- The health insurers Oscar, Clover, and Bright set out to disrupt the health-insurance industry.
- High barriers to entry and operational missteps kept them from upending much of anything.
- Americans are left with a costly, complex system ruled by dominant insurers that only grows bigger.
About a decade ago, a new breed of health insurer began to emerge. Armed with billions in venture capital, these upstarts bet that they could use modern technology to make healthcare better, cheaper, and simpler to navigate.
Oscar Health drummed up buzz with eye-catching New York subway ads and a cofounder named Kushner. The Reddit-famous Clover Health won the seal of approval from the investor Chamath Palihapitiya. In Bright Health’s case, its founders’ connections to UnitedHealthcare, the biggest, richest US health insurer, gave it some credibility.
Hype swelled around these companies, and they notched massive valuations before each went public in 2021.
Today, they’re mostly the poster children of just how challenging it is to break into the insurance industry. No longer new enough to be called startups, they continue to face setbacks, and their losses grow deeper. While their CEOs are talking about finally breaking even soon, the companies are having to rein in growth when they’ve barely got a toehold to begin with.
Any disruption has been limited, to say the least.
“I don’t think they’ve had much of an impact,” Lawton Robert Burns, a professor of healthcare management at the University of Pennsylvania’s Wharton School, said.
The insurers’ failure to disrupt the industry raises a key question: Is it possible for any startup to displace — or even compete with — established giants such as United Healthcare and Humana? As the prospects for fixing the costly and complicated system dim, the consequences could be grave.
“We have a high-cost healthcare system that’s just