
Insurance Startup Oscar Quits Two Markets, Rethinks Obamacare Plans - JumpCrisscross
http://www.bloomberg.com/news/articles/2016-08-23/insurance-startup-oscar-quits-markets-rethinks-obamacare-plans?cmpid=BBD082316_BIZ
======
honkhonkpants
I just don't see how an operation like Oscar fits into the US healthcare
landscape. If the benefits are denominated in dollars and you don't have
strong negotiating power (Aenta) and are not vertically integrated with the
health care provider (Kaiser), how can you not be screwed? The provider can
bill $5000 for one Advil and there's little that can be done about that.

There's no way out of this problem except federal laws that sets the prices of
services. Ibuprofen has a market price of less than a penny per milligram and
that should be the end of the story. It shouldn't be possible to bill them at
$100 each just because the patient couldn't object. As long as we have a
system where the prices for goods and services come as a complete surprise to
everybody, it is impossible to have a working "market" for insurance against
risk.

~~~
drawkbox
Until we disconnect healthcare from a job then pricing will be out of wack and
way off market value. Once healthcare is more consumer focused and everyone
has individual plans then pricing can be scrutinized. Currently it is a
backdoor game with insurance and health services greatly disconnected from the
customer.

We don't get auto, life, home or any other insurance from our companies, nor
should we, so why do we still do healthcare? It causes all sorts of problems
(starting business, stuck in jobs/quitting is more difficult, ageism, etc).
Imagine if all your insurance for your auto, home and life ended when you quit
a job, it is silly that healthcare does for people without individual plans.

Also companies like Aetna and BlueCross are company focused, very different
than in auto, home or even life insurance where it has to be mostly individual
focused (think Geico, Progressive, Nationwide).

We need to disallow getting healthcare from an employer (money can be given to
help pay it but as salary). This has to change first otherwise every price
control is still set in a closed fantasy market and will never change the
game, far disconnected from the user product/service market value.

~~~
chimeracoder
> We don't get auto, life, home or any other insurance from our companies, nor
> should we, so why do we still do healthcare?

Health insurance isn't like auto or home insurance, because it's not purely
insurance. Some part of it is, because you're insuring against the risk of
rare and catastrophic conditions, but a good chunk of it is covering routine
care, which is by definition predictable. Under an insurance model, the
insured price of a routine procedure would always be slightly _higher_ than
the out-of-pocket (uninsured) price.

The phrase "health insurance" is misleading. Real insurance has a negative
expected value - you pay slightly more in expectation in exchange for having a
lower variance on your possible outcomes. But people don't want that with
health "insurance". They want health insurance to cover things that they
otherwise wouldn't be able to afford, both routine and catastrophic. That's
not insurance, which is why comparing health insurance to any other form of
insurance doesn't really make sense.

~~~
pjc50
> a good chunk of it is covering routine care, which is by definition
> predictable

I'm curious to know what you consider "routine" here? I'm trying to think of
what I'd call routine NHS care and the examples I can come up with are
childhood vaccinations (not employees), elder care (not employees, medicare in
the US), OTC trivia like paracetamol (not exactly covered in either system),
and population screening programmes like for breast and other cancers.

Then there's chronic conditions such as asthma and diabetes, and the question
of whether people who've lost that particular lottery should have a
permanently lower standard of living or not.

~~~
douche
If you have children, it's pretty statistically likely that you'll be in and
out of the doctor's office for routine things like ear infections, strep
throat, bronchitis, flu. If they play sports, you can tack on sprains, broken
bones, x-rays, concussions, and yearly sports physicals.

The difference between paying the copays for all those office visits and
paying the uninsured-but-not-in-poverty sticker price is massive.

~~~
DanBC
> doctor's office for routine things like ear infections,

Why? There's not much doctors can do for ear infection. (Or strep throat, or
flu).

~~~
douche
You know that, and I know that, but a lot of people drag their kids into the
doctor's every time they have the sniffles.

I guess they don't hand out antibiotics like they used to, but I can remember
having strep and getting a prescription for penicillin would knock it out in a
day or two, whereas suffering along and letting it run its course could take
weeks.

------
zaroth
Oscar had 130,000 customers losing about $100 million a year. OK, that's $770
per customer per year. Plans were under-priced. Did they know they were mis-
pricing the plans or did their data fall down?

Here's the thing with ACA -- it's a consistent set of terms and conditions
that you can shop against. Some of the terms might not exist otherwise,
particularly eliminating pre-existing conditions. Ideally insurance companies
would price the plans correctly, operate efficiently, and break even. Then
Americans would benefit from access to plans with these shared terms.

But here's the scary thing, that $100 million a year could be from 10-100
expensive patients. Unlimited Lifetime Benefits is a pretty awesome term. I
really don't know how you write a policy like that.

It is strange to think you could face the independent mandate while also not
having any ACA plan to choose from in your marketplace? Is the mandate
specifically waived in these cases?

~~~
CaptainZapp
> Unlimited Lifetime Benefits is a pretty awesome term.

I can only speak for Switzerland, but an educated guess is that this is the
default just in about every European health insurance system.

And no, you can't be denied (basic) insurance (which covers everything
necessary) for a pre-existing condition.

~~~
peyton
I'm an American who has lived in Switzerland. I don't wish to start a debate,
but instead to mention that from my limited experience European and American
systems have a different definition of "unlimited," and in online discussions
this definitional difference seems to result in people talking past each
other.

The limits in many European systems appear to be on self-determination. There
are real barriers in some circumstances to getting second and third and fourth
opinions, additional tests, treatment for infants born premature before a
certain week, novel and unproven procedures, etc.

I don't know which healthcare model is preferable. It appears to me the US and
European models grew under different historical circumstances and have
different failure modes.

Again, not trying to spark debate. Just contributing a personal perspective
having lived on both sides.

~~~
vertex-four
Note that in at least the UK, you can buy private coverage on top of your NHS
coverage. You can access the NHS no matter what, for only your tax money - but
you can also use whatever private provider you like. It's not particularly
uncommon as a benefit.

~~~
arethuza
Of course, worth noting that while you can opt out of using the NHS you can't
opt out of paying for it. Which I'm personally OK with - especially as for
many things private healthcare providers rely on the NHS (e.g. the consultant
who treats you at a private hospital almost certainly has a "day job" at the
NHS as was trained there).

~~~
pjc50
.. and in general private providers deal with the complicated uneconomic
problematic cases by punting them back to the NHS. The state system is
"insurer of last resort", insuring you against the failures of the private
insurance system.

I'm OK with it too (in fact have used it since my previous employer offered
insurance, so why not) as long as people understand that it's a convenience
for people for whom time is more important than money and who want to get
prompt treatment for things that are important enough to stop you working but
not enough to kill you.

~~~
arethuza
My teenage son had his tonsils taken out a couple of years back at a private
UK hospital (under my work coverage) and after the operation the anesthetist
came up to me and apologized and said there was an extra cost that (for some
reason) wasn't covered under my insurance.

Having heard all of the horror stories from the US I was quite worried until
he eventually told me how much I had to pay extra - pretty sure it was £4.20.
:-)

~~~
toomuchtodo
Amazing. That's less than the meal I just ate in the cafeteria at the hospital
(Chicago suburbs) where I'm waiting for my daughter to be born; for her birth,
I was told my cost will be somewhere between $3k-$7k, but I won't know until
the hospital has settled up with our insurance company.

~~~
arethuza
Well, that was a small additional charge. Not what the insurance cost - which
I got through my previous job so not sure what it cost (NB I did pay tax on
it, but wasn't a huge amount).

~~~
toomuchtodo
For a reference point, our health insurance costs $650/month. Wife is on a PPO
plan, I'm on a high deductible plan (out of pocket for any costs until I've
spent $6000 in a year).

------
rob-olmos
Oregon's Health CO-OP also recently went under. Basically they lost $18.4m in
2015, and were expecting to receive $5m from the federal risk adjustment
program and instead owed $900k[1].

I received less than a week's notice that my insurance plan was ending despite
them knowing for almost 2 weeks before notifying me.

1: [http://dfr.oregon.gov/public-resources/Pages/co-op-
faqs.aspx](http://dfr.oregon.gov/public-resources/Pages/co-op-faqs.aspx)

~~~
bduerst
Did you buy through ACA or get it through your employer?

At least they're letting the ACA insureds transfer their out-of-pocket amounts
to another provider.

~~~
rob-olmos
I bought it directly from Oregon's Health CO-OP because I figured it would be
safer than going through any marketplace after the whole Oregon $300m fiasco.
I don't qualify for any assistance.

Yea thankfully they are transferring those! Took them almost 3 weeks to do so
for me; I'm glad I didn't have any major costs during that period.

------
newjersey
I am an Oscar subscriber. I'd like to think I'm the ideal customer. I have
autopay so they take my money each month. I am healthy and haven't used any
benefit. Apparently I'm one of just 26k people in NJ to subscribe.

I honestly believe that at the end of the day nothing can be done about either
Healthcare or higher education or anything like that without cutting costs.
Anything we can do to reduce cost is potentially good. I want effective salary
"cap" above which you'd pay 90% odd tax.

~~~
exabrial
Yes, the first overhaul with gargantuan regulation change worked so well we
should definitely do it again and this time add salary caps for the people
removing my appendix: "You make too much money, now work on my body and don't
accidently mess up please." And by yes I mean no.

We could do something that would actually work: Deregulate the industry,
enhance legal protection for healthcare workers (to keep the lawyers from
driving prices up again). Let health insurers decide rates and demographics
they wish to cover. Legalize discounts for people with healthy habits, and
penalties for those who don't have them. And instead of trying to tax the
health insurance companies into covering people with expensive health
conditions, we could actually fund medicare (instead of both Democrats and
Republicans continuously slashing it's payments to healthcare workers).
Competition for the "healthy" people would stabilize quickly and insurance
companies would be forced to grow profits by creating plans individualised for
not so healthy people. Really the only regulation needed would be ones around
a couple of moral issues, maybe something like: no dropping people for health
conditions that aren't preventable... or have different classes of insurance
like the do in the auto industry.

One only has to look at how competitive the life insurance market to see this
work in action right now. Even with someone that has COPD can get affordable
life insurance with after a health screening.

~~~
intended
So, in economics 101, the concept of insurance was clearly explained, and by
basic definition, the more fractured the pool the worse the outcome.

I haven't really understood _why_ America finds that this law doesn't hold
over its population. And I've also looked at outcomes and found that once you
start looking at costs/bed and patient coverage, any other first world country
with a working single payer system provides significantly better outcomes.

The things that America does better are things like cutting edge cancer care,
or cutting edge X treatment, but these are accessible to the richest of the
rich (and I've seen family members who can afford it vs family members who
can't - we are talking 1% of a nation).

So why do things like "make plans for not so healthy people" come up as
concepts.

The probability for a non healthy person to get sick is 1. At this point its
like a scholarship to go to get medical care.

If I were a medicare company, I would instead keep shafting the healthy
people, fight tooth and nail to keep that population, and call it a day. For
the sick people - why bother? (1)

I really don't get America when it comes to this (and many other things, which
you guys used to be world leaders in)

Why?

And edit: And to prevent (1), you would have to create regulation, something
expressly disagreed with in the parent comment.

Matter of fact, when I have pursued this with others or read threads, people
come up with _yet more complex_ market systems to deal with the skewed
incentives, in order to avoid regulation.

~~~
cronjobber
> economics 101 ... the more fractured the pool the worse the outcome.

You're probably (I don't know) talking about large insurers being able to
aggregate non-correlated risk into a nice non-risky positive expectation of
profit.

But of course econ 101 loves nothing more than to look at the margin, and if
the marginal client simply lowers expected profit, you better fracture him
out. But you clearly know that, so what _are_ you talking about?

~~~
intended
Right - and that's why insurance is discussed as the extra-ordinary case where
the normal market rules result in worse outcomes.

More competition results in a worse functioning market. Therefore for ideal
outcomes you don't create separate insurers, and no one moves out.

My question isn't on the economics, to be honest. My question is on the weird
cultural idiosyncrasy. I don't really understand that (and by that I mean I
understand its "political", but the math and success of it is pretty clear, so
how is the topic successfully made confusing).

That's the real magic at play, and thats what I'd like insight about.

~~~
cronjobber
> My question isn't on the economics, to be honest

No, your question isn't, mine is. I still don't really know what "Econ 101"
(i.e., basic) market failure you're talking about. Can you explain like I knew
enough jargon to understand an Econ 101 explanation but slept through that one
lesson?

Intrinsic economies of scale producing oligopolistic structures in insurance –
I've seen that mentioned as a market failure, but it would be strange to fix a
tendency towards oligopoly by legalizing it into a total monopoly, no? So
you're not talking about that.

------
AznHisoka
Here in NYC, it seems Oscar has the best coverage out of all the obamacare
plans.

With the others like Blue Cross, UHC compass, etc they never seem to cover all
my doctors. Or they have a ridiculous clause where you need a referral from
your family doctor to see a specialist.

------
dforrestwilson1
This doesn't seem so much an indictment of Oscar as the current healthcare
system.

