In order to expand its business, Oscar Health plans to double its “market size” over the next three years. … [+]
Oscar Health plans to double its “market size” over the next three years and expand its business selling individual health insurance under the Affordable Care Act, known as Obamacare, as well as new forms of insurance for workers and employers.
During its 2024 investor presentation on Friday, Oscar executives outlined plans to expand into more than 150 metropolitan statistical areas, which they said would effectively double the company’s footprint.
Oscar, which revamped its management team last year and hired former Aetna CEO Mark Bertolini, reported first-quarter profit of $177.4 million. Founded in 2012, Oscar has yet to turn a profit, but Bertolini and his new team remain bullish on the individual health insurance market and say that will change this year.
Oscar, which has about 1.5 million health insurance subscribers and is best known for selling Obamacare individual plans, is looking to expand its current ACA market share in 18 states. The company said it plans to expand its market share from 13% in 2024 to about 18% by 2027 through a mix of new health insurance products for individuals, workers and their employers.
Oscar did not disclose which new states and metropolitan statistical areas it plans to enter over the next three years, but said it has ample opportunity to grow from a “market opportunity” of 10 million potential customers today to a “market opportunity” of 20 million potential customers by 2027. One big market Oscar executives are targeting is the massive U.S. gig economy, which is home to about 58 million independent workers.
Additionally, Oscar executives plan to stop selling small group coverage after December 2024 and introduce new plans called “individual health reimbursement arrangements” that will be available during the ACA open enrollment period this fall. According to the federal government’s healthcare.gov website, such ICHRAs are “an alternative to offering traditional group health plans to employees.”
“This is a specific account-based health insurance plan that allows employers to provide employees with defined tax-free reimbursements for qualified medical expenses, including monthly premiums and out-of-pocket expenses (such as copayments and deductibles),” the healthcare.gov website states. “Employees must have individual health insurance (such as a plan purchased through the Marketplace) in order to use the funds.”
Oscar executives say such ICHRAs are attractive to small businesses, typically those with fewer than 50 employees and up to 1,000. Some of the larger companies they work with also have individual health reimbursement plans, especially in industries with high utilization and benefits costs, such as manufacturing and hospitality, Oscar executives say. A company spokesman said:
“Our model is uniquely positioned to address these trends and reshape health care to put individuals and families at the center,” Oscar said in an investor presentation released Friday. “The U.S. health care system is failing the individuals and families who are accelerating trends that will shape the future of the market.”
