OSCAR Health plan, did something that I had long been skeptical it could do.
It turned a profit in the 1st quarter.
Net Income: $178 million, a $217 million improvement year over year.
It only took 10 years and lighting several billion dollars on fire trying to reinvent the wheel instead of being a fairly boring insurance company that gets decent provider contracts from hospitals and crushing its admin expenses to a level that is sort of kind of reasonable instead of obscene. It also benefitted massively from higher interest rates as it has a big cash pile accumulated for future risk adjustment payments that is collecting interest. The interest gains are most but not all of the profits. But hey, insurers are investment vehicles with weird cash policies — so not screwing this up is a good thing as they could have invested in Beanie Babies or DJT Media instead of Treasuries.
2016 Dave got this one wrong — OSCAR if it tries to be a modestly competently run insurer without the technobabble can be profitable — but it only took a decade and lighting several billion dollars on fire to focus on the competent part.
Baud
Thanks, Biden!
Snarki, child of Loki
“Lighting billions of dollars on fire” seems to be a techdude thing.
Maybe they should all go to Burning
ManCash and let more people enjoy the spectacle.JaySinWA
So how long to recover the sunk cost of all the money burned?
LeftCoastYankee
The idea that rich investors throwing tons of cash at arrogant tech bros who refuse to learn the existing business, until the time they learn that business (or at least make money) is somehow efficient is truly insane.
Organizational tech is not consumer tech, but “something something Steve Jobs…”
TBone
Founded in part by Jared Kushner’s brother Joshua. Doesn’t want to pay for old people claims anymore, moving into the younger people claims market. Olds are “unsustainable.” Revenue streams, doncha know.
TBone
Ptuey I feel dirty.
Anoniminous
With 30 or 40 trillion in cash and cash equivalent floating around the Invest-O-Sphere seeking return losing 10 or so billion is no big deal, a big nickel. They just use the loss to eliminate any tax due & move.on.
Fraud Guy
I guess they could stay solvent longer than the market could remain irrational.I mean, they ended up solvent even though the market remained rational.Keaton Miller
Hey, they didn’t just light several billion dollars on fire, they purchased (and created!) bespoke data at reasonable rates! Even the wake they threw up in the insurance business should produce at least a couple of decent papers…
BradF
Im glad you posted on this. I thought of your past posts on Oscar when the news hit. New CEO, yes, but if its just RA float earning interest, the fundamentals are still a sinking ship. What changed in their business model? Are they a different company with a techie approach or more of the same a la UHC and friends?
Brad
David Anderson
@BradF: Some of it is interest rate float, a lot of it is that they are actually pricing to risk adjustment and cut back substantially on their administrative back-end (ie all the programmers and software developpers that were going to make them the hot new thing)