Payers, Startups

Oscar gets into bed with Humana to scale employer health insurance business (Updated)

It’s an interesting development for a company that has sought to position itself as an alternative to established health insurers.

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Note: This post has been updated to include a comment from Oscar Health’s vice president of Strategic Partnerships and news about insurance startup Bright Health.

Insurance startup Oscar is launching a joint venture with Humana for its relatively new employer health insurance channel Oscar for Business. It’s an interesting development for a company that has sought to position itself as an alternative to established health insurers. But it also offers a way for Oscar to scale up its business in new markets and more aggressively pursue would-be members who get their insurance through work.

The terms of the strategic partnership between Oscar for Business and Humana will initially focus on commercial health insurance for small businesses with 50 or fewer employees in the nine-county Nashville area, according to the news release. The new plans will be available this fall, pending regulatory approval.

The deal with Humana seems like an admission that Oscar is not capable of going it alone as an insurer, but a source familiar with the company disagreed and did not view Humana as a competitor.

In response to the question of why Oscar would collaborate with Humana, Elliott Green, vice president of Strategic Partnerships, said in an email that it offered an opportunity to help Oscar scale faster.

“We’re working with Humana because this is a partnership that quickly scales Oscar for Business and expands the same seamless, guided Oscar experience to more Americans in Nashville. Humana has strong, collaborative relationships with providers across the country and a coordinated care approach that Oscar will benefit from.”

When Oscar Health launched, it positioned itself as a transformational startup that would take what’s wrong with the insurance industry, such as lack of consumer centricity, complex user experience, and inflexibility, and improve it through a technology-led approach. Although the business has battled the bearish payer market of the past couple of years, leaving markets in New Jersey and Dallas-Fort Worth, Oscar announced last month that it planned to return to New Jersey, and would bolster its presence in San Antonio, move into Austin, and expand into California, starting with Los Angeles.

It also noted that would move into Ohio through a collaboration with Cleveland Clinic) and Tennessee. — but it had not specified at that time that it would be through an employer insurance collaboration with Humana.

Separately, insurance startup Bright Health revealed that it will expand to the Birmingham, Alabama, market in 2018 during the open enrollment period this fall. It applied to the federal government to make its Medicare Advantage plans available to residents of Shelby and Jefferson counties. The company works with broker partners, along with public and private health insurance exchanges to offer its plans in two other markets — Colorado and Arizona. Also, as part of Bright Health’s business model, it has formed a partnership with Brookwood Baptist Health in what it refers to as a Care Partnership. Birmingham is the third market for the insurer which also has a presence in Colorado and Arizona.

Photo: Ceneri, Getty Images