Photo by Amber De Vos/Patrick McMullan via Getty Images
- The buzzy health insurance startup Oscar Health is planning to start offering a new kind of health plan next year: Medicare Advantage plans. Those are private health plans for seniors.
- Oscar will start selling the plans in two areas: New York City and Houston.
- Oscar will offer a co-branded plan in the New York metro area with Montefiore Health System, and is teaming up with doctor groups and hospitals in the Houston area to offer the private plans to seniors in 2020.
- Oscar got its start offering plans on the individual exchanges set up by the Affordable Care Act, and also offers plans to small businesses.
- Click here for more BI Prime stories.
We’re starting to get a better idea of $3.2 billion health insurer Oscar Health’s push into a new insurance market.
Oscar currently sells insurance on the individual exchanges set up by the Affordable Care Act and to small businesses. It’s planning to enter a third market in 2020, offering private health-insurance plans to seniors, which are known as Medicare Advantage plans.
Specifically, Oscar plans to get into two markets: New York and Houston, pending regulatory approval, the company announced on Wednesday.
Oscar has raised more than $1 billion from investors enticed by its promise of a new tech-driven approach to health insurance. In August 2018 it raised $375 million from Google’s parent company Alphabet, and said it would use the funds to bring its plans to more people, including in Medicare Advantage.
Never miss out on healthcare news. Subscribe to Dispensed, our weekly newsletter on pharma, biotech, and healthcare.
Oscar’s plans for New York City and Houston
In New York, the Medicare Advantage plan will be co-branded with the Bronx-based health system Montefiore Health System. Oscar didn’t specify which counties it will sell in in the New York metro area, citing pending regulatory approval.
In Houston, Oscar’s partnering with doctor groups and hospitals, including Houston Methodist, HCA Houston Healthcare, VillageMD’s Village Family Practice, and St. Joseph Medical Center.
The Medicare Advantage market is increasingly competitive. About a third of people on Medicare are enrolled in private Medicare Advantage health plans. People can typically choose to enroll in Traditional Medicare or Medicare Advantage plans when they turn 65. Either way, their health needs are largely funded by the US government.
As of last year, more than 20 million Americans were enrolled in Medicare Advantage plans. It’s a growing market that insurers like Oscar are interested in getting a piece of, alongside entrenched rivals like Humana, UnitedHealth Group, and CVS Health.
A measured entrance into a new market
Oscar CEO Mario Schlosser said in a recent interview that the insurer plans to start out slowly in Medicare Advantage to get a sense of what works. Schlosser said he doesn’t expect the scope of the Medicare Advantage program to be as big as the company’s presence in other markets like the individual exchanges.
"We’re not going to go as big next year. So this will not be comparable membership size to our individual or small group business, far from it," Schlosser said.
Oscar is increasingly forming tight partnerships with health systems and doctor groups as a way to enter new markets. In Ohio, for instance, the company partnered with the Cleveland Clinic to offer plans in which members have access to Cleveland Clinic’s network of doctors.
The company already partners with Montefiore and Mount Sinai Health System in the New York City area to offer individual health plans. Oscar says that offering customers a more limited selection of doctors and hospitals can improve care while keeping costs down. The company also currently sells individual health plans in Texas cities including San Antonio, Austin, and El Paso.
In Houston, the plan is less focused on teaming up with one particular hospital, opting to have a few in the network alongside physician groups. The decision to work with a health system in one market and physician groups in another will help Oscar determine which model might work best at the start of offering a new kind of health plan.
"These are pretty much the competing models you have in Medicare Advantage, so we’ll test them both," Schlosser said.
In May, Oscar provided reporters with a summary of its financial results for the first quarter of 2019. The company said it took in $354 million in gross premium revenue, and that it generated a gross underwriting profit of $82 million. The company said it spent about 70% of its members premium dollars on medical care.
NOW WATCH: How to survive an alligator attack
See Also:
- 2 top leaders at Google’s $4.5 billion venture arm want to transform how new drugs get made to boost their entire portfolio
- The man who runs one of the biggest urgent-care companies reveals the 4 top threats facing the business
- A scientist who won the Nobel Prize for revolutionizing how we treat cancer says young scientists shouldn’t set out to cure the disease
Source: Business Insider – lramsey@businessinsider.com (Lydia Ramsey)