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Bright Spot: Rise of the Digital-first Health Insurers

Health insurance startups like Oscar health and Bright health are raising new rounds of funding, beefing up their various tech tools and expanding into new coverage areas.

  • Bright Health has expanded its footprint during the 2020 Open enrollment to 13 new markets including Florida, Illinois, North Carolina, Ohio, Oklahoma and South Carolina

  • Oscar Health, The Alphabet-backed health insurance start-up recently raised an additional $165 million at a $3.5 billion valuation to help expand into new markets and to beef up their operating cash pile.

  • 4 of the original 23 CO-OPs are operating in 5 states for 2019, and two of them decreased their premiums for 2019

One of the best parts of the ACA in its early days was the provision in the law that allowed funding to be allocated to help newer, slimmer, more tech-savvy entrants into the health insurance game gain momentum. The idea was great on many fronts, the most impactful being that the government, and by extension, CMS had spent years gathering all kinds of rich data on the Health and wellness needs of the Average American, and with a little funding and the power of technology, API's, Artificial intelligence, anyone with a plan and a vision to build a health insurance organization to provide cheaper, more inclusive plans could do so.

These new types of players were branded Co-ops. And for a while the plan worked, before political uncertainty around the Affordable Care Act caused a general reversal in the willingness of healthcare providers to fully participate in the various health markets to subside.

Many new health insurance startups were birthed via the unshakable support of the Obama Administration. Outfits like Common Ground Healthcare Cooperative in Wisconsin and Mountain Health CO-OP (Montana Health CO-OP) in Montana and Idaho were launched to provide quality affordable health insurance in the localities that needed them the most. The areas in which folks only had access to one major insurance player. This plan worked up until the loss of funding caused most of these types of providers to go out of business.

Now it's 2019, and as we get into the full swing of the 2020 ACA open enrollment period, there seems to be a handful of well-funded, patient-focused, tech-savvy health providers out there that have stepped up to fill the gaps left by the likes of United Health Care and Humana.

Two of these health payers have taken on more funding from various well-known Venture Capital and Private equity firms; and expanded into new markets. The first of which is Oscar health, the Health insurance company started by Joshua Kushner, brother of Presidential Adviser and Son-in-law to Trump, Jared Kushner.

Oscar Health, The Alphabet-backed health insurance start-up recently raised an additional $165 million at a $3.5 billion valuation to help expand into new markets and to beef up their operating cash pile. Although originally primarily in New York State, the health startup plans to significantly expand its footprint for the 2020 plan year and beyond.

Oscar was founded in 2012 by current CEO Mario Schlosser, Kevin Nazemi (who is no longer with the company), and Joshua Kushner, brother of senior Trump advisor Jared Kushner. Its mission was to take advantage of the new marketplaces for individuals to buy health insurance created by the Affordable Care Act (Obamacare). It started out in New York, but has now expanded to five other states.

Another tech-focused health insurance provider making waves this year is Bright Health. The Minneapolis, MN-based health insurance provider recently announced it had raised over $200 million in funding to help expand into newer markets.

The company, started by former United Health Chief Executive, Bob Sheehy, Kyle Rolfing, the former CEO of Definity Health; and Tom Valdivia, another former Definity Health executive.

The company now provides various individual health and Medicare plans in Alabama, Arizona, Colorado, New York City, Ohio, and Tennessee.

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