Another wave of losses for Oscar in Q3

For an industry traditionally scrutinized for low executive pay, one has to wonder what our executives are actually making.

Health insurance startup company Oscar endured further losses in the third quarter, in part because of efforts to build out its business and technology platforms.

Oscar lost $45 million across operations in New York, California and Texas in Q3, Bloomberg reports. In the first half of 2016, the insurer lost $83 million, according to company filings.

Nevertheless, Oscar’s investors remain confident that the startup brings a great focus to the consumer in an industry where that’s rare. On profitability, “I don’t think that this is a problem that gets solved in a year, I think it takes many,” said Joel Cutler of General Catalyst, one of the earliest investors in the startup that is now privately valued near $2.7 billion, the article notes.

Oscar's ambitions, "to build an end-to-end healthcare system that is designed to put the needs of the consumer first, and one that optimizes affordability and quality of care," have mandated "meaningful, up-front investments" that ultimately position the company for long-term success, Anne Espirtu, vice president of communications and corporate social responsibility at Oscar, said in an email to FierceHealthPayer.

Approximately two-thirds of the company's losses in Q3 are attributable to efforts to build out its business and technology, according to the article. Setting up its own narrow network, as opposed to renting a provider network, and high medical costs also factored into the losses, a person familiar with Oscar's financials told Bloomberg. 

Oscar announced earlier this year that it would scale back its provider network almost 50 percent in New York while raising premiums 16 percent. The insurer has struggled to stay in the black on its Affordable Care Act marketplace products, particularly because of shortfalls in the risk corridor program along with having to pay $28.3 million into the ACA’s risk adjustment program.

In August, Oscar said it would leave the individual marketplaces in New Jersey and Dallas. CEO Mario Schlosser noted that there are “weaknesses" in the way the marketplaces were set up. 

Other small payers, such as Evergreen Health, have complained that the risk adjustment program is disproportionately onerous for small insurers that are often more financially vulnerable.