It's great that the Oscar team is doing this - they seem like smart, dedicated guys. That said, they've chosen a very difficult market, and it's hard to see how they can build a profitable business around this:
1) The Affordable Care Act caps the profits of insurance companies through the imposition of the Medical Loss Ratio (see https://www.healthcare.gov/glossary/medical-loss-ratio-MLR/). Insurance companies literally have to pay back excess profits to policyholders.
2) The ACA also eliminates medical underwriting (discriminating based on prior medical history) and imposes guaranteed issue (requiring insurers to accept all applicants), making it impossible to gain competitive advantage by cherry-picking which customers to insure (like GEICO does in auto insurance).
The net effect is that insurance companies have basically become utilities. All that's left is to go for scale and efficiency, but this is a heavily regulated, very fragmented space and that greatly constrains how fast you can grow.
All that said I commend these folks for doing this - definitely a step in a right direction in an industry that could use it.
1) The Affordable Care Act caps the profits of insurance companies through the imposition of the Medical Loss Ratio (see https://www.healthcare.gov/glossary/medical-loss-ratio-MLR/). Insurance companies literally have to pay back excess profits to policyholders.
2) The ACA also eliminates medical underwriting (discriminating based on prior medical history) and imposes guaranteed issue (requiring insurers to accept all applicants), making it impossible to gain competitive advantage by cherry-picking which customers to insure (like GEICO does in auto insurance).
The net effect is that insurance companies have basically become utilities. All that's left is to go for scale and efficiency, but this is a heavily regulated, very fragmented space and that greatly constrains how fast you can grow.
All that said I commend these folks for doing this - definitely a step in a right direction in an industry that could use it.