The Affordable Care Act is driving innovation at all levels of the healthcare system, creating opportunities for small start-ups to compete with industry giants. One such start-up is Oscar, a venture-backed health insurance company that launched on the New York State Health Plan Marketplace, and the State's first new commercial health insurer in 15 years.1
Consumer-oriented healthcare is at the center of the strategy at Oscar, to be achieved primarily through the extensive and intuitive use of technology, data, and design. (All three of Oscar's founders have a background in the tech industry.) On the Oscar website, visitors have the ability to make side-by-side comparisons of Oscar products. Customers have similar capabilities regarding in-network providers, with metrics on cost estimates of a visit, location, patient demographics, language(s) spoken, and availability.
Another salient, technology-based feature of the company is telemedicine. Oscar partners with TelaDoc, a telemedicine company operating since 2002, to provide 24-hour mobile access to a physician. Physicians are paid $40 for a call, which is less than the typical reimbursement for an office or emergency room visit.
Oscar offers products for individuals only. While the company has expressed that it has plans to expand, both within New York and to other states, the Oscar network currently consists of more than 40,000 physicians and more than 80 hospitals around New York City. This network is rented from MagnaCare, a larger insurance company whose providers span New York and New Jersey.
Insurance start-ups such as Oscar may face a number of challenges associated, for example, with name recognition, scale, and managing risk. Thus far, however, it appears that such challenges, while potential hurdles, are not the total barriers to entry they might once have been.
Oscar has already raised over $75 million from investors, of which nearly $30 million has been set aside for reserves. It has fairly consistently caught the attention of many, with profiles by prominent sources such as the New York Times, Forbes, and Businessweek.
Furthermore, the company has gained some traction in the market during its short existence. A breakdown of final enrollment in the Marketplace has not been released, but a report on enrollment through December 30, 2013, attributed two percent of individual enrollment to Oscar. Six of the Marketplace's 16 issuers each enrolled 10 percent or more: Empire Blue Cross Blue Shield (18%), Health Republic Insurance of New York (16%), Fidelis Care (14%), EmblemHealth (12%), MetroPlus Health Plan (11%), and MVP Health Care (10%).2
Footnotes
1 For more information on Oscar, visit the company website at www.hioscar.com.
2 The complete report, published by the NY State Health Plan Marketplace, is available here.
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