| Oscar Health signaled on Wednesday that it’s doubling down on its investment in ICHRAs, also known as individual coverage health reimbursement arrangements. |
| The insurance option allows employers to give their workers pre-tax money they can use to purchase their own health coverage on the individual market, rather than providing a group health plan to all employees. It’s an area of health insurance innovation we’ve had our eyes on for years, because of the potential for ICHRA to disrupt traditional employer-sponsored insurance. |
| Oscar said it bought an individual market brokerage and direct enrollment tech platform, and is planning to launch an ICHRA plan with the Midwest grocery chain Hy-Vee. The plan will offer concierge medicine through Hy-Vee clinics to employers and workers in Des Moines, Iowa. |
| For those following along this earnings season, it’s not a particularly great time to be an insurer with plans on the ACA exchanges. Oscar hasn’t been spared from that. It reported a loss of $228 million in the second quarter, in line with the financial results it previewed in July. The insurer blamed “an increase in average market
morbidity” as the ACA marketplace membership skews sicker, which led to a bigger risk adjustment payment. |
| It said it expected to return to profitability in 2026 by hiking premiums and cutting expenses, including through layoffs. (An Oscar spokesperson didn’t answer a question about how many employees would be laid off, instead pointing us to a transcript of the company’s earnings call.) |
| “The individual market is experiencing a reset moment, but the market is resilient and we see significant opportunity for long-term growth,” CEO Mark Bertolini said on the earnings call. “The individual market's fundamental characteristics combined with ICHRA will drive a growing and stable risk pool over the long term.” |
| We’re skeptical that the individual market will bounce back quickly. The likely expiration of enhanced ACA subsidies at the end of this year, plus new administrative hurdles to signing up for coverage, could spur more healthy folks to leave the marketplace and require even higher premium hikes from insurers. |
| As far as ICHRA, the insurance option has yet to take off in a real way, with just 1 million people buying coverage with the arrangements, according to one estimate. It’s unclear how many ICHRA members Oscar serves. The spokesperson didn’t give us a number, only saying Oscar is “continuing to attract more employers and employees to the individual market through ICHRA” and offers ICHRA plans in 18 states. |
| - Shelby and Lydia |
