Mark Bertolini has helped Oscar Health move toward profitability after taking up as CEO of the health insurer a yr ago. Now, he says the corporate’s next phase of growth and profitability will give attention to tapping into the employer market.
That effort will include “going after the 71 million lives which are in small group and middle market employers, where most employees are over-insured to deal with the few sick people within the group to get a level premium,” Bertolini explained, ahead of the corporate’s investor day Friday.
“We’ve an enormous opportunity to create a complete latest market,” he added.
It isn’t a latest concept. When Reasonably priced Care Act exchanges launched 10 years ago, analysts predicted employers would abandon the complexities of shopping for group coverage and adopt individual coverage health reimbursement arrangements, or ICHRAs, giving staff money to purchase their very own ACA plans.   Â
Bertolini says the market never took off because insurers weren’t focused on keeping costs down for employers or their staff. Â
“What we’re now going to do is put plan designs in and underwrite the group. So we get the staff to the suitable plans — like an ultimate flexible profit plan,” he said.
Moving into the employer market is an element of Oscar’s technique to expand its membership from 1.5 million to roughly 4 million by 2027.
Ahead of its analyst day presentation, the corporate set a goal of achieving roughly 20% annual revenue growth over the following three years and earnings of $2.25 per share in 2027. Â
Concentrate on PBM contracts
After serving as CEO of Aetna for eight years, Bertolini has deep knowledge of how large insurers and pharmacy profit managers operate. Earlier this yr, he likened his role at Oscar to being on a pirate ship able to disrupt big Spanish galleons laden with gold.
Last yr, he helped Oscar negotiate more favorable terms on its pharmacy profit management, or PBM, contract with CVS Health’s Caremark division, which he says has helped Oscar control medical costs on its plans.
Oscar Health’s contract with CVS Caremark runs through 2026.
Mark Bertolini speaking on the CNBC Evolve Latest York event on June 19. 2019.
Astrid Stawiarz | CNBC
Next yr, Bertolini will likely be watching how health insurer Blue Shield of California implements its potentially disruptive PBM model.
Blue Shield contracted with a smaller PBM firm for the majority of its drug advantages in an try to rein in costs for its members. It is going to use Mark Cuban’s Cost Plus Drugs and Amazon Pharmacy as its preferred pharmacy networks starting in 2025.
“I feel the PBM model is played out,” Bertolini said. “They need to begin being legitimately straightforward with the client base and saying, we’ll pass on all of the [savings] that we have been in a position to create with the dimensions of our organization on to you. In the event that they make that leap, either through insurance premiums, or through the pharmacy itself, then I feel they will stick around.”
The three major U.S. PBMs — CVS’s Caremark, Cigna’s Express Scripts and UnitedHealth Group’s Optum Rx — have seen their businesses come under increasing regulatory scrutiny. During the last yr, all three have launched more transparent pricing models for insurance and employer clients.
