mentioned

• Alex Berenson's Substack: the source Marty attributes for the $50,000/year family-of-three Alabama health insurance case
• KFF Employer Health Benefits Survey: annual benchmark for employer-sponsored premium trends and year-over-year cost increases
• KFF Analysis of ACA Marketplace Plan Claim Denials: primary source for ACA marketplace denial rates; the 120 million figure Andy cites should be verified against the most current release
• Canada Health Act: the federal legislation governing Canada's public health system; the basis for understanding which cash billing is prohibited versus permitted across provinces
• Health Canada, Medical Assistance in Dying: the federal government's published information on the MAID program
• CMS National Health Expenditure Data: the primary source for tracking US healthcare spending as a share of GDP and year-over-year cost growth

Watch the conversation

Timestamps

• 0:37 - Intro
• 1:12 - Is CrowdHealth a Bitcoin company?
• 9:13 - $50,000/year for a family of 3 in Alabama
• 10:37 - Are people dropping health insurance?
• 16:46 - CrowdHealth gets cheaper as it scales
• 21:54 - Fish in water: health insurance as the only option
• 29:43 - Hospital auditors and Bitcoin on the balance sheet
• 35:47 - How the oligopoly writes the rules
• 44:58 - The data flywheel: C-section rates, error rates, doctor quality
• 48:20 - The moral case for opting out
• 51:40 - Doctors freed from insurance admin
• 57:32 - People will think you're crazy

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