Insurance startup Oscar Health seeks entry to Covered California

UPDATED. Insurance startup Oscar Health is seeking approval to enter California’s health benefits exchange by 2016, telling its board of directors that the company’s focus on consumers would be beneficial to the state. Started in early 2014, New York-based Oscar is trying to position itself as the technology-driven, consumer-focused alternative to the big carriers. It’s […]

UPDATED.

Insurance startup Oscar Health is seeking approval to enter California’s health benefits exchange by 2016, telling its board of directors that the company’s focus on consumers would be beneficial to the state.

Started in early 2014, New York-based Oscar is trying to position itself as the technology-driven, consumer-focused alternative to the big carriers. It’s experience in New York and New Jersey, the company said, indicates that the demand is growing.

“Oscar’s founders were frustrated with the available health insurance choices and thought there was a better way to provide health insurance coverage,” co-founder Kevin Nazemi wrote in a letter to Covered California. “Oscar seeks to do things differently — to make health insurance simple, human, smart and transparent.”

It’s not immediately clear if the exchange, headed by Peter Lee, will permit Oscar entrance to the vast California insurance market. Covered California explained to MedCity News that managed Medi-Cal (Medicaid) health plans could apply to all California region. Any new plan could as well, so long as they were licensed as of August 2012. Plans licensed after August 2012 could apply only in certain regions of California. Those regions — 1,9,11,12 and 13 —  are among the most rural and far flung areas of the state (see map) with the exception of Fresno.

In related news, Lee and the board of Covered California denied 2016 entry for UnitedHealth, saying the original insurers in the marketplace shouldn’t be undercut by United, which sat out the first two years and ceased its individual coverage in the state. Aetna and Cigna likewise opted to stay on the sidelines initially.

Oscar couldn’t reasonably join the exchange since it was founded after the fact in 2014. Insurance Commissioner Dave Jones has been critical of Covered California by saying residents deserve more options, including the likes of United.

Covered California did not disclose what other health plans have applied to join by 2016.

“United and other plans that were in the market in 2012 should have a higher bar,” Lee told the LA Times. “We think the health plans that helped make California a national model should not in essence be undercut by plans that sat on the sidelines.”

The biggest plans currently in the exchange include Anthem, Blue Shield of California, Kaiser Permanente and HealthNet, along with a mix of regional HMOs. United can join by 2017, Lee said.

Oscar is hoping Covered California will buy into its consumer and tech-focused approach, which includes 24-7 access to physicians through Teladoc.

“While more isn’t always better – especially when it’s more of the same – meaningful choice among health insurance companies leads to a more competitive and robust market,” Nazemi said.