Oscar Insurance CEO: "Health insurance companies don't care"

all right thank you Matt and thanks everybody for sticking around to the end tonight I don't know what the level of sophistication on the insurance sex side generally in an Oscars case specifically here so at the start I just want to ask Mario you know let's talk about the history of Oscar in a second but maybe you can just give the room a sense for the business today what states are operating in what services you offer yeah absolutely absolutely so but the history in a couple minutes okay that's going to tell the story of what we actually do in a better way but where we are today is we're a full-stack health insurance company we currently only sell into the individual markets aka the Affordable Care Act market or Obamacare markets we have about 135 thousand members in four states now in New Jersey in New York Texas California in those states we are only in very select cities when New York City obviously Long Island's New Jersey can up states area in San Antonio and Dallas in Texas in Los Angeles in California and why we are in a place like San Antonio out of all the launch places we could go and Sue we can talk about later as we talk about networks and providers and so on and that translates into revenues of about 650 million or so an annual basis and some we've raised from obviously Joel caprara you know the first guy gave us money and bought into the idea originally but also Peter Thiel's found response Joe Lansdale Google capitals in their fidelity Goldman and so on great so you mentioned the Affordable Care Act's you want to be rewind a couple years and talk about what you if that kind of was the catalyst for the business idea for you or how in the wake of that you came up with the idea of her for Oscar yeah business comes to be from a conversation the two co-founders Josh Kushner and myself had in early 2012 my wife was going through the first pregnancy and as anybody who's gone through that's as a husband of a wife who goes through it of course or directly you kind of realize it's how complicated the healthcare system is it does complex things so there's no surprise it's complex as a system but what what really pissed me off at the time was how literally the insurance company seemed to care about the complexity it sends you these confusing statements called yo B's Meishan benefits a few months after the fact usually with everything is capitalized in these statements usually a great sign that there's no layer between you and a computer a database and the other ends now you call them yet they had no idea of how much this will cost you my wife wasn't before not on the phone on an app all the time called babycenter.com chatting with women in Alabama you know debating how much the pregnancy would cost at the end of the year and you couldn't really ask him about things like you know what c-section rate can I expect if I meet this particular physician or in in the in the delivery room the maternity wards and at the neither delivery and things like that all this information was very obviously available somewhere you know which physicians how good at which conditions one but you certainly wouldn't get it from the insurance company and so what we said is if we could create insurance company that really makes use of its own data in a way that it simplifies the experience of getting health care not just insurance but health care for the member that would be a winning proposition now the there is a reason why insurers work the way they do and the reason is that they don't actually sell to you or myself or any average other average person on the street they sell to HR departments you know the name of the game over the past decades in US healthcare has been you essentially get insurance if you're employed somewhere in your HR department makes the decision as to who you go with it's a little bit and then when you leave the employer you have to leave your insurance company's little bit like I don't know like changing hairdressers and changing from an iPhone to an Android it's two things have nothing to do with each other are weirdly artificially connected and so then along him the ACA in mid-2012 the Supreme Court reaffirms Affordable Care Act and for the first time created this market really overnight it's where we could go out as a health insurer and sell to individuals and convince them we have a good product we'll take care of you we can build a brand around it we can tell people go tell your friends they should also sign up for Oscar etc and that was a big catalyst but was not the starting point the starting point was really the user experience acts somebody ought to do more in a system that we pay 18% GDP for in making it simple and accessible now Joe let's rewind to that time for you were you thinking about you know insurance before I hate you all in Mario ah facts but it's up to you know um why our jobs pretty simple we look for really big industries that and this one it's gigantic and you pay them all sorts of money and they supposed to take care of you and really bad things happen right and it's really old what makes me look young like the industry is really all the systems are really old the business model is really old and consumers aren't anymore and it doesn't match like the business model doesn't match you then you've got this this enormous marketing cost and his enormous sales and distribution costs are like the backdrop made also it's the sense weight it was really and Josh Krishna deserves a gigantic amount of of credit here along with Mario these two guys are really did all the smart thinking my job is just to find sort of people that think in first principles and to give them as much money as we can as fast as we can and that was Mario and he said this is really broken you're a consumer guy and you love look at all these businesses you've invested in that are in the consumer space and we can make this so much better from the bottom up and we can build this and this and this and this and this and this it's not we're gonna borrow somebody else's balance sheet we're not gonna borrow somebody else's systems we're gonna build every system from the bottom up sooner or later and we're gonna make this experience wonderful pretty easy and at the time with this great guy who was an executive and residence in our in our shop and he and Mario since become good friends he ran a good-sized health insurance business now the governor of Massachusetts but at the time I remember Mario coming in and pitching the business with Josh and everybody and the guy stands up in the middle of this this is exactly what health care should be that's exactly what starts making their pitch one basically kicks Mario off the slide deck and says this is what it should be Baba so that's how does that happen now Mario this seems like what Jill is saying one of the things that he really liked about Oscar was your kind of full-stack approach so you know there's lots of ways you could have gone that wasn't full stack so why don't you tell the audience a little bit about why you think that's the best way at least in you know the health insurance market I shouldn't show you some of the slides we had in the investor presentation very early on I think and we didn't have them in anymore when we talked to Joel Letendre catalyst but in the very early design slides for Oscar we actually said oh we should be an asset light to surance company so originally the idea was always we want to be on our own paper as the industry calls it meaning whenever own capital our own balance sheet and so on to be able to make decisions more quickly and decided we want to reimburse and pay for and so on but the idea was like you're building a software projects let's get the best api's you know let's get the best platforms to connect to and work on etc we thought that's how you can build an insurance company very early on and that decidedly is not the case in in there's really two reasons for it and we had to learn some of these over the years reasonably one is sort of obvious when you go and work with vendors that are that attached themselves to payers in the industry whether it's a pharmacy benefits manager that negotiates drug prices for you whether it's a network a physician sometimes whether it is you know other things like an a utilization management vendor these are the guys like use standardized metrics of medical decision making to determine where they should whether to say yes or no to procedure requests and so on you wouldn't expect these guys to be particularly technical I can tell you some hilarious stories about you know the lack of technicality with some of these vendors with one vendor actually very early on we we told him beforehand I won't tell you who it isn't what they did for us at the time they're not a vendor anymore up in a long time but we you know we flew out there was in 2013 earlier than Dean and we said bring your technology guys we want to talk about how to tap into your systems and get real-time data exchange between you systems our systems we go into the room and the two guys who are the technology guys is the guy who plugs in the network cables and the guidance towards mecca outlook on your PC that was were the two guys that were called technology guys and they both fell asleep during the meeting they both by they flew to the meeting from somewhere else in the u.s. gigantic waste of money and time and so that wasn't so surprising you know that these vendors are not gonna be particularly technology oriented and we generally can overcome those issues by just telling them okay this you know drop stuff on secure FTP servers whatever or give us a raw data feed will sort out ourselves and so on but the second piece we were surprising that they that healthcare vendors don't live in environments where they get beaten down on their error rates health care tends to have a really ten to fifteen percent error rates where claims are wrongly codes where transmissions get dropped and so on in ways that are very core to the way the business works and nobody seems to really care all that much because again you and I as the end users of this thing are not the end customers we don't make decisions now we get pissed off we call a broker we call an insurance company complain about this half but because of the complaining you know an HR department not going to drop did you know Aetna united whatever for the 40,000 is that they have and so that's why we in in essence then says we gotta be full stack we got to do everything ourselves we got to rebuild the systems from the ground up first that we now have our own claim system we have our own processes arounds anything from utilization management to clinical research to a busy member services even inside sales and so on and you see the impact from that's when one little data point for example not surprisingly there you can make good decisions or not-so-great decisions when you select insurance plan and you really want to feel stupid once in your life and I'm sure people in this audience don't feel stupid all the time all that much you know it was all pretty smart here and try to select insurance plan it makes you really feel like an idiot's adaptable the co-pays and all these things and tables everything but there is an like an economically optimal choice you can make if you sort of know what your projected utilization will be okay when we look at who ends up in the optimally economical choice in among our members selecting insurance plans when they call our team our sales team of people on the phone you know when you buy an insurance carrier we make better decisions for them than if you go through brokers which is sort of hilarious because brokers get paid tons of money for making decisions on your behalf and don't end up making particularly smart decisions oftentimes and so long story short this sort of like full stack approach I think is the way to go it's the harder way to go for sure but it is the way to go when in the directory looks a little more like this but then it gets more financial the farther you get on the curve I think the other thing is talk about the size of the investment in technology and it's just how many of the smartest people you know said they want to go work for a big insurance company you know Mario says this all the time really not that many how many smartest people you know in New York say they want to go work for Oscar quite a few and that's to a large degree because sort of the audacity of what he just said it's just ridiculously hard task and talk out a bit about that the talent that you've been able to attract yeah we're absolutely were the biggest lamb knife shop of Bridgewater associates people which is the smartest hedge from the world so now I was there myself which I can say it's but no very smart hedge funds you know a very systematic thinkers look at the global economy try to derive how you trade the markets based in really first principles again and really in the founding story of Oscar is this sort of like inside that if there is one entity in US healthcare that sees the entirety of the data flowing through the system and also controls the money flow it is the insurance company so we really believe thoughts if you want to have really impact using data in deeper insights on how the how the health is over our works you gotta be the insurance company and so as a results you know lots of Bridgewater people but saw the hedge fund people lots of people from you know Facebook Google and so on coming over our CTO and SVP engineering is getting Allen Warren he used to run the Google engineering team in New York came over a couple months ago actually we drove a client from school Chancellor's on boards running policy in strategies so really people who just want to do ground-up stuff that's important and has an impact and not sort of like worried about getting a pizza delivered ten seconds earlier as what seems to be the goal with AI and messengerís these days you know now in addition to your full stack approach you know you decided to go direct to consumer from very early on and the ACA created this moment in time where you could sell directly to individuals but there are other verticals and insurance auto where you know that has been around for a long time so you know why I guess healthcare and why not you know try the model and in a different vertical instead at first at least well honestly I could say we had a grand plan they would look through all the insurance companies and we decided this is the way to go but I wasn't the case you know it was my wife's pregnant dammit this doesn't work let's do that but I do think in hindsight it was a it was a it was a very lucky choice in a sense because the big difference between any other insurer insurance vertical and health is the number of interaction points you have in auto insurance in home insurance in in property casual so on you don't crash your car all the time you know your auto Shore does not pay and these from and I know for your like car checkup you know every few months or so there is no preventative care in cars at least I know you know you don't go there and somebody strokes the car whatever say young liberal longer but these are all interaction points we have in health I mean health insurance companies the way our health insurance the way it's set up nowadays is is worrying about more than just when you get sick you know we we have trends of care built in not just us but every insurance company and we didn't invent this we we actually in a very unique way are economically very aligned with a member you know if we can get you healthy or keep you healthy we will make more money and I honestly like that as a economic alignments and we know the average member has four doctor visits a year has eight prescription drug refills a year and so on so you have these interaction points and so that's a very important difference because if we were in a situation where the only thing we could do is after the facts after something bad happens to you we then sometime later jump in oftentimes two months later after the insurer hears about it and say no the only conversation we can have is saying no you know it's really the only conversation you have an estimate that is why you don't really like your insurance company all that much and we try to get out in front of it so we try to teach people from the very beginning Oscar is your entry point to health care whether you do the mobile application through the website through just calling us it doesn't frankly matter and as long as we insert ourselves in the conversation and can keep you out of the traps that are laid out for you everywhere in health care physics like Mara has done an extraordinary job here like the only thing we hate more than our insurance company is our carrier our cellphone carrier like if you look at the most insurance you know the most hated industry insurance is right there and if you look at Oscar everything is built to you make us like Oscar now it's difficult time in our life we're sick claims are difficult accept etc but it's call us let us help you tell them is talk about like Thomas and talk about some of things you've done to help us sort of find who we need to better measuring outcomes so that we go to the right providers and cetera like right I mean just exactly just a few what's different actually in the experience we have so it's not 1 algorithmic deep inside it's a lot of various inventions in a way that you experience healthcare for example we became we became the first or sure every knee across the country that said let's make Televisa totally free so you push a button and the physician will call you back and that never costs you anything it's 24/7 about a third of those phone calls happen outside of office hours where the only intern of you would have had us to either sweat it outs or tell you four year old kids to sweat it out which is hard to do or go to the ER you know and now I can push a button doctor back away back why do we do this well because it does reduce ER utilization ends we also when the physician on the phone then takes notes on what is wrong with you scan those notes and look for certain keywords it indicates that you may have some other things going on with you one of the things we launched him just a couple of weeks ago a very simple thing and didn't really take as long longer than a month or so the implements is when you hang up the phone one after one of those television phone calls and the doctor mentioned to you urgent care ER something along those lines we send the fax your health care hilarious retro future kind of thing you know like in the impact to the future parts who the movie where he's in the future I remember that everything was a fax machine you know sort of like healthcare nowadays so we send actually a fax to the physician that we've detected as having been the most involved in your care which we know because we have all of your claims right and the facts simply says one-page faxes says Mario and is about to go to the ER call this number or urgent care whatever call this number type in this pin and then my cell phone will ring because we have your phone obvious you're our member when we detect that phone call goes to run through our systems we pay the doctor 25 bucks very simple thing very straightforward but physicians like it because they don't get paid for phone calls typically yeah and they don't usually have this real-time Handler and when you go to the ER doctors do not know when you went to the are they just don't unless you tell them that he went why later and so that's a kind of a unique thing we have our own team of nurses internally that reaches out proactively if we see you doing certain things on the website and not being able to find a physician we do a lot of work on algorithmic physician discovery I think with the only ensure that shows you physicians that you can go to what what do they over index on patients that look like you so if I want to see a pulmonologist I'd like to probably see a guy who sees lower patients in their thirties 37 swear ideally the oven isn't those kind of guys and so we could show you that we can route you there we do those appointment make those appointments for you were again we try to be the entry points and they capsulated the whole thing it's still very very hard there's no question he's left to say you know sometimes and it is an industry where in particular with high deductible plans which is just the new reality of health care going forward that deductibles are a thing of reality it is still very easy to have a surprise now physician we want to keep you out of but I sure was saying about a third of a membership now comes the word of mouth when we seem to be doing something right on that note you know I think any of us who've written the subway in New York City you've probably seen one of the Oscar ads down there what talk about word of mouth versus some of the other marketing channels you use how those have changed over the years and what you're seeing you know most effectiveness that I am yeah the subway ads a kind of a funny story I actually think not to claim too many first year but actually think we've kind of the first technology can be putting subway that's now it's a bit more and but why do we do this is with a bit of an odd choice just by the way notice he defines the company is a technology company not an insurance company that's exactly I mean that's why and usually you don't have that you don't do subway apps you know doctors is more popping your pimples the subway ads it wasn't really tech companies in the sense but and this was the very simple insights we started running search ads you know the usual or whatever em search engine optimization and you know banner ads or so on we just noticed we didn't get some members out of it we didn't get members out of it very early on in Canal a 2013 we first the gates in the first open Roman period for the first Obamacare year and we kind of looked into it and asked some people and and it just turns out that people didn't know us you know in in buying something as heavy as insurance you kind of do want to have an idea of what this company is about to buy insurance from and so that's what we thought is there as a way to make us look look more solids and you know doctors dismiss the wrong example but they're also banked somewhere else in the subways and so we thought let's put some out-of-home ads and that made a huge difference in subway ads consistent when we asked members or the second biggest channel and that people described as this is the reason why I John Oscar in New York the first the biggest is what a mouth is 35 percents we then took this you know by the way to two other markets Los Angeles how many people ever chose their health care and their health care insurance come because word of mouth no seriously this is really different this is upside down yeah because it wasn't possible before I mean literally and you nobody probably ever bought insurance because you all have good employers no so um but we took at other market as well out of home and it doesn't work there I can never worked in Los Angeles never worked we had a bunch of billboards New Jersey that stuff never worked so it's what works out there sorry what works out there radio works better radio in particular these sort of like DJ reads where the DJ talks a bit about the story and because again you need an authority figure in in the in New York the subway is very egalitarian hedge fund managers and you know people building your furniture or whatever alike ride the subway and in radio might be bit more like that in other places and yeah it's it's never over I mean we have a we start with we try to sort of like always straddle this line between creating awareness for the fact that we're new kind of insurance company but also still coming across the solids one of the most ever tweeted whatever ads was a guy pulling his pants up and taking a picture down his pants fixing here saying talk to a doctor anytime you want was the big hits but it's it doesn't necessarily create sort of like a solidity of that you sometimes want an insurance company but then you gotta followed up with immediately a good conversation people actually call you in and that's Eastern usually when we kind of hammer it home when you have a guy on the phone one who knows how to talk about Oscar plans and there's not a cost under somewhere else and outsource but we D in-house Joey and you know in terms of other FinTech businesses do you have general advice you give portfolio companies in terms of customer acquisition I know it's a little bit different and insurance given the ACA kind of created this pool that was available for the first time but you know that it's it's it's where a lot of folks you're spending a lot of their dollars and I try to never take your portfolio companies too much advice um when I'm giving them advice it's going in the wrong direction like they're the ones supposed to be exporting everything so um that's just a general belief I have about venture it's that you know my job is to pick people like Mario and then enable them and to try to provide advice not to hit the rails but generally speaking um I think with regard to like I think there's just a transparency that's required to sell in the consumer space today there's an honesty if you look at the insurance business at large and like Mario suggested outside of Health one of the problems is the lack of frequency of interaction and you look at how you buy indemnity insurance it's really opaque there are no communal I check 24 or something in Germany but there aren't very many comparison sort of transparency tools in the United States everything is designed to it's designed by like knuckle-dragging insurance companies that sort of you know want to keep everything a little bit gray and so on and so forth so I think today in any consumer space particularly if you're selling to sort of younger consumers use of technology just full transparency just put it out there tell everybody what you're doing in the insurance business we also over ensure consumers probably over in Shore I don't think that consumers should ever buy more insurance you should only insure up to the point that you can't afford to pay for the loss and I think that that's one of the problems with this sort of a lack of there's no normal dialogue if you're if you're sold by a broker you're heavily sold the broker is heavily incented there's enormous marketing behind it and it sort of creates this air cover and if you're sold direct you can't figure out what the hell you're buying so I think in general today in the consumer space transparency lack of opacities in the insurance base because I do think you you know there a lot of people that are interested in what are the other categories of insurance that are sort of deceive a cabal and I think there are a lot but I think a modern company has to start with I'm gonna put it out there I'm gonna tell everybody exactly what I'm doing I'm gonna make my pricing really clear I'm gonna make my benefits really clear I'm gonna make it easy to talk to me and so on and so forth does that answer a question it was I know I think so but you mentioned insurance companies that RBC packable I think in general this base is way more capital intensive than a lot of other consumer tech companies Mario okay that's a good thing like you know because if you're the best at it and if you're if you if you're the first out of the chute and you're the best at it you actually find a fair contract with consumers makes it really hard for people to copy you if you know if you're delivering pizzas 10-second shorter than the other to use Mario's sort of pejorative comparison that's not that hard to copy you if you've got a reasonably difficult industry to enter there's regulatory barriers which are difficult to understand there's capital requirements that seem pretty steep and you get good at it and you find a contract with consumers that's based on trust and transparency it's hard to compete with you that's a good thing I like that so the mode is this pretty thick once you reach that and kind of scale but I guess talk a little bit about you know how much time I guess you see yourself or you thought you would spend raising capital versus you know how much time you actually spend today and how much of that you know how much energy is required on that side of the house for raising capital yeah yeah it's a as you were saying it's a very capital intensive business there's no question and in to some degree also we as a company were a start-up within a start-up and the ACA itself is a a startup that only over the years is getting better and better understood ACA and Affordable Care Act's right and when you look at some of the big insurance carriers selling in the individual markets and you sort of like look at how did some of the government programs affect them Federal reinsurance federal risk adjustments risk corridors and all these things you've had very very big swings on a percentage basis in the PNL in for all the financials over the last couple of years and so we have to be able to withstand some of the same swings and sin of the markets has oscillate itself to a point where it is stable normal time a couple of years to go through for any new insurance market launching was the same in Medicare Part D Medicare Advantage kind of medicates are getting privatized and so on increasingly but you have to be able to verse and that's and so we had to raising amount of capital I do not like spending time on its I mean there's no question I we like spending time on obviously great conversations like this one but also mostly building the business you know and I absolutely shouldn't say I hate it but I really don't think it's it's time invested in trying to build the company if you have to go out and talk to investors all the time you know no offense Joe well but we were fortunate and also have a fantastic fundraiser a team George Kushner that we were able to we were the first out of the gates and this Sylvana almost the only one out of the gates they're still really isn't there isn't any insurance company the technology-driven selling individual market across the country still doesn't exist that's active actually there's some people raising money but not that's active and so that led to a good amount of fundraising we raised and total now about seven hundred and twenty million or so in the last four years the vast majority of which is still in the balance sheets were sixty members in the balance sheet still and that's certainly a good thing but it's also very high top-line business of course you know so I think over the next two years or so we should get from a position where we still found the business to the venture capital to a point where it actually carries itself tomorrow why do large insurance carrier where's everybody else running away from the individual market and we've got capital time energy physics running towards it yeah and so I don't think my job here yeah it's like Peter get better questions and so others say let me know I don't think everybody is running away there are some people making very good business for example the Medicaid plants that are used to more hands-on medical management that are used to actually working with individuals in different income levels but conceptually sort of like a similar business and they have actually had very good results for the past couple of years it's not a story I hear people talk about all the time but the big insurance carriers they have been sort of complaining about this but again why is it the case well because this is not their markets if you look at the PNL of the big insurance carriers they aren't even in the business of taking risk on health care anymore they're in the business of running folk arts TPA business third prime minister a business they go to self-insure companies they pay the claims they get pay the management fee for that and that's the end of it and so if you and that business the shift you have the incentives you have as you know get people off the phone don't get them to ever call you instead of you have as satisfy the HR departments you know the service built the biggest Network possible so that nobody Indians in the in the in the company compliance and the incentive eventually also is not really all that much arounds managing your costs down if you think about a business where 85% of your costs so called medical loss ratio expands at a constant rate of between six and ten percent every year that's healthcare inflation in this country of the past 30 years or so right and all you do is you mark this up by a constant 15 percents that's an awesome business I mean I don't wanna be in a business we are in the business in the sense for them I would like to not be in their business because if we keep being the business all of us together by 2050 or is that the math recently half of our GDP will go to health care that cannot be a good idea and so the to your question Joelle some of the big hair is running away from it's because they realized I got a shift my business where it's all about HR departments all about sort of like not managing cost of it that closely towards pitching to individuals having people walk out on you potentially in this new business where people can vote for their feeds and they don't like that all that much and I think the much of what's been made of the financial results in them in the markets is in my opinion overblown because again in every other launch of other insurance markets that has been the case it's difficult launch these markets for insurers to price rights give you one statistic if you look at the Congressional Budget Office projections for where individual market premiums they thought were going to be in 2016 they thought back in 2012 were they're gonna be we're still 16% below that's collectively the virtual market probably lost about that much on a molecular social basis which means you know low and behold a new market where there's competition people underpriced little and now we're gonna have to come up with little bits and then it's gonna be a good business can I ask him one more question for you no oh come on it's good one okay it better be good it's reasonable that good but um so part of building a successful business was sort of looking at this from the consumer part of this was building a technology stack that was differentiated to support that consumer sort of Center look the other part of it is defining a product and creating a product that we can afford to deliver and the breadth of product that we can afford to deliver and be highly competitive you want to talk about that a little bit yeah the integration with the provider network and the technology it takes to do all that two very important points we if you look at the way we've rolled out in in in all of the cities we've we've been in since the very early days we always basically said we're only gonna this is the San Antonio the solution of the San Antonio riddle in essence we said we only can go into cities where we can build a unique relationship with a provider system if we go on to the like business of just getting everybody in the network then then you have then you are building a system where there is no correlation between quality and costs if you look at health care nowadays and we did that math almost is the beginning on all kinds of our own claims data there's academic research in the same question there is no correlation between called in cost and healthcare this approximation when you buy a good wine must be expensive must be good whatever else or buy a good car and I must be expensive must be good there's not hold in healthcare if you have a guy who puts a sign on Park Avenue cancels all his insurance contracts everybody kind of things all that guy must be great I didn't take insurance must be a great guy not the case just not the case be very careful about this and what the future of healthcare delivery is in my opinion is an unbundling of the system where you can really go to the highest quality providers for particular issues you have in where you were then someone like us can orchestrate the experience across the boards you know answer and that's what we basically do when we when we went to San Antonio I made a big deal with with the hospital called tenants for example they owned the so-called Baptist system they are a system of hospitals and physicians and we said let's tap into your systems let's make sure we have more data bout your physicians and any other insurance company has let's make sure we can route more quickly to your physicians that make sure we can make appointments a more quickly as without you get a better experience for a lower price because we sort of like tighten these relationships more and give a better product experience healthcare is the only industry I think where you can actually say without blushing you could get a lower price products at a better quality because the u.s. is such an insane outlier in terms of what we spend on health care collectively Switzerland Germany Japan ten eleven percent of GDP goes to health care you know and they have good health care systems I can tell you that in from Germany us eighteen percent health care goes to 50 videos to health care the only country rich country in the world where you have such a big gap that needs to come out of the system and these more concentrated cured networks is really an important parts of the whole of the puzzle there in a very important way and the contact with the consumers you explain exactly what that is it's exactly right for exactly yeah we get you in with lower wait times and then you otherwise would get Providence and Los Angels the other system we did this with and you can see you're gonna see us doing this in other places as well a very important part of the of the overall story okay I'm sure there might be some questions the audience maybe give me in Joel a break from moderating here but on those coming yeah we have questions here do you think the ACA is working and is is there any worry that if Trump becomes president that Oscars business might take a hit should they impede or repeal the ACA yeah it's always a great question um so I think the ACA is absolutely working I think if you look at the positives okay we if in ten years from now 50 years now we haven't shifted health care and health insurance towards individuals making decisions I honestly think was cool as a country I really think we are the US the only one where through weird historical legacy World War two freezing of salaries so when employers get into the business of deciding on your benefits basically if you compare this to Defiance benefits pensions shifting the defined contribution or forty years or so the same will have to happen in health insurance and health care will have to get individualized the ACA is our biggest foot-in-the-door of that happening and I actually think that the fact that insurance companies all collectively underpriced in this markets which explains the sort of shaky medical loss ratios you've seen across the country is a sign that for the first time we need to lay bare your pricing holy crap they priced competitively you know they couldn't get away with pricing all over the place as you sort of like half of you kind of picture niche or depart in the sense you know so I think those aspect of the ACA are working insurers you know all have to come out and do more direct marketing build more of a brand directly worry more about the customer service and we just really see this I mean in every market we are competing you see the other insurers waking up and saying oh yeah I should reset my websites you know as long as they're only doing that's I think fine for a while but those are very good as with the ACA certainly the medical loss ratios have to become more sustainable in the prices became more sustainable that will happen in my opinion the risk pools will stabilize if anybody comes presidents I think in my opinion economic sanity will win out over time you can't turn back the clock on twelve point seven million now newly insured Americans and that will never happen wherever becomes presidents and even Trump has indicated already that some he doesn't want people at people die on the streets and so one way or the other whether through tax credits were through subsidies we have it now well through other means I think this market will continue be the case if you look at health care inflation of the past few years it's been much lower than has been before whether you can fully put this on the ACA am I don't know but there must be some correlation there for sure so long story short yes it's a good idea net survive yeah leaving aside politics they act is a few years old it's epic and it's sort of impact on the health care industry and this is three years in the beginning of a long experiment it's definitely got fixed I mean we you know right now in this is good thing called special enrollments you essentially can wait until you're sick and then buy insurance if you write yourself a letter that mario schlosser incorporated just dropped my own health insurance you know it's like a weird sort of like loophole you can you can create and that that honestly I say stop we have to make sure people understand that they have to enroll in open Romans whether they sick or not otherwise you can take advantage of the system and the money we're all paying into it that's the way insurance works but CMS and HHS is one they are on top of these things and these Kings will get worked out you talk a lot about the carrier's what role do you think providers play in the problem of health care costs and what if your experience has been with some of the larger provider systems and they play a usual I mean the reason why we have six to ten percent health care cost inflation up because the insurance companies I mean they make two three percent margins in in in price maybe again 10 50 percent of top of the health care cost it is provider pricing and that's the reason why cost of can have so much of the past couple of years and when we interact with them and again as Joe a fronted me to say they play a hugely important role in our in the way we think about the other worlds I see a huge by a huge bifurcation there and I don't know if it's 50/50 year or what the split is but there are some hospital CEOs that basically want to write the fee-for-service gravy train all the way against the wall and whether the wall would be anti trusts were regulation were consumers voting with their feet because they're enough of these health care costs inflation's i don't know but that walls gonna be there but they want to milk this thing for all its guts and there's another class hospital CEO as a base he says i want to be at risk for the healthcare i deliver almost nobody that risk in this in this country on the brighter side like they're all it's all mostly fee-for-service right you get paid for every service you deliver and that's where you get the $35 aspirin and all these things that people have written about so this class of the hospital CEOs these are the guys we want to work with and we consistently work with they are the ones who say oscar put me at risk in this let me tap into you a premium flow so I can keep my er empty and actually get paid for that now I get paid for an empty bed as opposed to only for filling a bit that's fantastic member loves its provider loves its Oscar loves that's right and that that class of CEO space is the one where we're building with you know in internet ownio and Allison in LA and increasingly also wherever wherever else we go but talk about what needs to be done with the information stacked in order to get there – yeah you can't just you can't just sort of like say oh you know I only work with one Hospital Network and what I hear this is health is one of these hilarious plays where people really sink in glacial time periods when we have that conversation providers the pic pushback we need sometimes get it's like oh yeah we try this in the mid 90s with HMOs and people didn't like it like mid 90s that's when Apple launched the Newton you know so since then they actually have built a tablet that would be wanna use you know so but they're sort of like this thing like 25 years ago it didn't work um yeah it didn't work for good reasons because you you made a deal with only one provider network and then you didn't tell anybody remembers where they can go you know and they had to wait much longer to see a physician err to go to a PCP with six with six years wait time six weeks Waits and then see the dermatologist know that crap you know so that doesn't work but if you go and bills and more deeply like a product where you literally tell the provider networks hey give me some appointment slots that Arthur can use to the schedule appointments very quickly let me use you and nurses to take to answer phone calls or your doctor's and the phone calls the staff we actually try to build with these provider systems then you can make it work very nicely when we talk to members on the phone way more than them saying I want to go this exact doctor because I have a very good scientific reason they say you know I need a colonoscopy I need a amide my child is sick with this and I had this literally couple weeks ago my son's good and his tonsils taken out who do I go to I want to answer these questions using good data using good narrative and we can do that for you if we work more deeply with the network so play a big role great this will be the last questions you've talked a little bit about Oscar's plan to grow into 30 markets but given the sort of lower than expected turnout in California what is the plan going forward and why do you think the turnout was lower than markets like New York yeah so what you mean is in California we had about 5,000 members in Los Angeles in Orange County that's out of the hundred and thirty five thousand number is not the majority you know California's big that was a bit below expectations we sort of thought we can get maybe to ten thousand so in the first year there it came mostly from I think two things one is some pricing it's always difficult at the pricing right when you go into new markets and it is just the case that some the monthly premium we charge is a big sort of like signal people look up and say can I afford this or somebody else much cheaper than we are so we came a little bit too high in price and that will continue to be that will I expect that to be the case we're going to do markets we will sometimes come in too low sometimes come in too high it is difficult to understand exactly where the medical risk and utilization will be in a new markets I can give you some preview for Orange County next year we're gonna come down in price in in a for example because we now know better where our risk is and in the in that market and what the reimbursing rates are and so on the second reason was that we start actually advertising way too late we do have to get out there and tell people the story that what they're buying with us isn't traditional insurance coverage it is that in an orchestration of health care for you you know call us as the entry point to your health care system we will do a lot of the work for you that you either to do yourself through stacks of papers and faxing well that's somebody like us can do for you and getting that narrative out is not an overnight thing getting the narrative to actually the partners we do sell with we do work with a select number of brokers as well who we can tell the story well someone take some time and so in a place like California if we come in with a low membership in the first year I I we don't sweat it at all and when the word of mouth starts kicking in that number will go up well it takes a year or more is of no concern to me in New Jersey we were at two thousand numbers in the first year in 2015 and went through thirty thousand the second year so as long as we repeat kind of like that steady growth of market share we're totally I'm very very happy and frankly we don't want to grow too quickly either because this is a insanely complicated is industry and business we're you you really want to make sure you get your systems totally rights and you are data totally right before you start offering plans okay and like that we are out of time so I want to thank Mario I want to thank my co-moderator Joel and I want to thank all of you for sticking around at the end of the day you


  1. Looks like a dynamic group of people to work with.

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  3. I don't trust ANY of these health insurance companies! I heard that this OSCAR pulled out of a whole state (New Jersey)! I long for the day when ALL of these health insurance companies are eliminated (eliminate the 'middleman'), and we obtain a single payer system, like all the other advanced industrialized nations around the world! If you are unlucky enough to have to obtain health insurance on your own (not via a large employer), be prepared to pay 'through the nose', have the option to see a very limited amount of doctors, and to be 'nickel and dimed' about what procedures and costs they will cover! The whole healthcare system is unraveling here in the USA, and no private healthcare company is going to provide a real solution! I don't have much faith in them, really.

    On an interesting note: they have disabled comments on their YouTube channel videos! Why guys?

  4. I wish you success.

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