A $375 million investment from Google's parent company, Alphabet, will help Oscar Health launch Medicare Advantage plans, the insurance company announced Tuesday.
With the investment, New York-based Oscar said it would enter the Medicare Advantage space in 2020 and expand its presence in the individual and small business markets. Salar Kamangar, a Google executive and the former CEO of YouTube, is also joining Oscar's board.
"Oscar will accelerate the pursuit of its mission: to make our healthcare system work for consumers. We will continue to build a member experience that lowers costs and improves care, and to bring Oscar to more people," Oscar CEO Mario Schlosser said in a statement.
The new funding follows a $165 million investment from Alphabet and Founders Fund in March.
The planned expansion into Medicare Advantage marks new territory for Oscar, which so far has sold plans only in the individual and small group insurance markets. Medicare is seen as lucrative business for insurers as baby boomers age into Medicare and the Trump administration allows Advantage plans the flexibility to offer new benefits. An Oscar spokeswoman said there are no further details available on the Advantage plans.
Oscar joins a spate of other insurers investing in the space. Centene Corp. last month announced a partnership with Catholic healthcare system Ascension Health to research a joint venture that would launch a Medicare Advantage plan in 2020. Anthem also recently bought two Florida-based Advantage plans and is gearing up to grow its group Advantage membership in 2019.
In an interview with Wired, Schlosser also said the new funding will allow it to hire more engineers, data scientists, product designers and clinicians.
Since launching in 2013, Oscar has rapidly expanded its footprint in the individual market even as other insurers have scaled back their presence on the individual exchanges.
The startup, which is known for emphasizing the use of technology, telemedicine and concierge teams to augment members' care, this year serves about 240,000 individual members in six states and partners to create narrow networks with health systems like Cleveland Clinic in Ohio; Tenet Healthcare Corp. in Dallas; and Mount Sinai Health System and Montefiore Health System, both in New York.
Oscar also offers small business plans in certain areas in four states. The company reported its first quarterly profit in the first quarter of 2018, signaling its strategy of creating narrow networks through partnerships with brand-name hospital systems may be a winner.
Oscar recorded a net profit of $7.4 million in the first quarter and premium revenue of $312 million, more than three times the amount of premium revenue it reported during the same time in 2017. Oscar said it is on track to generate $1 billion in premium revenue for the year.
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