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Healthcare

A Health Insurance Company That Looks Like a Tech Startup

(Image via Shutterstock)

(Image via Shutterstock)

Imagine a future in which people are as loyal to the brand that provides their health insurance as they are to the one that makes their favorite tech gadget, search engine, or social media platform. If $30 million from Peter Thiel’s Founders Fund and a team of ex-Facebook, Google, Spotify, and Tumblr engineers succeed, the old guard of health insurance companies will have to step up the innovation and tech quotient to compete.

New York Magazine this week describes Oscar, the year-old Soho-based “tech-driven” health insurance company founded by three Harvard Business School buddies, as a serious threat to the status quo, with a “faster and more efficient infrastructure” than any of the big insurers offer. At just 16,000 subscribers and projected year-end revenues of $72 million, Oscar might not even be on Aetna’s radar yet, but considering the complexity of the industry, one industry expert calls it a “respectable start.”

NYMag’s Matthew Schaer points to the pros and cons of an insurer built by tech heads. On the one hand, he writes:

“Subscribers are mailed their membership cards in the same type of box as an iPhone and issued a profile that, à la Facebook, organizes medical information in reverse-­chronological order. There is a search engine that accepts common­sensical queries (“My tummy hurts”) and Google Maps–based software that ranks in-network health providers in a person’s immediate area. If someone prefers to speak to a doctor directly, he can click on a link, and a professional will call him back in less than an hour.”

But, Schaer asks, “is it wise to trust so much of our health history to the cloud? Is the Silicon Valley ethos, with its premium on sharing and openness—and as a corollary, the steady monetization of personal information—really compatible with the health-care system? … Perhaps most vitally, is the whole thing stable?”

Industry analyst Deanne Kasim tells Schaer that Oscar’s emphasis on openness could give it an advantage in the market. “But,” she tells him, “the bottom line is going to be the same with any small health-care company: How well are they able to manage risk over a long period? If they can’t do that, then all the technology in the world won’t help.”

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