Oscar Insurance Corp. expanded to California this year. But the New York-based startup health insurer, known for its technology-based philosophy and subway ads, has enrolled very few people.
Slightly more than 2,000 Californians had selected an Oscar health plan on the public exchange as of Feb. 7, according to figures from Covered California, the state's insurance exchange. That represents a miniscule 0.1% of the 1.57 million residents who renewed or chose a 2016 plan on California's exchange.
After including 3,000 people who bought coverage off the exchange, Oscar had about 5,000 California members, according to company spokeswoman Cat Cuppernull.
The low enrollment speaks to the challenges of entering an insurance market dominated by well-known incumbents, such as Kaiser Permanente and Anthem, and trying to set competitive prices for a price-sensitive audience (PDF). Oscar also has to demonstrate how it differs from traditional insurers beyond its millennial-focused marketing, which includes “Oscartoons,” cartoon drawings of current customers, and its emphasis on telehealth and smartphone apps.
“If history repeats itself, Oscar will be in the market a short period before they understand the concept of adverse selection,” John Barrett, founder of Health Insurance Brokers, Pasadena, Calif., said on an industry call this week.
Oscar, which did not participate in California's exchange in 2014 or 2015, only sold 2016 plans in Los Angeles County and Orange County. Its premiums were more expensive than many of its competitors, particularly for the most significant type of exchange plan.
For-profit insurers Molina Healthcare and Health Net, and not-for-profit L.A. Care Health Plan routinely offered cheaper silver plans (PDF), which are the benchmark plans that determine the Affordable Care Act's premium subsidies. Consumers with silver coverage who earn between 100% and 250% of the federal poverty level also are eligible to receive the ACA's cost-sharing subsidies, which lower their copays, coinsurance and deductibles.
Anthem and Blue Shield of California dwarfed Oscar, not only because of their sheer size, but also because of their provider networks. Even though Anthem and Blue Shield had pricier silver options, they were the only two insurers in the state that offered broad-network, PPO plans, which likely appealed to consumers who wanted more doctors and hospitals in their network, and were willing to pay more for those choices.
“The problem that Oscar has is, they are really a very narrow network,” Barrett said. “Basically, my brokers had almost zero activity with Oscar.”
Despite the early flame-out in California, Oscar appears to be picking up steam near its home base in New York and New Jersey. Anthony Cancela, CEO of Cancela Insurance Brokerage in South Plainfield, N.J., said Oscar rents out a “fairly larger network” for its individual customers and rolled out an extensive advertising campaign.
“Oscar ads were everywhere during the open enrollment,” Cancela said.
It's unclear how much traction Oscar has made in Texas, its other new market for 2016. Texas uses the federal website, HealthCare.gov, and HHS has not released enrollments by carrier.
Oscar CEO Mario Schlosser released a statement, saying the company is “thrilled by the reaction we have received from members across New York, New Jersey, Texas and California, growing from 40,000 members to over 145,000 members in just one year. It is our continued mission to provide the simple, intuitive healthcare that members love, and we look forward to continued expansion and growth throughout the U.S."