Upstart health insurance companies made radical departures from their original business models in 2023 and enter 2024 attempting to regain the allure that attracted billions of dollars in investments.
Insurtechs Bright Health Group, Clover Health and Oscar Health spent the year paring back their businesses in response to lackluster performances and financial struggles. All have come a long way down since their splashy debuts.
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Clover Health and Oscar Health reached the end of 2023 on relatively high notes with shares prices higher than they were when the year began. Both focused on developing technology assets and announced leadership transitions during the year and are on stable financial footing heading into 2024, said Ari Gottlieb, an independent healthcare consultant at A2 Strategy. “Oscar and Clover faced market realities,” he said. “You can't lump all the companies together anymore.”
Bright Health faces considerably more difficult financial problems than its peers. On the other end of the insurtech spectrum, Alignment Healthcare and Devoted Health made strides in 2023.
Clover Health and Oscar Health declined to make executives available for interviews. Bright Health did not respond to an interview request.
Bright Health
Bright Health experienced the greatest fall in valuation this year, with its market capitalization plummeting from over $400 million at the close of 2022 to below $50 million as 2023 waned.
The company is all but out of the health insurance business and made a deal to sell its last asset in the sector, Medicare Advantage plans in California, to Molina Healthcare. The value of the transaction has declined since the companies announced it in June. Molina initially agreed to pay $600 million for the Medicare business but cut its buying price to $425 million in December.
Insurance regulators in several states have dinged Bright Health over financial shortfalls, and Texas ordered its local subsidiary into liquidation. Bright Health also came up short on its payments into the health insurance exchanges' risk-adjustment program, to which it owes $380.2 million, and is about $300 million in arrears to its creditors.
"Bright doesn’t have a lot of leverage at this point,” said Atul Pathiyal, president of payer advisory services at the Chartis Group.
Clover Health
Clover Health took a strategic U-turn in 2023, a year in which it nearly lost its listing on the Nasdaq Stock Market.
At the time of its initial public offering in 2021, Clover Health pitched its participation in the Medicare Accountable Care Organization Realizing Equity, Access and Community Health Model as a significant strength. Yet the company announced in December that it's pulling out of ACO REACH after losing money in consecutive years. Clover Health also laid off employees and outsourced its insurance administration operations in 2023.
The company has made progress controlling Medicare Advantage costs and improved its medical loss ratio in 2023. In 2024, Clover Health plans to focus on that market and to refine the Clover Assistant physician enablement tool in 2024.
Oscar Health
Oscar Health emphasized maintaining rather than growing exchange enrollment for the 2023 plan year. For the next plan year, the company expanded into 145 additional counties and slightly reduced average premiums. Oscar Health is the only for-profit health insurance exchange carrier to cut rates for 2024, according to the investment bank Stephens.
The company, which replaced co-founder Mario Schlosser with ex-Aetna chief Mark Bertolini as CEO in March, also will focus on building its technology business in 2024. The +Oscar member engagement technology platform landed a new customer in November when Oscar Health inked a deal with Sanford Health Plan, a unit of Sioux Falls, South Dakota-based Sanford Health.
