PYMNTS MonitorEdge May 2024

Oscar Health Aims to More Than Double Membership by 2027

Oscar Health reportedly aims to expand its presence in the employer market by providing more affordable health plans for small- and medium-sized businesses (SMBs).

Using its position in the Affordable Care Act market, Oscar Health aims to compete with larger insurers and increase transparency on pharmacy benefits, CNBC reported Friday (June 7).

Oscar Health CEO Mark Bertolini told CNBC that increasing transparency on pharmacy benefits is crucial in holding down costs for employers and patients. By implementing plan designs and underwriting the group, Oscar Health aims to ensure that employees are enrolled in the most suitable plans.

The move into the employer market is part of Oscar Health’s strategy to grow its membership from 1.5 million to approximately 4 million by 2027, according to the report. The company has set a target of achieving around 20% annual revenue growth over the next three years, with projected earnings of $2.25 per share in 2027.

Bertolini’s experience as the former CEO of Aetna has provided him with deep knowledge of how large insurers and pharmacy benefit managers (PBMs) operate, the report said. Last year, he played a key role in negotiating more favorable terms on Oscar Health’s PBM contract with CVS Health’s Caremark division, enabling the company to control medical costs on its plans. The contract with CVS Caremark is set to run through 2026.

Bertolini is also closely monitoring how health insurer Blue Shield of California implements its potentially disruptive PBM model, per the report. Blue Shield has contracted with a smaller PBM firm and plans to use Mark Cuban’s Cost Plus Drugs and Amazon Pharmacy as its preferred pharmacy networks starting in 2025. Bertolini said he believes that PBMs need to be more transparent with customers and pass on savings directly to them to remain relevant.

In response to increasing regulatory scrutiny, the three major U.S. PBMs, CVS’s Caremark, Cigna’s Express Scripts and UnitedHealth Group’s Optum Rx, have introduced more transparent pricing models for insurance and employer clients, according to the report.

Oscar Health reported in May that it recorded its first-ever net profit amid record customer enrollment in Affordable Care Act plans.

“The ACA now has more than 21 million people enrolled and is the fastest growing health insurance segment, driven by the gig economy, consumerization and government policies,” Bertolini said May 7 during the company’s quarterly earnings call.