Oscar Health isn't pulling back from the Obamacare individual market. For the fourth straight year, the health insurer plans to expand coverage. In 2019, it will offer plans in nine states, up from six this year.
"We feel very confident now that we have a real blue print and real system for going into new cities," said Oscar CEO and co-founder Mario Schlosser. He said he's confident that the market can withstand another year of regulatory headwinds.
"We do believe the individual market is stable in most parts of the country," he said.
Next year, Oscar plans to enter Florida, Michigan and Arizona — which had only one insurer in some of its biggest counties this year. It also plans to expand into new markets in Texas, Ohio, where it partnered with Cleveland Clinic, and in Tennessee, where it partnered with Humana on a small business plan. The move will effectively double its footprint next year.
The technology-driven health insurer was 12th on the 2018 CNBC Disruptor List. This year, it not only expanded its use of mobile technology to engage members, it also built up the back-end technology for managing claims and provider networks. Bringing that work in-house helped cut costs. It is also helping chart a path toward sustained long-term growth.
"We have a pretty perfected algorithm now, that we used to evaluate about 100 cities across the United States ... that prioritized for us ... everything, from which system partners could we find in those cities ... to what do the risk pools look like," Schlosser said. "We already at this point are well into the conversations for our 2020 expansion."
This week marked the deadline for insurers to file initial 2019 rates for states on the federal Affordable Care Act exchange. Early rate filings have seen insurers once again ask for double-digit rate increases ranging from 12 to more than 30 percent in some markets.
There are three major regulatory headwinds in 2019, which have insurers concerned that fewer healthy people will sign up for exchanges plans next year. Last year's repeal of the ACA penalty by Congress effectively gutted the individual mandate to buy insurance. This week, the Trump administration approved new rules for Association Health Plans, which will allow small businesses and individual entrepreneurs to buy into business group plans. Later this year, the administration is expected to issue new rules for short-term health plans, which carry fewer coverage requirements and lower premiums and could appeal to younger individuals.
"I do think there will be some impact ... from regulatory changes on the way the risk pool looks," said Schlosser. "However, we've had these influences over the last few years and we've always been able to price against it."
Price hikes could crowd out unsubsidized individuals, but higher premiums result in higher tax credits, which offset the increases for the majority of exchange plan enrollees. Half or more of Oscar members in its current markets receive subsidies.
Correction: An earlier version of this story said Oscar was operating in nine states this year. It operates in six states.