Startup health insurers spent 2022 scaling back their businesses as investors are no longer willing to contribute the billions of dollars necessary for subsidizing them. Insurtechs Oscar Health, Clover Health and Bright Health Group’s failure to thrive at a time when most health insurers are making more money than ever has left some wondering what their future holds.
While Oscar Health, Clover Health and Bright Health all have different core businesses, their origins are largely the same. Founders who generally lacked healthcare experience started health insurance companies around the time the Affordable Care Act's exchanges went live in 2014, promising to disrupt coverage available in the new marketplaces and to capitalize on the growing Medicare Advantage program.
The companies pitched using technology to modernize a big, unloved industry dominated by legacy players. Of the $4.3 trillion in the U.S. spent on healthcare in 2021, approximately two-thirds flowed through health insurers, according to the most recent federal data. “Now is a unique moment to create a company that is relentlessly focused on serving members. We had to disrupt one of the largest industries in our country,” Oscar Health co-founder Josh Kushner said during its investor roadshow in February 2021.
