https://mailchi.mp/cfd0577540a3/the-weekly-gist-november-11-2022?e=d1e747d2d8

In its Q3 earnings call, Oscar Health CEO Mario Schlosser revealed that the “insurtech” has pulled out of the MA market in Texas and New York, leaving it with only one Florida-based plan. Oscar entered the MA business with high hopes in 2020, but counted fewer than 5K MA members in Q3 2022.

Although its Affordable Care Act exchange enrollment has nearly doubled since last year, now covering more than 1M lives, Oscar is still struggling with high medical loss ratios, which have kept it from turning a profit. The company’s stock price is at an all-time low, having declined over 90 percent from its peak, shortly after its 2021 IPO.

The Gist: Like Bright HealthCare before them, Oscar pulling out of MA is another sign that the chance of meaningful disruption from “insurtechs” has nearly vanished. While still privately held, Oscar achieved fame in the early 2010s through catchy marketing that targeted a young, tech-savvy client base, and its move into MA before the pandemic signaled broader ambitions.

Oscar’s travails illustrate just how hard it is to start an insurance company from scratch, even with an intriguing and comprehensive technology platform. The company proved unable to overcome its lack of market power in negotiations with providers, and faced difficulty managing a small, unstable risk pool. 

Now that more traditional insurers are improving their mobile tech interfaces and telehealth offerings, the differentiated value Oscar offers to its members has clearly diminished.