I admit it, I can not figure out why Oscar is a media darling. I might be an old fuddy duddy stuck to the ways of a dinosaur industry but I can’t figure out what they are doing that is so vastly superior to what my former co-workers (who work at a profitable entity by the way) do. And then I read this write-up on Oscar in BackChannel and I know what their core competency is; getting the tech press to write fawning write-ups. Is that truly a market breaking and market making core competency with sustainable value?
I just want to pull out a few things that had me wait the weekend to write this as I just couldn’t go into an immediate critique.
(By the way, “members” is Oscar’s preferred term for its users — “customers” sounds too meretricious, and “patients” implies that they are sick. Oscar thinks of itself as a wellness machine.)
Members is fairly standard language at every health insurer I have ever talked to, worked for or been covered by. If I am talking with actuaries or the finance department, I’ll hear the term covered lives as well. Per Member Per Month (PMPM) is a nearly universal metric for first pass cost analysis. Quora had an answer for PMPM from 2011.
The collaboration with Mount Sinai is part of Oscar’s new “narrow network” in New York City. This term refers to a tightly bounded but high quality set of medical services, and is a key component of Oscars full-stack approach.
Everyone is doing a narrow network these days. My previous insurance was through an IDN’s narrow network. My new job’s insurance is through a narrow network. Smart insurers use narrow networks to drive both pricing down and quality up. This would have been innovative in 2004. Now it is normal. Penn’s LDI has a great brief on the evolution of QHP narrow networks.
The numbers on Schlosser’s screen marking Oscar’s subscribers don’t seem game changing— some thousands in each age group; the largest chunk in the 26 to 35 bracket. It’s not surprising that young adults are susceptible to a health care insurer with the vibe of an internet startup; after all, Oscar has been called the “Hipster Health Insurer.” But there are both older and younger signups as well, even some people over 65. “It’s exactly on target,’” says Schlosser of the mix, his English heavily accented by his native German. As for the numbers themselves, Oscar had about 120,000 members last year and may not (because it left two markets) have many more this year
What I see in this paragraph is massive risk adjustment outflows. Read more