It’s Oscar season in the health insurance industry. Cigna and Oscar Health kicked off a deal that will add power to each insurer’s position in the commercial space while playing off their respective strengths. Under the name Cigna + Oscar, the two carriers will be offering fully insured plans to small employer groups in to-be-announced markets in the United States.

While Oscar has struck up deals with influential third parties in the past, the arrangement with Cigna is particularly notable. Unlike Oscar’s other deals with Humana in Nashville and Montefiore Health System in New York City, the Cigna partnership is not limited to a single geographic territory. This could signal the beginning of a broader venture than Oscar has previously undertaken. With Oscar operating this partnership under Cigna’s license it will be easier for them to break into new markets. The insurers also will share risk equally under a reinsurance agreement for products offered through this partnership.

The pair are looking to tempt small groups with attractive fully funded plans that include integrated medical, behavioral, and pharmacy services, broad access to physicians and hospitals, a concierge team assigned to individual members, digital support, featuring 24/7 telemedicine at no charge, and benefit management services.

Where will the new Cigna + Oscar products be offered first?  While neither insurer has hinted at its potential nominees, DRG data analysis has identified several major markets to consider.

Austin, TX: Cigna’s national commercial presence is strongest in Texas, and in Austin, Oscar has significantly grown its commercial presence from 2018 to 2019. With two healthy bases of enrollment already in place, Cigna + Oscar could capitalize on Ascension Seton and Baylor Scott & White Health for network partners.

Los Angeles, CA: Similar to Austin, Oscar has made significant in-roads into the exchange market in Los Angeles, where the carrier grew faster from 2018 to 2019 than in Orange County, California. Cigna also has a strong commercial base.

Nashville, TN: Oscar saw enrollment slip from 2018 to 2019, and a partnership with Cigna could give Oscar the momentum it needs to regain a foothold in the market. Plus, Oscar has a history of partnering with carriers to launch plans in Nashville.

And while New York City–based Oscar has a precedent of using this city as a launch pad for new products, in addition to having its most commercial lives in the New York City market, its tight provider network, particularly in the small-group market, makes it an unlikely choice to launch this product.

The availability of and interest by a provider network for this product, enrollment opportunity, and market competition will be strongly considered when scouting locations. It’s likely Cigna + Oscar will initially be launched in a mix of locations where Cigna and Oscar both are and markets where Cigna has a strong presence.

With so much to consider, why would Oscar partner with a large national carrier in 2020? Oscar’s position as a tech-savvy newcomer to the insurance industry has had many benefits, and its geographic reach grew considerably for the 2020 open enrollment period. Oscar added 12 new major cities for 2020, nearly doubling the large urban markets where it offered exchange plans for 2020. However, the carrier also has bumped against limitations in certain parts of the country. In the last few years, Oscar waged—and lost—a legal battle with Florida Blue over the established carrier’s monopoly in lucrative Florida health insurance exchange markets. They also have significantly narrowed networks and product scope in many of their markets to streamline operations. Oscar may have learned from these setbacks that the commercial space is not as easily upended as previously thought. Enter Cigna, a large national partner with the resources needed to grow Oscar’s commercial business.

Despite the discrepancy in covered lives, other industry experts have commented on the partnership’s mutual advantages. Cigna is a formidable partner. Its self-insured business is strong and offering fully insured plans signals a drive to diversify commercial products. Small employer groups may not yet be willing to make the leap to Cigna’s self-insured plans. Small employers may be attracted to Oscar’s focus on health information technology, customer service, and a branding scheme targeting millennials.

What remains to be seen is—will this partnership and fully insured product be attractive enough to entice small-group employers to try it and make this collaboration successful? Disruptors, like Oscar, are shaking up markets throughout the country. Add a niche product launch with a strong national player and it will only fuel this growing disruption. If they are successful, look for other insurers to follow suit and create similar partnerships that offer innovative products and present a new competitive threat.

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