Oscar Health: The 'Family Doctor' of Health Insurance Files IPO Prospectus

The U.S. health insurance market is enormous in scale and the most developed globally. Health insurance not only constitutes the mainstay of the U.S. insurance market but also holds a significant position in the nation’s economy. In 2013, the size of the U.S. health insurance market reached $2.1 trillion; despite the impact of economic downturns, total premiums continued to grow.

As the tidal wave of internet healthcare surges, a new cohort of innovators is emerging in the health insurance sector.

In October 2013, Oscar Health—a nascent insurer with a strong technological background—was established. Its three founders, Josh Kushner, Kevin Nazemi, and Mario Schlosser, were determined to bring unprecedented innovation to the traditional health insurance market through technological interfaces, telemedicine, and genuine transparency.

Typically, Americans have not regarded health insurance as a core component of the healthcare process; when an individual falls ill, insurance companies generally participate solely as payers. Oscar Health aims to redesign health insurance into a novel customer-centric experience, encouraging patients to seek guidance from their insurer before consulting a physician. As one of Oscar Health’s founders stated, “We want customers to feel as though they have a family doctor.”

Oscar Health leverages internet technology and telemedicine to maintain timely contact with members, integrating disease prevention with treatment. This approach encourages members to proactively manage their health, seek early prevention and intervention, and reduce the suffering associated with illness. Furthermore, Oscar’s insurance plans cover a comprehensive range of services—including consultations, diagnoses, and medication management—by actively engaging in the healthcare process. This enables better control over medical expenditures and mitigates the moral hazard of healthcare providers excessively inflating costs. Additionally, Oscar Health provides proactive care and support to high-risk individuals with poorer health status, thereby reducing costs associated with adverse selection.

Regardless of whether Oscar Health succeeds or fails, one thing is certain: it will send shockwaves through the health insurance and healthcare markets.

24/7 Online Telemedicine Services

As a health insurance company, Oscar Health certainly adheres to traditional practices in the health insurance sector, such as copayments and deductibles. However, its innovations lie in offering free telemedicine services, complimentary access to common medications, and online price comparison tools. Oscar Health is poised to lead a new trend: transforming insurers from passive claims processors into providers of a novel customer experience. Guided by this objective, it helps customers navigate the complex healthcare system through a comprehensive and secure approach.

Through user experience, consumer services, and innovative care options, Oscar seeks to expand the role of health insurers, transforming them into providers of medical services. Oscar aims not only to cover medical costs but also to become a primary platform that delivers around-the-clock healthcare services to patients.

For common ailments, patients can simply log on to the website to seek treatment options. Furthermore, when users renew prescriptions with a single click via their health records, they no longer need to consult expensive specialist physicians in person for prescription refills.

Oscar Health’s innovative features and many of its objectives will be delivered through telemedicine, despite the fact that telemedicine has historically been unpopular among patients. Oscar aims to change this perception by introducing new approaches, such as 24/7 online services and sleek, modern design.

The founder of Oscar Health stated that patients can consult with doctors via phone for free within the first 20 minutes. While this may not be a revolutionary concept, such a shift in behavior by health insurers regarding care-seeking represents an entirely new endeavor.

Currently, not all policyholders can log in to the insurer’s website before seeking medical care, unless they are merely checking whether a doctor is available online. Oscar Health aims for patients to view the insurance company as a means of accessing healthcare, rather than thinking of it only when seeking payment for medical expenses.

Oscar also introduced several incentive programs, such as “10 for 10.” Patients receive a $10 reward for answering ten questions. The responses are then used to develop proactive healthcare plans and help the Oscar team upgrade and update these plans based on user preferences. The answers may help a diabetic patient locate nearby nurses who can provide services, and assist web developers in improving these plans.

Oscar Health representatives stated that, to enhance flexibility, the company would consider hiring registered nurses and nurse practitioners to provide follow-up home care services for patients who require them. Postpartum mothers who prefer this type of service may request weekly visits from healthcare professionals. Patients and caregivers can also communicate to determine convenient times and locations for these services.

In New York, Oscar has formed partnerships with more than 83 companies to provide seamless remote services.

Although Oscar Health has set its sights on all uninsured individuals in New York State, young, healthy adults who are adept at using social media tools are arguably the easiest demographic to target with sales materials. The tech community and younger demographics have long been a focus of attention, yet they are typically the least inclined to purchase health insurance. Let us examine how Oscar Health attracts and retains these young, healthy customers.

Oscar Health provides young people with a simple, user-friendly website featuring a “Find Care” tool similar to Google Maps and a search function that allows you to input symptoms in plain English. It also enables you to compare prices for services such as magnetic resonance imaging (MRI) and make free calls to physicians at any time.

Risks and Challenges

In the U.S. health insurance market, there are numerous market participants, with approximately 650 insurance companies offering health insurance products. These include both comprehensive insurers and specialized health insurance companies. Due to the complex operational technologies and high barriers to entry in the health insurance sector, this field has exhibited characteristics of monopolistic competition. Notably, six major specialized health insurance giants—UnitedHealth Group, WellPoint (now Elevance Health), Aetna (part of CVS Health), Cigna, Humana, and Centene Corporation—hold significant market shares. In 2014, these six U.S. specialized health insurance companies were listed in the Fortune Global 500, accounting for 33.33% of the 18 U.S. insurance companies included in the ranking.

However, the U.S. health insurance system and healthcare coverage have long been plagued by numerous issues. Prior to the Affordable Care Act (Obamacare), the United States lacked universal health insurance; government-provided coverage was limited to vulnerable populations such as the elderly, low-income individuals, veterans, and people with disabilities, while other citizens were required to purchase commercial health insurance on their own. This resulted in a significant portion of the population lacking health coverage. Since the implementation of Obamacare, efforts have been focused on establishing a federally regulated health insurance marketplace, which has enabled a surge of startups into the healthcare sector to design personalized insurance plans tailored to different demographic groups. Oscar Health is a prime example of such companies.

Oscar Health, as a new type of health insurance company, leverages technology to make health insurance simpler, more intuitive, and user-friendly, catering to diverse populations. Currently, Oscar segments its customer base by marital status, number of children, and annual income, offering tailored health insurance plans accordingly. These plans are structured on a monthly basis and cover four key areas: physician visits, medical consultations, prescription medications, and disease prevention.

Oscar Health has long championed the mantra of “move fast and break things.” However, as a startup, it has faced skepticism from customers in its actual operations. While customer health screening surveys provide a comprehensive analysis of their physical condition, overreliance on so-called “A/B testing” (an emerging web optimization method used to improve metrics such as conversion and registration rates) has incurred substantial costs. Consequently, increased medical expenditures and psychological anxiety have instead disrupted consumers’ normal daily lives.

An anonymous user named Valleywag once complained about Oscar Health on Twitter. He claimed that the company’s poor data quality and obstructive public relations practices resulted in terrible after-sales service and exorbitantly high medical expenses. When he initially searched for physicians on the company’s website, it incorrectly labeled his doctor as out-of-network. Although he later switched to another physician, the buck-passing between Oscar Health and hospital administrators during the reimbursement process ultimately left him bearing the medical costs himself, entirely undermining the original purpose of purchasing health insurance. He later discovered that he was not alone in experiencing such issues.

Affected customers believe that Oscar Health is unethically conducting A/B tests with people’s lives and well-being, treating user health as mere objects in a database. Poor-quality data poses significant risks. In the healthcare sector, which is heavily regulated by the government, Oscar Health’s rapid growth further exacerbates these risks.

Generally, startups tend to seek investment by accumulating customers, while paying insufficient attention to product quality and user experience, merely hoping to repair relationships with users after the fact. This approach essentially gambles on users. If the aforementioned customer complaints are valid, Oscar Health is adopting a highly dangerous business model. This is particularly critical in the healthcare industry, which directly impacts people’s lives; it must not betray user trust. Once corporate credibility is damaged, it is difficult to restore, which is detrimental to the company’s long-term development.

Founding Team

Josh Kushner (Josh Kushner）



One of the three co-founders of Oscar Health, he currently serves as a Managing Partner at Thrive Capital, a venture capital firm. A young Harvard-educated entrepreneur with deep roots in traditional venture capital and a strong business background—his father and brother are both businessmen—he is also a key executive at Kushner Companies. In addition to his roles at Oscar and Thrive Capital, he has invested in seven companies, including Reddit, Hightower, Opendoor, and Zola.

Kevin Nazemi (Kevin Nazemi）



One of the co-founders of Oscar Health, Inc., and also the co-founder and CEO of Done. Nazemi holds three educational credentials from Harvard Business School, Harvard University, and the Massachusetts Institute of Technology. Previously, he was a long-time employee at Microsoft Corporation, where he served as an executive, bringing with him a strong technical background.

Mario Schloesser (Mario Schlosser）



Co-founder and CEO of Oscar Health, co-founder and former CEO of Vostu. He holds an MBA from Harvard Business School, is a visiting scholar at Stanford University with expertise in computer science, and is a senior fellow at the MIT Media Lab.

Funding Status

In July 2013, Oscar Health secured investment from BoxGroup, Thrive Capital, Khosla Ventures, and others.

$40 million Series A financing invested by 6 companies.

In January 2014, it secured $30 million in Series A financing from five investors, including Lakestar, Founder, and General Catalyst Partners.

In May 2014, it secured $80 million in funding from 14 companies, including Formation 8, Thrive Capital, Khosla Ventures, and General Catalyst Partners.

In April 2015, Oscar Health secured $145 million in financing from five companies, including Goldman Sachs, Wellington Management, and Li Ka-shing.

To date, Oscar Health has raised a total of $295 million in funding, and its current valuation has exceeded $1 billion. Last year, Forbes magazine reported on Oscar Health, stating, “Investors have assigned the company an inflated price-to-sales ratio of 11x—indicating that they view Oscar Health as a high-growth technology company rather than a traditional insurer, akin to the relationship between Tesla and Ford Motor Company.”

Indeed, compared with traditional health insurance companies, Oscar Health is leveraging internet technology and telemedicine to inject a touch of “Silicon Valley mindset” into the health insurance sector. Of its three founders, while Joshua Kushner came from the venture capital world, both Mario Schlosser and Kevin Nazemi had strong backgrounds in internet technology. The company’s Chief Technology Officer, Fredrik Nylander, is a former executive at Tumblr, the pioneering microblogging platform. Most of Oscar Health’s investors are from the venture capital community. Given that the company was built on technology and innovation, it is no surprise that investors position it as an emerging tech company.