Oscar Health is pausing sales of individual market coverage in Florida weeks before the end of this year’s open enrollment period, the company announced Monday.
New Florida customers will not be able to sign up for insurtech’s health insurance exchange programs starting Tuesday. Under federal law, existing members will be able to renew their Oscar Health coverage at any time during the annual subscription period, the company said in a press release. A company spokesperson wrote in an email that regulators in Florida or elsewhere have failed to implement corrective action plans against Oscar Health.
“This Florida pause is the result of proactive steps Oscar has taken as we consider other exits from the market to ensure that our tentative membership does not exceed the company’s target for 2023 and allows us to maintain our strong financial position.” Oscar Health aims to achieve profitability in its insurance business next year and overall profitability by 2024, the company previously advised investors.
Under the Affordable Care Act, a health insurance company can suspend registration of new exchange customers if it reports to the authorities that it does not have the necessary funds to pay the claims. indemnify. However, insurers must still ensure existing members have the ability to extend guaranteed coverage. The Florida Office of Insurance Regulations and the Centers for Medicare and Medicaid Services did not respond to requests for interview.
Before Oscar Health can begin selling products to new customers in Florida—their biggest market—insurers will need to be, said Zach Baron, associate director of health policy at the Georgetown University Law Center. must demonstrate to state and federal regulators that they have adequate capital reserves. legal initiative.
“Probably, it won’t just flip the switch back on. There’s going to be some sort of review and back and forth to make sure they don’t get into this situation again,” Baron said. “It really depends on the regulators. I feel like they don’t want to make a lot of operational changes during the open enrollment period.”
Federal regulators often pause insurance companies’ subscriptions during subscriptions because of data errors, for example, said Tricia Beckmann, director of Faegre Drinker Consulting and a former CMS regulator. such as inaccurate information about cost-sharing requirements, provider networks, or benefits. “It’s like a corrective action plan,” she says.
A corrective action plan is often the penultimate step before regulators force an insurer out of the market. Beckmann said the federal government hasn’t ordered a financially troubled health insurance exchange to stop signing up new policyholders since the early years of the market, when many health insurers cooperative economy suffered severe financial difficulties, causing most to eventually close.
Oscar Health began working with CMS in the third quarter to manage its membership in the open enrollment process at a level that “allows us to manage capital prudently,” the company wrote in Quarterly filings with the Securities and Exchange Commission on Nov. 9. Oscar Health decided to go through this process with regulators after other exchange insurers moved out of Florida, the company said. wrote in his profile.
A company spokesperson said Oscar Health is not working with regulators to suspend exchange registrations outside of Florida. Insurtech was co-founded in 2012 by Joshua Kushner and Mario Schlosser and primarily operates as a non-profit exchange provider in Florida, Texas, and California.
Nearly 60%, or more than 637,400, of Oscar Health’s 1 million members live in the Sunshine State. Insurtech has lost $117.4 million so far in Florida this year, nearly double the $9 million the company lost there in the same period a year ago, according to state financial filings.
“If you are a health insurer and your capital position is so fragile that you have to stop people from enrolling in your plan, are you really allowed to enroll people in general? ?” Ari Gottlieb, an independent healthcare consultant at A2 Strategy Group. “It is a question that no one can answer because we are operating under the supervision of the regulator. Historically, the concept of multi-billion dollar insurance startups coming to market and thriving is not something that regulators have to concern themselves with.”
Oscar Health’s suspension of Florida’s membership is among a number of recent steps the insurer has taken to limit growth.
The company almost completely shut down its Medicare Advantage business this year, giving up all of its plans except for a single product in Broward County, Florida. That plan is marketed with Memorial Health System in Hollywood and Holy Cross Health in Fort Lauderdale, which are part of Trinity Health based in Livonia, Michigan. Two Florida hospitals jointly own 50% of the co-branded plan.
Oscar Health is also leaving the exchanges in Arkansas and Colorado next year and has halted sales of its tech services for the next 18 months.
