New York-based health insurer startup Oscar Health recorded a $105.2 million loss in its New York and New Jersey businesses in 2015, showing insurance companies of all sizes are struggling with the new markets created by the Affordable Care Act, according to Bloomberg.
The costs associated with starting a new company took a toll on Oscar's bottom line last year. Issues such as a shortfall in the risk corridor program also contributed to the health insurer's loss.
Along with other insurers across the nation, Oscar felt the impact of the risk corridor program shortfall. The program is designed to temporarily level the financial playing field for payers by limiting both unexpectedly high gains and losses associated with participating in a new insurance market. Insurers that saw greater profits paid into a pool to compensate insurers with higher losses. The three-year program, which runs through 2016, fell short by more than $2.5 billion in its first year because so many insurers experienced losses in the individual market.
Oscar also took a hit from the ACA's risk adjustment program, which is intended to reinforce market rules that prohibit risk selection by insurers. Under the program, funds are transferred from plans with lower-risk enrollees to plans with higher-risk enrollees. Oscar paid $28.3 million into the program from New York alone last year.
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