How Trump's Medicaid Crackdown Is Fueling This $22-Million Backed Healthcare Startup's Expansion

Forbes

4 days ago

Nikita Singareddy (middle) and her cofounders Courtesy of Andreessen Horowitz
When Nikita Singareddy, Cydney Kim, and Ben Wesner first thought up Fortuna Health from a Crown Heights apartment, they saw opportunity in one of the least modern but most utilized corners of American healthcare: Medicaid. The legacy program offers free health insurance to 80 million Americans, but the current enrollment process is complex, slow and sometimes entirely paper-based. To bring a much-needed software update to the nearly $870 billion government program, the three founders leveraged their backgrounds in healthcare, strategic operations and technology to launch Fortuna in 2023.
The SaaS startup offers a user-friendly web-app for patients to easily submit and renew their Medicaid applications. While the typical enrollment process requires users to send materials online or via snail mail—then wait upwards of 45 days for a decision—Fortuna completes it in under a minute thanks to its AI models that flag common errors like missing pay stubs on employment verification forms. Fortuna makes money by selling its technology to insurance agencies and hospitals, which benefit from keeping patients insured because it increases the amount of money they get from the state.
Here's how it works. After a person applies to Medicaid, their provider sends a push notification powered by Fortuna, directing them to an online portal with instructions for accessing benefits. Fortuna's software then guides them through a personalized and multilingual experience—similar to a one-on-one interaction—that can respond to unique situations such as households with a mixed immigration status or seasonal employees who don't earn income throughout the year.
Last week Fortuna Health closed an $18 million Series A led by returning investor Andreessen Horowitz. The goal? Expand its service into more U.S. states and territories (they're currently active in eight) and the development of AI-powered workflows. The Series A brings their total funding to $22 million. Nikita Singareddy declined to comment on Fortuna Health's most recent valuation.
'We've experienced an 11x increase in users since last year and the growth is not entirely new,' Singareddy said. 'But because we've already laid the groundwork with our partners we have seen more customers that are ready to activate with this new sense of urgency.'
Singareddy, a healthcare policy wonk who got her start interning on Capitol Hill in college, worked on different sides of the healthcare industry from insurer Oscar to venture firm RRE Ventures. But it wasn't until her work at a Federally Qualified Community Health Center, otherwise known as 'free clinics,' where she saw firsthand how outdated technology created a barrier for people to access Medicaid. Experts estimate that 70% of Medicaid churn—which is when eligible people lose coverage—is due to procedural hiccups that could have been avoided with clearer instructions.
'There is a totally different healthcare system for people who are lower income and under-resourced versus commercial health insurance,' Singareddy told Forbes . 'Coming from policy being my area of passion, I saw that discrepancy and wanted to solve it.'
Fortuna raised its seed round shortly after the Medicaid unwinding period when pandemic-era protections expired and members had to verify that they still qualified for the program. Health plans and states needed a tech-enabled third party to manage the millions who suddenly lost coverage, generating early traction for Fortuna in the Medicaid SaaS field that has few competitors.
'We always say there are no bad ideas, just bad timing and what generated so much momentum for Fortuna is that they picked the perfect time to enter the market,' says Julie Yoo, a healthcare investor at Andreessen Horowitz.
Two years later, the startup is generating more momentum—thanks to politics. President Trump signed the One Big Beautiful Bill Act into law on July 4, which includes strict oversight on Medicaid, making the already analog process more complex like increasing the frequency in which users have to renew their coverage from once a year to every six months, and a new 80-hour work month requirement with additional documents required to prove employment.
'We've never wavered from our mission to be the TurboTax for Medicaid but the bill has forced our hand to move quicker on expanding into all 56 U.S. states and territories that have Medicaid programs,' Singareddy said.
While fully integrated into eight states, Fortuna has yet to scale nationally. The latest Series A will go toward building infrastructure to meet demands in new territories, but entering new markets will require a go-to-market strategy tailored to each state's unique Medicaid system. To apply for Medicaid via Fortuna, enrollees need their health provider to grant them access to the platform. That makes securing contracts with insurers, hospitals and health plans in each region critical for the startup's growth.
'They're only in a handful of states, so they either need a major payer or health system to get behind them in each new market,' a healthcare analyst at William Blair Ryan Daniels said. 'But how do you get them on board without consumer awareness? And how do you drive consumer awareness without the payer behind you? It's the classic chicken and egg problem.'
The One Big Beautiful Bill itself could mitigate this problem as Singareddy says Fortuna has already seen an increase of general inquiries from users about how the policy changes will affect their coverage. Fortuna is also building localized relationships with organizations at the state and county level to drive consumer awareness in new regions.
'We are not new to this problem. We didn't get created just to solve the Big Beautiful Bill,' Singareddy said. 'I'm glad we've spent so much time obsessing over how to modernize Medicaid so that we can be in the hands of many more people for this moment.'