Oscar Health CEO Mark Bertolini’s implied message to Republicans eager to let the Affordable Care Act’s (ACA's) enhanced subsidies expire was clear: Do so at your own risk.
Speaking to investors during the company's quarterly earnings call, Bertolini said the ACA is helping voters in red states and that the country’s uninsurance rate is now at 8%, down from 14% a decade ago.
“Going the other way would only confound the inflationary impacts that the current race focused around and resulted in former President Trump being reelected as president,” said Bertolini, adding the subsidies may not be extended in an identical fashion.
Donald Trump and Republicans in Congress have been itching for years to repeal and replace the ACA and may take pleasure in allowing the ACA premium tax credit to expire.
The insurtech has stated repeatedly that long-term growth is aided by, but not dependent on, the continuation of the subsidies. But, now, the threat posed to the subsidies is suddenly more undeniable. Its stock is down more than 15% following Trump's electoral win, reaching a seven-month low.
Oscar is expecting double-digit ACA market growth once again, driven primarily by Medicaid redeterminations and the enhanced subsidies. Nearly two-thirds of ACA members live in GOP-led states, and there is a 76% year-over-year market growth increase in those states.
More than 21 million Americans are covered through the ACA. Oscar is in 504 counties across 18 states.
After two quarters of net profit, Oscar posted a $54 million loss and -0.22 earnings per share. Total revenue was recorded at $2.4 billion, a 68% year-over-year increase.
Medical loss ratio climbed to 84.6%, and there are now 1.65 million Oscar members in total. The company added 73,000 in the quarter.
Oscar raised its full-year guidance, projecting $9.2 billion to $9.3 billion in revenue and an SG&A expense ratio of 19.4% to 19.6%. It is predicting adjusted EBITDA will be closer to $210 million, the high end of its range.
Still, the insurer expects net profitability this year and 20% revenue compound annual growth rate by 2027.
Oscar recently announced it is launching new products focused on its Hispanic and Latino members and beneficiaries with conditions such as diabetes and pulmonary and cardiovascular diseases.
One new offering, its guided care HMO, is targeted to price-sensitive members. It features real-time referrals and a dedicated primary care physician.
“We’re launching it in a couple of markets this year,” said Bertolini. “ It is our intention to use that to get back into California. We need some more work on the California side before we can present it to the regulators there.”
If there is fear a Trump administration could spell the end of ACA subsidies, Oscar is hopeful it is more receptive to individual coverage health reimbursement arrangements (ICHRAs).
Oscar has 3,700 ICHRA members currently. It is looking at convincing part-time gig workers, small businesses and large employers to begin using these plans. The company is lobbying high-ranking government officials at the state level to pass pro-ICHRA legislation, as detailed in Fierce Healthcare's recent special report on upcoming lobbying priorities.
The company also is using artificial intelligence to improve operational efficiency, execs shared during the call.
One AI tool being deployed is a “clinical intake bot that gathers information for quicker diagnoses and a feature that pre-populates preventative screening recommendations based on medical history,” explained Bertolini.