Oscar Health is committed to the individual insurance market and in it for the long haul, executives said Friday.
At the company's annual investor conference, senior leaders shared plans to shift Oscar Health's focus from traditional Affordable Care Act coverage to serving the individual market — including small and mid-sized employers — through individual coverage health reimbursement arrangements or ICHRAs.
Related: Oscar Health records first-ever quarterly profit
Oscar Health disclosed during a first-quarter earnings call in May that the company had its first-ever profitable quarter, leading some analysts and consultants to think the insurer may be gaining a stronger foothold in the market.
Here are five areas Oscar Health executives touched on Friday as they laid out the company's near-term expansion opportunities.
1. Big growth plans
Oscar Health aims to grow within existing markets and beyond. By 2027, the company plans to increase its market share within its exisiting footprint from 13% to 18% and is aiming to enter at least 150 additional metropolitan statistical areas, executives told investors.
“We're confident that there is a long runway in the individual market, and that our strategies are going to position us to take advantage of that,” said Alessa Quane, chief insurance officer for Oscar Health.
The company anticipates overall growth in the individual market despite concerns that federal enhanced subsidies will lapse after 2025.
Executives did not disclose specific states or geographies in which Oscar Health is looking to expand. The insurtech enrolls about 1.4 million members in individual and small group plans, according to its first-quarter report.
2. ICHRA interest
Oscar Health is shedding more light on its interest in ICHRAs, a newer individual coverage option that Oscar Health CEO Mark Bertolini dubbed a “disruptive product.”
“It's our belief that no matter who the ICHRA player is and wherever the employer comes from, we'll stand our product up against any other individual product in the marketplace and win and take share,” Bertolini said.
Oscar Health is partnering with three vendors on pilot programs to evaluate market approaches for small to medium-sized employers, marketing opportunities, technology integrations and advocacy campaigns.
ICHRAs give insurers the opportunity to offer more products in the market, provide employers with better insight into their costs and offer employees more coverage options, Bertolini said.
Oscar Health’s total addressable market in the ACA this year is 21 million lives, and the company has the potential to reach 75 million more individuals through ICHRAs, Bertolini said. Executives said they expect small group employers and the gig economy will be more open to this coverage type, while the middle market will be more difficult to reach given the greater number of employees and rate hikes that aren’t as stiff compared with the small group market.
The company previously announced plans to sunset its Cigna+Oscar small business product next year as it doubles down on serving employers through ICHRAs.
3. Special enrollment period dilemma
Oscar Health recorded strong special enrollment period membership growth from March to May. However, executives warned continued growth throughout the year could put pressure on its medical loss ratio, which measures the percentage of premiums spent on claims, given the adverse effects of risk adjustment. The company pointed to Medicaid redeterminations or the market swelling more than anticipated as possible reasons for special enrollment growth.
“We're thrilled to have all of the SEP growth early, which is good for the bottom line. But if we saw growth go all the way through into the back half, that's where you would start to see some MLR pressure because of that partial year risk adjustment dynamic,” said Oscar Health Chief Financial Officer Scott Blackley.
4. Medicare Advantage uncertainty
Executives said turmoil in Medicare Advantage, including financial strain on carriers and disinterest from some providers, is creating an opportunity for the insurtech's +Oscar platform.
Oscar Health is looking for provider partners to create a private-label Medicare Advantage product to serve patients in the company's markets.
The insurtech pulled out of the Medicare Advantage market after initiating its exit in 2022. Executives have previously alluded to plans to re-enter the market.
5. Investments in AI
The company remains committed to building use cases for artificial intelligence to improve member satisfaction and drive down administrative costs.
In the first quarter, Oscar Health recorded a 98% claims auto-adjudication rate, which measures the share of first-time claims not processed manually. With the higher rate, the company needs fewer claims operators and produces fewer errors, said Mario Schlosser, Oscar Health co-founder and chief technology officer.
Schlosser also touted the company's technology-focused model as a way to recruit staff wanting “to work in a modern-day AI shop.”
