Lots of people in healthcare have been keeping a watchful eye on Oscar, a new insurance company that staked a claim as a great disruptor for the industry. So, following the launch of the Affordable Care Act (ACA) and completion of the initial enrollment period, how’s it going for Oscar? And – most importantly – how’s it going for Oscar’s customers?
Oscar, whose headquarters is in the SoHo district of NYC, describes itself as “a new kind of health insurance company that is using technology to make insurance simple, intuitive and human.” The idea of a tech company changing insurance attracted lots of press when it was announced in 2013, including “Say Hi to Oscar: The New Kid That May Change Health Insurance” (Forbes, August 19, 2013) and “Why Tech Guys Think They Can Sell Health Insurance” (Businessweek, July 24, 2013).
This year, the company appears on CNBC’s list of top 50 disruptors, and its founder, Josh Kushner, was named among Inc.’s “35 Under 35 Coolest Entrepreneurs.” Oscar continues to make headlines in major publications:
- “Does Oscar sound cooler than Aetna?” (New York magazine, June 10, 2014);
- “A friendly, approachable health insurance company? Yes, it exists” (Inc., April 23, 2014);
- “The geek guide to insurance” (The Economist, April 5, 2014);
- “Start-up health insurer finds foothold in New York” (The New York Times, March 28, 2014);
- “Oscar is a health insurance startup for digital natives” (Fast Company, February 27, 2014); and
- “Can three technologists, $40 million and Obamacare change health insurance forever?” (The Washington Post, January 1, 2014).
In May, Forbes reported that “disruptive healthcare start-up” Oscar had raised $80 million in investments so far this year on top of the $75 million it captured in 2013. But according to the numbers, despite its relatively low premiums, Oscar attracted fewer than 12,000 members, roughly two percent of New York’s enrollees. But Kushner, in the March 28 article listed above, told The New York Times, “We’re not a social app that is trying to chase the most hits. We’re trying to build something that’s going to turn the industry on its head.”
Now that the first open enrollment period is behind Oscar, however, press reports aren’t the only source of news about the company. Customers will now have stories to tell about their experiences with Oscar. For example, we came across one in a blog post that certainly gives Oscar a harsh welcome to the challenges of being an insurance company, not only on the business end, but the marketing side, as well: unhappy customers have loud voices… especially in the digital era from which Oscar itself is born.
Even though it’s only one perspective, that blog post paints a pretty bad picture. In it, a customer tells the story of getting stuck with total responsibility for over $2,000 in lab tests… despite the hospital being told by Oscar that the tests were covered by her plan. This all occurred after the customer had to switch primary care doctors because Oscar’s list of physicians incorrectly listed her original doctor as a participating provider. In her own words, the customer was left feeling “cheated” and “misled.” She also believes Oscar is “withholding and distorting information about what is covered in detail.”
Has Oscar been focused so much on the technology piece that it forgot the people piece? Will it be able to overcome these kinds of customer experiences and build a viable and profitable membership base? If not, it wouldn’t be the first time that an early adopter and disruptor failed. Time will tell.
And time is likely to bring additional disruptors to the industry, as well. As reported in The Atlantic, the health insurance industry may be “on the cusp of an oil rush,” in which competition “drive[s] the reinvention of U.S. health care” and some “stand to become unabashedly wealthy.”
So there are lessons to be learned from Oscar (and other disruptors). For example, Oscar clearly taps an audience of interest to payers and points to an experience that healthcare consumers may be craving, and so it makes sense for the industry to keep close watch, to learn from not only from Oscar’s mistakes, but also what it’s done right.