Oscar drops out of NJ Obamacare

Aug. 23--Oscar, a start-up health insurance company that billed itself as a consumer-friendly option, will drop out of New Jersey's Obamacare market beginning January 1, the company's chief executive officer said Tuesday.

Mario Schlosser, CEO and co-founder, said New Jersey and one of its other markets, Dallas-Fort Worth, were facing uncertainties that would make it difficult to compete. Its exit leaves three carriers in New Jersey's exchange for 2017.

"We face the same challenging market dynamics as do other companies -- some larger, some smaller," Schlosser said in a blog posted on the company's web site.

New York-based Oscar provided coverage for 24,560 customers in New Jersey, or 6.8 percent of the market, according to the New Jersey Department of Banking and Insurance.

Its departure comes as insurance companies nationwide operating in the Obamacare marketplaces have been dropping out or raising premiums. The marketplace was created by the Patient Protection and Affordable Care Act to cover a segment of consumers who weren't covered by their employer and weren't eligible for Medicare or Medicaid.

The turmoil is a sign that consumers covered by Obamacare have been using health care services more frequently than their counterparts who have long been covered.

The company was founded in part by Joshua Kushner, whose father is Charles Kushner, of Long Branch, and whose brother is Jared Kushner. Jared Kushner's development company owns Pier Village and the Monmouth Mall, although these days he is better known as Donald Trump's son-in-law.

Oscar was compared to Uber and Airbnb, using technology to improve a product that could compete with long-standing competitors. And it seemed perfectly suited to consumers who bear more of the financial burden for their own health care.

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It isn't clear what makes New Jersey's market uncertain. Oscar declined a request for an interview. Schlosser said in his blog that it will continue to operate in New York, San Antonio, Texas, and three California markets: Los Angeles, Orange County and, in 2017, San Francisco.

Observers said Oscar's business model was innovative, but it came with a risk. It sold a product that is more complicated than, say, finding a ride or a guest room. And many Obamacare consumers were buying health insurance for the first time.

"It's too complicated a purchase," said John Sarno, president of the Employers Association of New Jersey, a trade group that has helped consumers purchase Obamacare.

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New Jersey's marketplace will have three carriers selling plans for 2017 when open enrollment begins in November: AmeriHealth New Jersey, Horizon Blue Cross Blue Shield, and Health Republic Insurance of New Jersey.

Horizon, with nearly 60 percent of the market, has the lion's share. It has aggressively added consumers through its Omnia plan that offered lower out-of-pocket costs for consumers who used its preferred network of health care providers. And it has proposed increasing premiums for 2017 by less than 5 percent, which is relatively modest.

Still, industry experts said New Jerseyans would have benefited from Oscar and other competitors coming into the market.

"It's a little bit of a blow to the consumer world, unfortunately," said Toby Stark, president of the New Jersey Association of Health Underwriters, a trade group representing health insurance brokers.

Michael L. Diamond; 732-643-4038; [email protected]

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