Mark Bertolini, CEO of Oscar Health, is prepared to tackle the employer market.

• Mark Bertolini, CEO of Oscar Health, presented the company's three-year strategy to expand its presence in the employer market during an investor day presentation.
• Bertolini suggests that Oscar can use its presence in the ACA market to compete with larger insurers and offer more affordable health plans to small- and mid-sized businesses.
• Transparency in pharmacy benefits is crucial for controlling costs for both employers and patients, according to Bertolini.

As CEO of the health insurer for a year now, Bertolini has helped the company move towards profitability. He states that the next phase of growth and profitability for the company will involve tapping into the employer market.

Bertolini stated ahead of the company's investor day on Friday that they have a significant opportunity to create a new market by going after the 71 million lives that are in small group and middle market employers, where most employees are over-insured to take care of the few sick people in the group to get a level premium.

The Affordable Care Act exchanges were launched 10 years ago, and analysts predicted that employers would shift from group coverage to individual coverage health reimbursement arrangements (ICHRAs), allowing workers to purchase their own ACA plans with the cash provided.

According to Bertolini, the market failed to launch due to insurers' lack of focus on reducing costs for employers and their employees.

He stated that they would now implement plan designs and underwrite the group to ensure employees have the right plans, such as an ultimate flexible benefit plan.

Oscar aims to increase its membership from 1.5 million to approximately 4 million by 2027 by entering the employer market.

The company aimed to achieve approximately 20% annual revenue growth and $2.25 per share earnings in 2027 before its analyst day presentation.

Focus on PBM contracts

As CEO of Aetna for eight years, Bertolini has extensive knowledge of how large insurers and pharmacy benefit managers operate. Recently, he compared his role at Oscar to being on a pirate ship ready to disrupt big Spanish galleons filled with gold.

Last year, he assisted Oscar in securing better terms on its pharmacy benefit management (PBM) contract with Caremark, which has helped Oscar manage medical expenses on its plans.

Oscar Health's contract with CVS Caremark runs through 2026.

In the upcoming year, Bertolini will observe Blue Shield of California's implementation of its innovative PBM model.

In an effort to reduce costs for its members, Blue Shield has contracted with a smaller PBM firm for its drug benefits. Starting in 2025, it will use Mark Cuban's Cost Plus Drugs and Pharmacy as its preferred pharmacy networks.

"Bertolini believes that the PBM model has been exhausted and the company should be transparent with its customers about the savings it has created. If the company communicates this directly, either through insurance premiums or the pharmacy, it can maintain its customer base."

The three leading U.S. Pharmacy Benefit Managers (PBMs) - Caremark, Express Scripts, and Optum Rx - have faced growing regulatory oversight. In response, they have introduced more transparent pricing models for both insurance and employer clients over the past year.