Health insurer Oscar Health reported a $137 million loss in the third quarter but projects returning to profitability by 2026. While membership continues to grow, the company cites rising healthcare costs and changing policy landscapes as significant challenges.
Oscar Health stands as one of the largest individual health insurance providers under the Affordable Care Act (ACA), also known as Obamacare. Boasting over 2 million members, the company saw a 28% surge in membership compared to last year, contributing to a 23% jump in total revenue reaching nearly $2.9 billion for the third quarter. Despite this growth, the company reported a wider net loss this quarter ($137.5 million) compared to the same period last year ($54.6 million).
Oscar’s struggles mirror those faced by other insurers offering government-subsidized health insurance through the ACA marketplace. These companies are grappling with soaring healthcare costs and a sicker pool of patients requiring more expensive care. Consequently, many have downgraded profit projections and announced premium hikes for 2024 to offset these escalating expenses.
Oscar’s strategy to regain profitability hinges on carefully balancing membership growth with cost management. The company aims to achieve positive net income next year by implementing this balance. They point to recent rate filings in nearly all states where they operate as evidence of this commitment. These filings reflect several key factors driving increased costs: upward trends in healthcare utilization, a surge in medical needs within their insured population (called “morbidity”), the expiration of enhanced premium tax credits originally provided under the ACA, and initiatives aimed at improving program integrity – preventing fraud and abuse.
Oscar sees an opportunity to expand its market share as competitors retreat from certain areas or entirely withdraw from the ACA marketplace. CVS Health’s Aetna is exiting Obamacare altogether for next year, while UnitedHealth Group’s UnitedHealthcare and other major players are scaling back in specific regions.
While acknowledging these challenges, Oscar CEO Mark Bertolini remains optimistic about the individual health insurance market’s future growth. He highlights the increasing number of Americans working in service-sector jobs that often lack comprehensive employer-sponsored benefits. This trend, coupled with businesses seeking affordable employee benefit options and consumers prioritizing more choices, positions Oscar favorably for expansion.
“The individual market aligns with major macroeconomic, workforce, and consumer trends,” Bertolini said. “Oscar is ahead of the demand and we are creating the future of individual healthcare for all Americans.”
