Shelby Livingston has a story at Insider about how OSCAR, the venture backed health insurance company, thinks it just might be profitable for the first time in 2024. This will be after a decade plus and $3 billion dollars in outside capital. I’ve always contended that being an insurer is hard and boring. For a decade I can’t figure out what OSCAR does better than my former co-workers besides get good press and lose billions of dollars.
There is one quote in the story that made me roll on the floor laughing. Oscar was trying to price its plans for 2014. And an expert was saying that structurally Oscar was going to get a lot of things very wrong:
Are there problems in the health insurance industry?
YES!
Is everyone in the industry an idiot?
NO!
Capri
The bigger issue is not being able to figure out how to accurately cover the costs, but why medical care in the US costs so much to begin with. Many other countries have the same new equipment, do the same procedures, and prescribe the same drugs, yet manage to cost half as much.
Jay
@Capri:
It’s not rocket science. “For Profit” effects every level and stage of US Healthcare, and also effects many stages of “not for profit” healthcare, as “market set prices”, from staff to medications inflates costs.
Barbara
I have worked with a lot of health insurers. Whatever issues they might have attracting super smart people is not one of them. Failing to understand or use technology is also not a typical problem.
Victor Matheson
In the health insurance world, those who can, do proper actuarial analysis.
Those who can’t…. Leave the private sector and go get a PH.D.? ;-)
OzarkHillbilly
Sadly, I don’t get the joke. Literally, I am not getting the joke, just a big blank box and refreshing the page just gets me more of the same. I has a big ol’ sad. :-(
eta: I had a very small hope that after saying the above, the internet gawds would relent and show it to me just so I would feel stupid. Nope, they just hate me.
sab
@OzarkHillbilly: Me too. Perhaps it’s the same as the stuff right below it.
Math Guy
@Capri: Agreed. This is one of the few issues that really pushes my buttons. Our health care system is bats#!t crazy and causing serious harm to people.
Jay
@OzarkHillbilly:
tried a cut and paste, did not work.
The joke is basically, an insurance expert told them they would lose money because there were 35 key metrics that they were either “bad at”, or were ignoring.
The response was basically, “why? We are cool, new, an internet start up and are smart,…..”
Techbro hubris.
Chetan Murthy
OSCAR — that’s Jarvanka’s bro’s company right? Gosh, it’s sure to be a banger, I mean, those Kushner bros never fuck up, right?
OzarkHillbilly
@Jay: Thanx.
I know the type. They follow the Elon Musk model.
Amir Khalid
@OzarkHillbilly:
Consider that Dunning-Krugeriffic quote in the last full paragraph of the excerpt,,and how things turn out in the very next sentence.
Ken
@OzarkHillbilly: I think the joke is the new guys came in with their brilliant idea to make money, the experienced guy said “it won’t work”, and turned out to be right. That he was an actuary may be additional humor, but I’m not getting that — maybe because they’re experts at (statistically) predicting the future?
Oh great, I have a friend who’s an actuary, and now I’m wondering if every time he sees me he’s thinking “five years and three months, plus or minus two months”.
Jim Bales
I have to say, if an actuary tells me something is true, and it is in their area of expertise, and it is an area where I don’t have many years of focused experience, I would not bet $10 on their being them being wrong, much less $1B
YMMV
Jim
WereBear
You are proof enough for me :)
The nature of this market is how long investment in good care takes to pay off. We have created a situation where we aren’t using our knowledge of keeping people healthy because it’s not going to pay off.
When they have a “customer” for two years the motivation has to shift. Because Obamacare has done great things for prevention. Which saves the government money.
The rates of new recruits dropping out because of poor health is almost as bad as the rate during the Great War draft. Which led to government programs like free lunch (which the Congress just canceled I understand) and iodine in the salt and B vitamins in the processed flour.
All these sweeping health measures which transformed areas of the country. I think it made it possible for us to fight World War II, and win. We invested for the future.
Maybe the wrong people are making health decisions.
Jay
@Ken: Actuaries don’t tell jokes
Geminid
@OzarkHillbilly: “That wheel is a legacy technology. Surely we can invent something better than this!”
sdhays
@Jim Bales: Well, the actuary can be wrong, but I, personally, would be a little concerned if my “reasons” for thinking he was wrong were:
I mean, those aren’t reasons, they’re assertions that don’t even have any bearing, if true, on what the actuary is saying.
Venture capital sure likes to lavish money on total morons.
kalakal
@Jay: Actuaries are people who find accountancy too exciting
kalakal
@Geminid: The mindset behind the Electric Wok
jonas
So other than just have a hip ‘tude, what did Oscar *claim* it was doing to disrupt the health insurance industry?
Mike E
@Ken: it’s the curse of Cassandra.
Barbara
@Jim Bales: This is basically the Dunning Krueger syndrome on an industrial level. They assumed that they knew more than the people who had been DOING THIS FOR DECADES. Which is to say, they didn’t know what they didn’t know.
SFAW
@jonas:
“Ya know — stuff. Stuff that only WE understand, because we’re disruptors who are willing to take on the status quo. And other stuff like that. OKAY??? You got it now???”
jonas
@sdhays:
Sure. But they figure that if they throw enough money to enough people, they’ll eventually fund something *not* run by a moron that actually works and, Hey! Ka-ching! The rest of the time, though, yeah, it’s pretty much shoveling money at Entertainment 720.
SFAW
@sdhays:
Then why TF ain’t they calling ME?
OzarkHillbilly
@SFAW: You aren’t a total moron.
Baud
The reason they’re called actuaries is because they always say “Well, actually….”
Another Scott
@jonas:
“Differentiated full stack technology platform … leverage the power of personalized data … engagement…”
It sounds like they want to be the FB of health insurance.
Hey, who wants to join me in my new venture?? I’m creating the FB of auto emissions inspections! Differentiated full stack technology!! We’ll make billions!!!11
(groucho-roll-eyes.gif)
If they’re still around in 5 years, I assume that they are more likely to be the cable company that you can’t cancel than a beloved disruptive model for the future.
Reality wins in the end.
Cheers,
Scott.
Baud
@Another Scott:
Nominated!
SFAW
@OzarkHillbilly:
You sweet-talking SOB. Have we (i.e., we other jackals) had our daily “Blech” from you this AM? If not: are you feeling OK?
Old School
@SFAW: The “blech” is one thread up.
Ken
@jonas: Nearly every claim of being “disruptive” that I’ve seen over the past couple of decades has not been specific about how, except basically “we’re not doing the things that worked in the past”.
Which yes, if you come up with something that no-one ever has before, and that works better than what everyone’s been doing, you probably will be disruptive. But most of them fall down on the “works better” part.
Barbara
One thing can be true without another thing being true. Health care is a late adopter when it comes to interactive technologies (as opposed to technologies you can bill for, like MRIs). So electronic medical records and telehealth platforms (to name two obvious examples) arrived in health care a long time after other industries had adopted analogous technologies. But that doesn’t mean technology adaptation on a larger scale will lower health care costs, which seems to surprise many entities like Oscar. Because they don’t really understand what is driving high health care costs to begin with. Lack of technological adaptation is low, low on a very long list.
jonas
@Another Scott: They forgot to throw “blockchain” in there somewhere.
WereBear
@kalakal: BRILLIANT
Yes, I once worked for an accounting firm.
Another Scott
@Barbara: +1
I haven’t done a lot of looking and thinking about this, but from their mission statement above, it sounds like Oscar wants to be a middle-man, an electronic waiting room, for people wanting healthcare. To serve them ads, to direct them to favored vendors, to slice and dice all kinds of very personal data that they can package for advertisers, all for a tidy price. Very much like FB / Angi / TripAdvisor / etc with a sprinkling of 23AndMe.
So, they don’t have to understand health insurance and medical care and all the rest. They just have to charge more than their costs, and get big enough to be the only guy in town to get to the point to charge monopoly rents, to be a success. If it takes 10 years of setting money on fire to get big enough, they’ll do that as long as investors are happy with their “disruption” and “full technology stack” and “engagement”.
I assume the actuaries and the management of the 200+ year old insurance companies know what’s going on and are keeping an eye on them, but also know that reality wins in the end.
Thanks.
Cheers,
Scott.
jonas
@Ken: Or they’re simply doing things the old way and just bandying words like “disrupt” about as pure jargon to get people to click on their ads or fund them or whatever. A couple of years ago, there was this ad that kept appearing on websites I was browsing that claimed “A group of MIT undergraduates is massively disrupting the insurance industry!” (they didn’t add “…with this one weird trick” but it was about as obvious). I think curiosity got the best of me at one point and I did click to see how the awesome power of disruption was being put to use and it was… a quote comparison tool. That was it. Like Hotels.com, but, like, for auto insurance. Take that, old fogey insurance industry!
Barbara
@Another Scott: I haven’t even gotten that far, but I do know that health insurance isn’t quite like auto insurance or life insurance. It is like those things in that if you don’t need it you don’t spend much time thinking about it beyond what it costs. But if you do need it, your assessment of its features is much more personal and much more targeted to your very specific preferences than other types of insurance. And the things you care about are unlikely to include spending loads of time giving personal information to insurance companies.
Tom Levenson
@Jim Bales: You are a wise man.
cain
Some David Sirota aligned publication posted this:
https://jacobin.com/2022/06/joe-biden-medicare-prices-health-insurance
Any chance you could comment on this article, David?
Another Scott
Possibly related? This just appeared before my eyes this evening while I was doing some shoe shopping…
https://clinic.amazon.com/
Cheers,
Scott.