Oscar Health execs weigh in on future of ACA subsidies, signal 2024 profitability

Editor's note: The original version of this story incorrectly attributed a quote to CFO Scott Blackley. The quote was from CEO Mark Bertolini.

Enrollment in individual market plans continues to grow, with a record high of 21.3 million people signing up for plans during the most recent open enrollment period.

Much of that, however, is due to expanded premium subsidies, which launched during the pandemic and were extended through 2025. Officials at Oscar Health, which has reaped the benefits of growing ACA enrollment, said Wednesday that they're planning for a potential future where those subsidies are no longer in place.

When asked about the possibility of the ACA subsidies being withdrawn during its earnings call, Oscar’s CEO Mark Bertolini said that Oscar considers the ACA to be a good place for growth.

“We had some interesting looks at our data this open enrollment and in this open enrollment 63% of new ACA consumers are from red states,” said Bertolini. “And 76% in the ACA open market year over year market growth is in red states."

"So, I kind of find it hard that the political dynamic that was going on six, eight years ago is going to be the same relative to the Republican party going after a group of people that largely are going to be their own constituents," he said. "We’ll see.”

However, in the event that ACA subsidies are withdrawn, Bertolini said that Oscar’s developed a plan for that possibility.

“The group we worry about the most are the people in the 100% to 200% of federal poverty level who have zero premium plans and would potentially be paying around 60 or 70 bucks a month,” said Bertolini. “That’s the place we think the impact is and we’re planning against that to find solutions for it.”

Bertolini added that the individual market “is the fastest growing segment of health insurance with over 21 million people enrolled in individual insurance plans on exchanges for 2024. Oscar is well positioned to capitalize and innovate on the strong market growth, as well as leading the industry in trends driving the future of healthcare.”

Oscar Health officials told investors on the call that their strong performance last year lays the foundation for even stronger results this year. Bertolini told investors that Oscar “closed out 2023 with another strong quarter, driving financial performance for the full year.”

The company slimmed its losses notably in 2023, posting a $270.7 million loss for the year compared to a $606.3 million loss in 2022. In the fourth quarter, the company reported a loss of $150 million, down from a $226 million loss in the prior year quarter.

In addition, revenues for 2023 were $5.9 billion, growing from $3.96 billion in 2022. For Q4, Oscar health brought in $1.4 billion in revenue, up from $995.1 million in the fourth quarter of 2022.

He said that Oscar’s strong finish sets the foundation for more growth this year. The company expects revenue for the year to be between $8.3 billion and $8.4 billion, and it is projecting that it will reach profitability for the first time, bringing in between $125 million and $175 million in earnings before interest, taxes, depreciation and amortization (EBITDA).

“We exceeded our 2024 open enrollment expectations,” Bertolini said. “We expect to serve over 1.3 million members. We continue to see strong retention, which we believe is driven by our superior members experience. Our disciplined pricing in 2024 is allowing us to grow our membership well above the market while driving margin expansion.”

Oscar reported total membership of 1 million at the end of 2023, down from 1.2 million at the end of 2022. Company officials said that this year Oscar will be operating in 20 states and 512 counties. The insurtech plans to expand operations in Arizona, Florida, Georgia, Illinois, Iowa, Kansas, Missouri, North Carolina, Ohio, Oklahoma, Tennessee, Texas, and Virginia.