Oscar Health has received a $375 million investment from Google's parent company, Alphabet, and the payer is looking to expand into Medicare Advantage in 2020.
In a statement, Mario Schlosser, co-founder and CEO of Oscar, said the investment comes with Salar Kamangar, a longtime Google employee and former CEO of YouTube, joining Oscar's board.
- In a Q&A with Wired, Schlosser said the infusion from Alphabet will go toward hiring more engineers, data scientists, product designers and clinicians along with the launch of new product lines like MA.
After a rocky first few years, Oscar appears to be hitting its stride. Launched in 2012 by Joshua Kushner (brother of President Donald Trump's son-in-law Jared Kushner) and Schlosser, the New York-based payer startup initially focused on the ACA exchanges.
Oscar reported a profit in the first quarter of this year and significantly improved its medical loss ratio. In March, the company said it raised $165 million from investors, including Alphabet's investment arm Capital G and life sciences arm Verily.
The payer said Tuesday its latest investment will "deepen Oscar's investment in a technology and product roadmap." In a statement to Healthcare Dive, Schlosser also said the money will increase involvement in the individual and small business markets and allow the MA expansion. While the infusion helps Oscar, it also allows Alphabet to put stake in the payer industry, especially the growing MA sector, without creating its own insurance company.
Oscar announced in June it plans to expand its individual health insurance to six new markets in three states (Florida, Arizona and Michigan) and three large metro areas in Ohio, Tennessee and Texas. If approved, Oscar would cover 14 markets in nine states. The company already doubled its individual insurance membership by 250,000 this year.
Oscar is just the latest payer to show interest in MA. During Q2 earnings reports, multiple insurers spoke positively of the MA market and discussed possible expansion plans next year.
UnitedHealthcare and Humana are the two largest payers in MA, and they continue to grow their membership. WellCare Health Plans, Aetna and Anthem also discussed increasing their MA membership. Centene additionally called it a "significant driver of growth" in the coming years.
Payers have found stability in MA through a steady stream of Medicare-eligible people entering the market daily, low-cost new members who come from employer-sponsored plans, upfront payments to cover members with high healthcare costs and an easy time converting members from traditional Medicare through marketing campaigns.