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Oscar Health said Tuesday it plans to stop selling health coverage to small businesses in partnership with Cigna in 2025, as the insurance upstart doubles down on growing its footprint in the individual insurance market.
Oscar and Cigna launched the joint plans in 2020, and they served about 61,000 members as of March 31. The plans are expected to generate revenue between $250 million and $260 million this year, but they ultimately struggled to make money, company executives said Tuesday during Oscar’s first-quarter earnings call.
“Both companies tried very hard over the last five years to get the thing to a place where, from an underwriting standpoint, it was profitable,” Oscar CEO Mark Bertolini said. “I think owner economics get in the way when you have different pieces of the revenue stream going to different organizations, and we just couldn’t rationalize that in a way that will make the product work longer-term.”
With former Aetna chief Bertolini at the helm, Oscar has been sharpening its focus on growing its individual marketplace membership and shedding other business lines with slower growth. The small business plans are only the latest casualty. Oscar also ditched Medicare Advantage and put on ice plans to sell its full technology platform to other insurers in favor of striking smaller tech deals.
Bertolini said Oscar plans to keep serving small employers, but through ICHRA, or individual coverage health reimbursement arrangements, in which companies give workers set amounts of money to buy their own insurance plans on the individual market. He said Oscar’s made “significant progress” on products and pilots in that area. It’s a risky bet, because ICHRA has yet to take off among employers.
Oscar said its individual insurance enrollment reached almost 1.4 million in the first quarter, an increase of 46% over a year ago. Its revenue grew 45.8% to $2.1 billion, and its net income was $177.5 million, which the company said is its first-ever quarterly profit.
A spokesperson for Cigna Healthcare said it’s committed to ensuring a smooth transition for members as it winds down its joint plans with Oscar.