VentureBeat

Revolution Money, a new company backed by former AOL chief executive Steve Case, has launched a free online money transfer service to compete with PayPal. It has landed $50 million in a second round of funding.

The service is designed to be used on fast-growing instant messaging services such as AOL’s AIM and other social networking sites, and could appeal to younger users who balk at PayPal’s fees.

The Largo, Florida company is also offering a credit card it says will lower interchange fees for merchants. It is called RevolutionCard, and the company calls it the industry’s first anonymous, PIN-protected credit card. It will slash fees to 0.5 percent of a transaction, instead of the average of 1.9 percent charged by the credit card industry.

Revolution Money, formerly known as GratisCard Inc., boasts a number of other well-known executives on its team or advisory board: Ted Leonsis, former United States Treasury Secretary Larry Summers, former Charles Schwab CEO David Pottruck, and former MasterCard International President and CEO Russell Hogg.

The funding comes from Citi, Morgan Stanley and Deutsche Bank, and included Leonsis, and original controlling investor, Revolution, Case’s investment firm.

The money transfer service is called Revolution MoneyExchange. It is not yet open fully to the public, but users can register at the site to request an invitation when it is ready. It will allow online transactions, and is designed for social and instant messaging networks. Eventually, MoneyExchange says, it will let users link their accounts to the RevolutionCard, which can be used for offline payments.

Extend Health, a Burlingame, Calif., provider of “defined contribution” health plans designed to cut costs for business, raised $15 million in a second funding round. Investors included Psilos Group Partners and Revolution Health Group.

Although it’s not all that obvious from its release or its Web site exactly what Extend Health does, the phrase “defined contribution” is a big clue. Most health-insurance plans today are “defined benefit” plans — you or your employer (or both) pay premiums, and in turn you get a set level of coverage. Defined-contribution plans, however, are like 401(k) retirement plans — your employer simply determines how much they’ll contribute to a health-coverage plan, whether or not that’s enough to cover your medical bills. (This is the main notion behind “health savings plans” and the like.)

This page from Extend Health’s Web site, for instance, is particularly telling. Each of the company’s three programs are explicitly designed to save companies money by shifting healthcare costs and risks to their current and former employees or the government. That’s certainly an understandable business model, even if it seems likely to make the country’s healthcare crisis worse rather than better. There’s also growing evidence that these sorts of plans are highly unpopular with employees, and that few people choose them unless they have no other choice.

Extend Health, which used to be called Extend Benefits, also announced a new advisory board filled with luminaries including former Medicare chief Mark McClellan and former House majority leader Dick Gephardt. The company was founded by Steve Case’s Revolution Health group.

A bevy of start-ups are emerging to give people new ways to liberate them from the control of powerful health insurance companies — it’s about time.

Typically, you go to a doctor, and the doctor keeps your records on file and you can’t access them. But now people are demanding more freedom and transparency, and start-ups are responding.

The latest is Revolution Health, the start-up formed several years ago by AOL co-founder Steve Case, but which has been working quietly until its launch today. The company gave us access to the site a few weeks ago, and we’ve played with it. It is extensive, allowing you to build your records, find and compare local doctors, compare insurance companies (we’ve included a partial screenshot at bottom), help with claims and much more — it also wants to compete against the incumbent healthcare information and service portal, WebMD.

In fact, it is doing so much, that we agree with venture capitalist John Steuart, a specialist in healthcare who has looked closely at Revolution Health, when he says he can’t tell where the company plans to focus.

The most interesting Revolution Health appears to be offering — though it hasn’t made clear exactly how — is the ability to own and carry your own electronic health records (an idea Steuart finds worthy of venture backing, if it can be done right). That way, if you travel, or change providers, you can be treated wherever and by whoever you want. Also notable are Revolution Health’s service to find a cheap doctor, so that uninsured can avoid the emergency room. Moreover, it lets you compare insurance costs. This is useful, but it’s not clear how you build a business here (since there are several players in this area now).

Revolution is just the latest entrant, albeit one of the most talked about today, because of Case’s fame.

Other companies helping liberate parts of your personal health records (see good summary of the issue here) are CapMed and iHealthrecord.com. There’s another good summary of the industry in this Business 2.0 story.

Another is MedBillManager, a start-up in Nashville, TN that is run by three people, which gives you tools to track your bills, and a social networking feature that lets you compare insurance and other medical costs against that of other members. It is self-funded. Notably, managers of healthcare software players with competing products, Intuit ($49/year subscription) and SimoHealth (recently acquired by Revolution Health) have subscribed to MedBillManager’s testing version to see how it works, according to MedBillManager’s chief executive, Christopher Parks. Both Intuit and SimoHealth, however, are downloaded software programs instead accessible online, and don’t offer the social networking features. MedBillManager also wants you to be able to manage your records, but we didn’t see clearly how to do this in our test version.

Finally, there’s new start-up Taumed, of San Francisco, which is only related in that provides a way to search and ask for advice online, and find the latest healthcare news. However, it joins a host of competing search engines, in players like Dailystrength (see our story here), Kosmix and Healthline. Taumed tells VentureBeat it is raising a first round of capital.

Separately, the WSJ has a story today about Revolution Health (no link here, because the WSJ requires a subscription, but others covered the launch too), and the response by incumbent site, WebMD.

Revolution Health will offer telephone-consulting and digital-record services free for a year, to those who sign up within 90 days. The company says it eventually will charge $100 or so a year for a subscription to premium services. WebMD, in turn, released some tools today that look similar to those offered by Revolution Health — users will be able to store and maintain health records for free, and join forums about their health issues.