One of the unique things about healthcare is that nearly all consumers agree that the system is broken, and that something needs to change. Just how to go about doing that exactly is, of course, the subject of much debate.
At the center of that debate is Oscar, a health insurance startup founded in November 2012 by Mario Schlosser, Josh Kushner, and Kevin Nazemi. In that time they’ve grown to over 250,000 members, partnered with doctors in seven major metropolitan areas, and taken a data-centric view to an often byzantine system—all while adjusting to seemingly continuous efforts from Congress to enact reform. Things only got more complicated in 2017 when Kushner’s older brother Jared assumed a role in the White House.
With all that in mind, we exchanged emails with Schlosser, the current CEO, about the story behind Oscar, and the path he sees for it in the future. Answers have been slightly edited for length.
Explain the genesis of Oscar. How exactly did the company come about?
Schlosser: In 2012, when my wife was pregnant with our first child, I had my first meaningful interaction with the healthcare system. I found myself immediately at a loss when it came to figuring out which hospital to go to and estimating how much the entire process would cost. For something as common as a pregnancy, I couldn’t believe how incredibly complex and confusing navigating the health care system was. Like many consumers, we turned to our friends and family for advice, but there was no central source for trustworthy information and we had very little transparency into the final cost of the pregnancy, let alone what our insurer would cover.
At the same time, my cofounder, Josh Kushner, had his own confusing experience with the healthcare system, which landed him with an indecipherable medical bill. In an industry where there is so much data available, we felt strongly that there was enormous potential to improve the American healthcare system by giving more agency to the consumer. We came together and started to talk about what we could do to improve health care’s consumer experience.
As we considered where our impact would be greatest, it became abundantly clear that health insurers play an integral role as the only player with a complete, 360 degree view of the consumer’s interaction with the health care system. Using our backgrounds in data and consumer science, we developed the idea for Oscar Health: the first consumer-oriented health insurer that uses technology, data, and design to deliver a member experience that is seamless, easy-to-use, and affordable.
What's your biggest selling point? How do you convince people to switch over from their current provider to Oscar?
Oscar is a consumer-focused, technology-driven health insurer that makes it easier for patients to access and choose quality, affordable care. All of our members have access to 24/7 free telemedicine, a dedicated concierge team, optimized care search tools, step-tracking reimbursement, and a beautifully designed mobile experience—all of which give them the necessary to tools to take charge of their own care.
So far, our strategy has worked. By the end of last year, almost two-thirds of Oscar members’ interactions with the health care system were conducted virtually, through Oscar. Because we’ve built our tools to be fully integrated, we’re able to resolve many routine health care issues for our members through a virtual primary care system comprising of concierge teams, virtual primary care providers and deep data integrations with providers that ensures clinical information will flow almost real-time.
How will the recent healthcare reform, and the administration's continued effort to roll back Obamacare, impact your business and the number of markets you're in?
We’ve found that the individual mandate, itself, does not significantly factor into why consumers are attracted to Oscar. For example, in a year of regulatory uncertainty, Oscar doubled its footprint, enrolled more than 250K members, and launched major industry partnerships with Cleveland Clinic, Humana, and AXA. These developments show that Oscar's consumer-focused, tech-driven model is working and in demand. As we watch Washington closely, we remain confident that Congress won't leave millions of Americans uninsured.
On a similar note, what is the ideal scenario, in Oscar's eyes, for the resolution to the current state of healthcare reform in America?
Consumers increasingly want a simplified health care experience. They want to be able to access care when and where they need it, have transparency into what things cost and why, and to know that there are resources at their disposal to help them navigate the complex system. For too long the United States has operated with an employer-sponsored health care model that has allowed costs to climb, with no system to keep them in check. Employer-sponsored plans lead to lack of consumer purchasing power and information. Since more than half of Americans receive insurance through their employer, it’s a unique relationship in which consumers don’t actually have full control over the insurance they purchase—they have to buy plans based on what their employer has chosen. Moreover, its the employee’s paycheck that bears the brunt of the cost as the employer sees only a fraction of that impact. With the introduction of the individual marketplace, health insurers were able to sell direct to consumers, allowing them to price compare and choose a more competitive plan. Its health care reform that promotes a pro-consumer, transparent, and stable system that is most needed in America.
Oscar enrollment recently topped 250k. How has that number changed since the start of Open Enrollment, and where do you see it being at the end of 2018?
The 250k enrollments for 2018 exceeded our expectations and represents 2.5x increase from our membership in 2017. Especially with this year’s shortened enrollment deadline and the increased noise surround health care reform, this result proves that there is a clear demand for Oscar’s consumer-focused, tech-driven approach. We know our model is resonating with members. We sell Oscar for Business plans, which are available to small businesses in NY, NJ, and Nashville, throughout the year. This means that our total lives insured, including our individual and small business members, will continue to increase during 2018.
What has to happen for Oscar to achieve profitability, and when do you see that happening?
We’ve always said that building the first full-stack, member-centered health insurer is a bold, ambitious investment that will unfold over a long time horizon, but as we enter 2018, we are in a stronger position than ever. We have consistently narrowed our losses, reduced MLR (medical-loss ratio), and will post our first annual underwriting profit in 2017.
We have also developed the infrastructure we need to bring some of the most important and previously costly processes, such as claims processing and network construction, that are core to our business in-house. Our 250K enrollments put us on track to make $1 billion in revenue this year. We are thrilled with the progress Oscar has made in just five years, and we’re even more excited about where we will be after 15 years.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
