Care Transformation Center Blog

Meet Oscar: The new kid on the block that's transforming health insurance

Tom Liu

"Meet Oscar."

That’s the message you’ll find on the website of Oscar, Inc., a startup insurance company launched last fall in New York.

Founded by three Silicon Valley tech entrepreneurs, Oscar is disrupting New York’s health exchange by enticing insurance shoppers with a few unconventional benefits like free 24/7 "televisits," free generic drugs, and three free PCP visits per year.

Oscar: Just one example of the coming retail revolution

Oscar admits it’s not the cheapest plan on the market, but it’s betting that consumers will be attracted to its benefit design "perks" and handy comparison shopping tools.

Investors are certainly optimistic. Oscar recently raised $30 million from financing led by Peter Thiel’s Founders Fund, bringing its total funding to date to $75 million. And with over 800,000 individuals enrolled for coverage in New York as of April 1, even a small percentage of that market represents substantial revenues.

Oscar’s unconventional benefit design is just one example of how insurers are changing their business model, as they shift from a traditional business-to-business approach to a new business-to-consumer strategy. This shift is being spurred by a powerful trend: the "retailization" of the insurance market.

The public exchanges are projected to enroll 25 million individuals by 2018. 40 million more are projected to enroll in private exchanges. As the onus of choice for health plans shifts from employers to individuals, previously undervalued perks may become salient differentiators as individuals search for the most attractive plan.

24/7 televisits and reduced copays just might catch their eye.

How will individuals choose in a retail insurance market?

That’s the billion dollar question (or rather, $205 billion by 2021).

Will individuals demand access to a broad network? Will they only look at plans that include their primary care physician? Will they pay attention to quality and customer satisfaction ratings? Or will the exchanges simply become a platform to race to the bottom on premiums?

A recent Kaiser poll offers some clues.

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Those are the questions our research team is studying every day. If you're a Health Care Advisory Board member and a C-suite executive, join us at our 2014 CEO Special Sessions to learn more about the coming retail revolution, emerging growth channels, and the right network strategy for 2014 and beyond.


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