A group of techies and venture capitalists in New York are betting that they can run a health insurer like an Internet startup... and have recruited some of Silicon Valley's biggest names to finance the venture.
Oscar is a new insurance firm that launched in late 2013. CEO Josh Kushner belongs to a prominent New York family and was an early stage investor in Warby Parker and Instagram; cofounder Kevin Nazemi is a Microsoft veteran; cofounder Mario Schlosser is a MIT Media Lab veteran and hedge funder; and CTO Fredrik Nylander is a former Tumblr executive. Peter Thiel's Founder's Fund and Vinod Khosla are investors. It's an unusual pedigree for a health insurer. Plus, while most local offices for more established health insurance firms are a few miles north in Midtown, Oscar is based out of Silicon Alley's iconic Puck Building. There's an open floor plan, Warby Parker's offices are down the way, and Kushner's Thrive Capital is upstairs.
At a media event on February 25, Kushner recounted how he was inspired to start an insurance company after receiving his health insurance bill in the mail and realizing none of it made sense to him. Plus, he sees potential to disrupt the insurance industry in the post-Obamacare world. “The Affordable Care Act was an opportunity to sell something different than the usual consumer products offered to individuals,” he said. The Affordable Care Act (better known as Obamacare) created a system of state and federal insurance marketplaces which (alongside plenty of website glitches) offer a ton of opportunities for moneymaking in health care. Since there are tens of millions of Americans who now have access to affordable health insurance of their choice, there's a chance for enterprising companies with the agility to navigate government bureaucracy to make money from that opportunity.
Oscar's product seems tailored toward the tech community and, well, young people. Oscar offers a web- and mobile-friendly aesthetic designed to make the insurance experience smoother for plan members, even if their network isn't as robust as the competition. Users are able to consult with doctors for problems like the flu over the phone (Oscar claims conversations take place within an hour of registering online) and the insurer's site offers a good search functionality for specialists. On the Oscar homepage, first care issues listed include pregnancy, depression, asthma, flu shots, back pain, and acne. Searches for specialists in the Oscar network only found in-network doctors in New York City and its suburbs; insurance buyers in, say, Buffalo or Rochester appear to be out of luck. Although Oscar's executives denied it, the young, relatively educated, and urban (or big-city suburban) uninsured appear to be their target market—at least for now.
Kushner, Nazemi, and Schlosser also tout the service's use of data. Much like other insurance providers, Oscar collects metrics on medical professionals for performance reviews—but uses them for customer recommendations as well. Using Oscar's web front end, consumers can see whether individual doctors predominantly treat patients in their twenties or thirties, what language the doctors speak, and other metrics.
In the long term, Oscar is offering the newly-insured under the Affordable Care Act a unique proposition: A health insurer deliberately catering toward digital natives. But the big question remains how scalable Oscar can be, and if it can be replicated outside of New York.