Dive Brief:
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Health insurance startup Oscar Insurance Corp., lost $57.6 million in Texas, New York and California in the first half of 2017, which is better than the $83 million it lost last year in the three states last year, Bloomberg reported.
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The company, which offers Affordable Care Act (ACA) plans, spent more than it took in for premiums in New York. However, Oscar did much better in the other two states, where the company took in more than it spent on care.
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After suffering losses in 2016, Oscar made changes in 2017, including increasing premiums, leaving New Jersey and parts of Texas and limiting its network offerings in New York.
Dive Insight:
The New York-based company is changing the insurance norms regarding technology, such as going with a data-driven insurance product and in-network scheduling assistance.
In addition to first-half losses, Oscar lost $25.8 million in the first quarter of 2017, which was an improvement over what the company lost in 1Q of 2016 ($48.5 million). Just like in the first-half numbers, New York was the major reason for the losses in the first quarter.
Oscar membership continues to drop after it pulled out of New Jersey and cut back elsewhere. The payer had 106,000 members last year, which dropped to 90,000 members at the end of the first quarter of 2017 and fell further to about 85,000 members at the end of the second half.
Though Oscar pulled back some in 2017, the payer is looking to expand again next year, including going into Tennessee and Ohio, returning to New Jersey, and enlarging its footprint in Texas and California. Oscar is expanding its ACA offerings while other payers, such as giants like Anthem, Aetna and Cigna, have announced they're leaving at least some of the exchange markets.
In addition to the ACA plans, Oscar is looking at other markets, including the small businesses market. It is teaming up with Humana to offer commercial health insurance in central Tennessee this fall. The payer is also working with Cleveland Clinic for a co-branded health plan to people in northeast Ohio in November.
Much like other insurers in the ACA exchanges markets, Oscar’s success this year will be at least partially connected to whether payers get cost-sharing reduction (CSR) subsidies. President Donald Trump has threatened to cut the payments to insurance companies, which helps them cover lower income Americans and contain out-of-pocket costs for members. Trump’s threats have caused much uncertainty and caused some payers to pull out, pull back or propose more than 20% premium increases in 2018. The Congressional Budget Office reported this week that eliminating CSR payments would cause premiums to increase an additional 20% next year and push payers out of the exchanges.
On Wednesday, the White House said it will pay August CSR payments to insurance companies, but there are still concerns about whether the Trump Administration will continue to make payments long-term. Congress is expected to discuss CSR payments when it returns from August recess and it may decide to fund the payments itself rather than waiting for White House approval each quarter.