Oscar Health is aiming to significantly expand its presence in the employer market by offering more affordable health plans tailored to small- and medium-sized businesses (SMBs). Leveraging its strong position in the Affordable Care Act (ACA) market, the company seeks to compete with larger insurers by enhancing transparency in pharmacy benefits, according to a CNBC report on Friday (June 7).
CEO Mark Bertolini emphasized the importance of transparency in managing pharmacy benefits to control costs for both employers and patients. By implementing strategic plan designs and underwriting, Oscar Health aims to enroll employees in the most suitable plans, ensuring cost-effectiveness and efficiency.
This strategic move into the employer market is part of Oscar Health’s broader goal to increase its membership from the current 1.5 million to approximately 4 million by 2027. The company targets an annual revenue growth rate of about 20% over the next three years, with projected earnings of $2.25 per share by 2027.
Bertolini’s extensive experience as the former CEO of Aetna has provided him with deep insights into the operations of large insurers and pharmacy benefit managers (PBMs). Last year, his expertise was pivotal in securing more favorable terms in Oscar Health’s PBM contract with CVS Health’s Caremark division, allowing the company to better manage medical costs. This contract with CVS Caremark extends through 2026.
Bertolini is also closely monitoring Blue Shield of California’s innovative PBM model. Blue Shield has partnered with a smaller PBM firm and plans to utilize Mark Cuban’s Cost Plus Drugs and Amazon Pharmacy as its preferred pharmacy networks starting in 2025. Bertolini believes that for PBMs to stay relevant, they need to increase transparency and pass on savings directly to customers.
In response to growing regulatory scrutiny, the three major U.S. PBMs—CVS’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s Optum Rx—have introduced more transparent pricing models for their insurance and employer clients.
In May, Oscar Health reported its first-ever net profit, driven by record enrollments in ACA plans. “The ACA now has more than 21 million people enrolled and is the fastest-growing health insurance segment, driven by the gig economy, consumerization, and government policies,” Bertolini said during the company’s quarterly earnings call on May 7.
