According to the news report by Bloomberg, the parent company of Google, Alphabet Inc. is investing $375 million in the Obamacare startup, Oscar Health. With this investment, Alphabet will own about 10% of privately held Oscar’s stake.
Oscar Health is one of a number of startups that are cashing in on the fact that millions of Americans are now flooding the private, individual health insurance market. These startups are using the Affordable Care Act (Obamacare) as the basis of their insurance policies.
Oscar Health is looking to enter the lucrative privately administered health insurance market for seniors. This market is known as Medicare Advantage and the startup is planning launch its services in this market by 2020, according to its Chief Executive Officer, Mario Schlosser.
Schlosser also said that this investment by Alphabet will allow the company to expand faster to more cities across the US.
Oscar has focused on was the massive amounts of poorly organized health care data in the market. The health care industry is in shambles at this point in time, rife with confusing regulations, widespread incentives as well as outdated technology.
The startup’s goal is to do for the health care industry, what Uber has done for the taxi industry – use technology to revolutionize the industry, making transactions faster and easier for customers. And then use the data garnered to develop radical new health care services for patients across the country.
Oscar is currently on CNBC’s 2018 Disruptor 50 List, being ranked in 12th place. The company is using a mixture of technology, partnerships with insurance providers as well as member experiences to make health insurance easier to understand for its customers, while also giving the doctors associated with this program more flexible models for payment.
The startup has built its systems and infrastructure from the ground up and now the company has got its own claims systems, clinical management systems and even a brand new network. According to Schlosser, everything the company does internally to manage health care for their customers has been reinvented as well as rebuilt using the latest technology.
The company also stated that the former Chief Executive of YouTube, Salar Kamangar is going join Oscar’s board.
Prior to this investment by Alphabet, Oscar had secured funding from two business divisions of Alphabet just a few months ago. One was Verily, which is the life-sciences arm of the company. Verily’s co-founders include Schlosser as well as Josh Kushner (the brother of one of Trump’s top advisors, Jared Kushner).
The second business division of Alphabet to invest in Oscar was Capital G, the company’s venture capital arm. Together, these two units invested about $165 million in the new startup.
This is not the first time that Oscar has worked with Alphabet. The tech giant and the startup have had a close relationship for many years now. In fact CNBC had reported in February that the two companies were contemplating submitting a joint proposal to manage the health care for thousands of low income residents in Rhode Island who were on Medicaid.
Despite the fact that those plans never really saw the light of day, Verily continues to show its support for Oscar and is clearly interested in developing further in the health insurance segment.
At the time, the startup had been able to raise funds to the tune of $900 million and garner a market valuation of $3.2 billion.
The story was first reported by Wired, the online magazine. According to Wired, Schlosser stated that the investment by Alphabet is only financial and that Oscar and the tech giant do not have any plans of entering into any collaborations at this point in time.