Is Oscar Health Insurance Going Out of Business and What It Means for You

Oscar Health Insurance has been facing financial struggles, with a $2.7 billion loss in 2022, according to the company's own reports.

This significant loss has led to concerns about the company's future viability.

Oscar's financial struggles have been attributed to various factors, including high medical costs and increased competition in the market.

The company has been working to reduce costs and improve its financial situation, but the outcome is still uncertain.

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Oscar Health is exiting the California marketplace at the end of this year due to failing performance metrics, including consistently recording medical loss ratios over 100%.

The insurer had expected to have 35,000 members in California by the end of this year, but will instead "pause" its implementation in the state with the intention of reentering in the future.

Oscar Health has already exited several markets, including Arkansas and Colorado, and ended its Medicare Advantage plans in New York and Texas.

Last year, the company announced it would allocate resources to reach profitability amid tech falterings and $610 million in net losses for 2022.

Oscar Health reported a net loss of $39.6 million on revenue of $1.5 billion, compared with a net loss of $77 million in the prior-year period.

The company is shifting its focus to improving efficiency and implementing new initiatives, and has secured a "large value-based primary care group" partner for its +Oscar platform.

Here are some key statistics on Oscar Health's recent performance:

Oscar Health Insurance has some of the highest prices of any major health insurance company, with an Oscar Silver plan costing $582 per month on average for a 40-year-old.

Oscar's prices put them in sixth place out of seven of the largest health insurance companies in America, with Blue Cross Blue Shield (BCBS) being the only company with higher average prices.

You can expect to pay more per month for Gold and Platinum plans, but you'll pay less when you get health care, making these plans best for people with chronic illnesses or frequent hospital visits.

Here's a breakdown of Oscar's average monthly costs compared to top competitors:

Keep in mind that prices may vary depending on your location, and you should compare plans carefully to ensure you're getting the best deal, including potential subsidies that can lower your out-of-pocket insurance costs.

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California has been a challenging market for Oscar Health, a health insurance provider. Oscar Health will exit the Covered California marketplace at the end of this year after failing to meet performance metrics in the state.

This decision is not surprising, given that the insurer consistently recorded medical loss ratios over 100%. Medical loss ratios are a measure of how much of an insurance company's revenue goes towards paying medical claims.

The exit will have a "very modest" impact on Oscar Health's top-line financials, according to CFO Sid Sankaran. This suggests that the company has been preparing for this move and has a plan in place to mitigate the effects.

Oscar Health is not the first insurer to exit California; the company has already withdrawn from several markets, including Arkansas and Colorado. In fact, the company plans to reenter these states in the future after reshaping its product offerings and strategy.

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Here are some key statistics about Oscar Health's recent performance:

It's worth noting that Oscar Health has made significant changes in recent months, including the appointment of a new CEO, Mark Bertolini. Bertolini has brought with him 16 years of experience at Aetna, including serving as CEO during the insurer's sale to CVS in 2018 for almost $70 billion.

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Oscar has some of the highest prices of any major health insurance company, with an average monthly cost of $582 for a 40-year-old Silver plan.

This is $101 more per month compared to an equivalent plan from Kaiser Permanente.

Oscar's prices put it in sixth place out of seven of the largest health insurance companies in America, only behind Blue Cross Blue Shield (BCBS) in terms of average prices.

Here's a breakdown of Oscar's average monthly costs compared to its top competitors:

Monthly rates are lowest for Catastrophic plans and most expensive for Platinum health insurance, with Gold and Platinum plans generally costing more per month but offering lower out-of-pocket costs for those with chronic illnesses or frequent hospital visits.

For your interest: Oscar Health Insurance Plans

Oscar Health will exit California, where it had expected to have 35,000 members at the end of this year.

The insurer plans to exit the state after consistently recording medical loss ratios over 100%, executives said.

Oscar Health has been struggling to meet performance metrics, and this exit is part of a larger trend of carrier exits in the industry.

In 2022, Oscar announced it was withdrawing from several markets, including Arkansas and Colorado, and ending its Medicare Advantage plans in New York and Texas.

The company expects to hit total profitability on earnings before interest, taxes, and depreciation in 2024, but it's unclear how this exit will impact its financials.

Oscar reported a net loss of $39.6 million on revenue of $1.5 billion in the first quarter of 2023, compared to a net loss of $77 million in the prior-year period.

Oscar has secured a large value-based primary care group partner for its +Oscar platform, which is expected to drive primary care utilization and streamline operations.

Oscar Health customers are generally unhappy with the company, but they love its mobile app. The app has a 4.9 out of 5-star rating on Apple and a 4.7 out of 5-star rating on Google Play.

Oscar members are also fond of the Oscar Care benefit, which allows for quick access to virtual medical care from anywhere.

However, Oscar falls short in areas like customer service, customer billing, and finding an in-network doctor. You should confirm that your preferred doctor is part of Oscar's network before buying a policy.

Oscar receives a significant number of complaints, roughly three and a half times as many as an average health insurance company of the same size.

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Carrier exits have been a common occurrence in the health insurance market, with significant insurer exits at the end of 2022.

Bright HealthCare, which covered nearly a million people, exited the market in 15 states. WPS Health Plan and Oscar Health also scaled back their participation for 2023 in a handful of states.

However, there were also insurers entering markets in various states for 2023, leading to an increase in the total number of insurers offering plans via HealthCare.gov.

For 2024, Oscar is exiting the market in California, marking another instance of carrier exit.

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The risks of partnering with the U.S. government in a capitated model are significant. Oscar assumes all the risk while CMS pays a fixed fee.

Oscar cannot raise premiums without CMS oversight, which limits their ability to adjust to changing market conditions. This can make it difficult to stay profitable.

Oscar's health insurance margins are capped at 20% due to the Medical Loss Ratio (MLR) requirement. This means they can't make more than a 20% profit on their health insurance revenue.

If Oscar projects a 2% profit margin on $8 billion in collected premiums, it's unlikely to be sustainable in the long term. This is especially true given the risks and limitations of the capitated model.

Having 1.3 million members doesn't necessarily mean they're Oscar's customers, as many came through the government-run exchange. If CMS decides to drop Oscar from the exchange, they could lose a significant portion of their business.

CMS has the power to renegotiate contracts and make changes that favor them. With excellent actuaries on their side, they can potentially shift the terms of the partnership to their advantage.

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