$3.2 billion startup Oscar Health is plotting its expansion into new states as it moves into a competitive insurance plan market

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• Oscar Health is looking to enter new states in the coming years, including Georgia and Illinois, according to filings reviewed by Business Insider.  
• The $3.2 billion health insurance startup got its start selling plans on the individual exchanges set up under the Affordable Care Act, but in recent years has expanded to sell plans to small employers and in 2020 it expects to offer plans to seniors, also known as Medicare Advantage plans.
• A spokeswoman for Oscar said in a statement that the moves was in preparation of operating in new markets, but didn’t necessarily mean the states would be included in the company’s 2020 footprint.

Oscar Health is plotting an expansion to its geographic reach. 

According to a regulatory filing reviewed by Business Insider, the health insurance startup has registered as an insurer in Georgia. The company has also incorporated in Illinois, a sign that it’s planning to move into markets the two states.

A spokeswoman for Oscar said in a statement that the moves was in preparation of operating in new markets but didn’t necessarily mean the states would be included in the company’s 2020 footprint. As of 2019, Oscar offered health-insurance plans on the Obamacare marketplaces in 9 states: Arizona, California, Florida, Michigan, New Jersey, New York, Ohio, Texas, and Tennessee. It also sells plans for small employers.

"Oscar is committed to expanding our footprint so we can offer our tech-driven, consumer-facing health insurance to more people across the country," the spokeswoman said. "There are regulatory requirements with which we need to comply and licenses we need to obtain in order to operate in new markets. These new entities are merely preparatory and, pending approval, we will announce our 2020 footprint and the products we will offer in each market later this year."

It’s happening at a time when Oscar is plotting its expansion into a competitive new plan market. In 2020, Oscar will start offering private health-insurance plans to seniors, which are known as Medicare Advantage plans. The company hasn’t yet said where it will sell those plans. 

Oscar’s 2018 financials and 2019 enrollment

The health insurance startup mainly sells insurance on the individual exchanges set up by the Affordable Care Act, and took in $1.2 billion in gross premium revenue in 2018. Oscar’s financial losses narrowed to $57 million, from $131 million in 2017, according to state financial filings.

Yet Oscar faced slowing growth in 2018, a big problem for a startup valued at $3.2 billion. The company nearly doubled its footprint for 2019, expanding into six new markets. Membership, though, increased by just 18,000 between 2018 and 2019, to a total of 257,000 people.

That’s thanks in part to tough competition in some of the company’s new markets: Oscar signed up just 2,000 people in Arizona and 1,000 in Michigan in the individual market. 

Read more: We got a look at $3.2 billion startup Oscar Health’s latest enrollment numbers, and they show why the company is pursuing a new strategy for growth

The financials and enrollment figures make it clear why Oscar is expanding its reach into a lucrative new market: Medicare Advantage. The Affordable Care Act’s exchanges have been challenging for health insurers, with a number leaving the business altogether. In the ACA, which is often called Obamacare, enrollees tend to buy cheaper plans, making it difficult for companies like Oscar to offer more expensive options.

It’s an area startups and big insurers alike have been flocking to. For instance, Devoted Health launched its first plans in 2019 in Florida after raising more than $300 million from investors. Clover Health, a startup founded in 2014, now offers Medicare Advantage plans in seven states. The startups are competing with big, entrenched insurers like Humana, UnitedHealth Group, andCVS Health.

Oscar in August 2018 raised $375 million from Google’s parent company Alphabet, and said it would use the funds to bring its tech-backed health insurance plans to more people, including in Medicare Advantage. In total, the company has now raised more than $1 billion.

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Source: Business Insider – lramsey@businessinsider.com (Lydia Ramsey)