Oscar Health embodies Nick Sleep's "shared economies of scale" concept: while traditional insurers use scale to boost margins, Oscar passes scale benefits to customers through lower premiums (10% below UHC) and better service (12% vs 23% claim denials). This customer-first approach creates a Costco-like virtuous cycle where better service attracts more members, generating more scale to share.
Thank you for the thoughtful piece I found it insightful, especially your conviction in Oscar’s long-term opportunity.
However, I had a few concerns and questions I’d love to get your perspective on:
1. Provider Network Ownership – Unlike UnitedHealth (UNH), Oscar doesn’t own a provider network. Without this vertical integration, how can Oscar truly control medical cost inflation or capture structural cost advantages in the long run?
2. Tech Differentiation – You mention Oscar’s technology as a key differentiator. From what I understand, UNH and other legacy insurers have similarly robust tech stacks (e.g., Optum). What makes Oscar’s tech platform structurally better rather than just more user-friendly?
3. Defensibility vs Replicability – If Oscar’s edge lies mainly in UX and brand positioning, doesn’t that leave it vulnerable to being replicated by bigger players with better scale and unit economics?
Thanks for the thoughtful questions , really appreciate the depth.
Just to clarify: Oscar does have its own provider network. It’s not as vertically integrated as UnitedHealth/Optum, but it’s not purely renting access either. They’ve built curated networks and now run their own clinics in some states, giving them a growing degree of control over cost and quality.
On tech: this is where I think the real structural edge lies. Most legacy insurers still run on systems designed in the 1970s. Oscar, on the other hand, has built a modern tech stack from scratch and they’re now integrating AI and large language models deeply into their platform. This isn’t just a UX difference. It’s an entirely different architecture, enabling a level of efficiency and adaptability that incumbents can’t easily replicate.
Of course, scale matters, but I believe Oscar’s vertical build, data stack, and tech-native DNA give it a long runway if executed well. And customers love Oscar (Net promoter).
Oscar’s tech stack is impressive, but without an in-house PBM it misses the high-frequency Rx data that fuels many real-time AI use-cases (adherence, formulary optimization, risk scoring). UnitedHealth, Cigna, and CVS integrate payer + provider + PBM data end-to-end, giving them a broader AI feedback loop.
How do you see Oscar overcoming that data gap, and can +Oscar truly scale its AI models without owning the pharmacy layer?
The lack of an in-house PBM is a real gap in Oscar’s data loop compared to fully integrated giants like UNH or CVS.
That said, Oscar’s edge isn’t about duplicating the full-stack model. It’s about building a modular, interoperable platform that can plug into pharmacy data sources via partnerships and APIs.
They don’t need to own the pharmacy layer if they can access the data at the right points and layer AI on top intelligently. That’s a different approach…lighter, more flexible, and possibly more scalable in the long run.
My first thought was: the risk of changes to the ACA marketplace, looking at the current crazy current politics, isn’t large enough to keep you reserved about making it your #1?
Great question, Wouter, and definitely something I’ve thought a lot about.
I do take ACA risk seriously, especially in today’s political climate. But my view is that the combination of growing red-state enrollment, deep system integration, and Oscar’s positioning as a tech-driven infrastructure layer gives it more staying power than many expect. And I believe Oscar’s management, especially Mark Bertolini and the team around him, are well equipped to navigate the policy jungle. They’ve been in the system long enough to understand how to adapt and secure their piece of the pie, regardless of how the landscape shifts.
I already have an opening position in Oscar, I do see all the positives you wrote about but I am not entirely sure if they miss out on the ACA part how it’ll financially look like. If there is a way around it..it’s not just policy it’s dollars they’ll miss out on. You think they have a back-up plan jn place? If they would share such a plan, thát would be a catalyst ;)
Thanks a lot, Blake! Really appreciate your thoughtful engagement and sharp questions.
Just to be transparent: I can’t go into full detail on all of this here in the comments. It’s exactly the kind of work I share with full members, and I hope you understand that I try to keep the deeper research reserved for those who support the project.
If you ever decide to join as a full subscriber, I’d be more than happy to dig into each of your points properly.
Fair enough :) Glad to hear Oscar sparked your interest. Definitely worth a deeper look. Let me know if you end up diving in…always happy to trade thoughts with thoughtful readers. Enjoy your weekend too & Thanks again!
I don’t love the timing as it seems likely the ACA subsidies will not be extended, and those expirations will lead to a significant drop in memberships next year.
If Oscar is able to offset this with penetration into new markets with similar success as measured by operational efficiency and customer satisfaction, then I will consider an investment.
That can be easier said than done as I’ve invested in competitors and watched them get caught offsides on pricing despite significant experience and expertise in the industry.
2026 will be a genuine test to Oscar’s business model and will indicate to me whether it is superior to incumbents or not.
I don’t love the share dilution, but appreciate that it has slowed materially.
If Oscar can compound near the 20% it is guiding for, or even in the high teens, it can provide excellent returns.
Oscar Health embodies Nick Sleep's "shared economies of scale" concept: while traditional insurers use scale to boost margins, Oscar passes scale benefits to customers through lower premiums (10% below UHC) and better service (12% vs 23% claim denials). This customer-first approach creates a Costco-like virtuous cycle where better service attracts more members, generating more scale to share.
Well said!
Thanks for the write up!
And thanks for reading!
Sure :)
Love the conviction!
Thanks, Joel! Always great to hear from you!
Thank you for the thoughtful piece I found it insightful, especially your conviction in Oscar’s long-term opportunity.
However, I had a few concerns and questions I’d love to get your perspective on:
1. Provider Network Ownership – Unlike UnitedHealth (UNH), Oscar doesn’t own a provider network. Without this vertical integration, how can Oscar truly control medical cost inflation or capture structural cost advantages in the long run?
2. Tech Differentiation – You mention Oscar’s technology as a key differentiator. From what I understand, UNH and other legacy insurers have similarly robust tech stacks (e.g., Optum). What makes Oscar’s tech platform structurally better rather than just more user-friendly?
3. Defensibility vs Replicability – If Oscar’s edge lies mainly in UX and brand positioning, doesn’t that leave it vulnerable to being replicated by bigger players with better scale and unit economics?
Thanks for the thoughtful questions , really appreciate the depth.
Just to clarify: Oscar does have its own provider network. It’s not as vertically integrated as UnitedHealth/Optum, but it’s not purely renting access either. They’ve built curated networks and now run their own clinics in some states, giving them a growing degree of control over cost and quality.
On tech: this is where I think the real structural edge lies. Most legacy insurers still run on systems designed in the 1970s. Oscar, on the other hand, has built a modern tech stack from scratch and they’re now integrating AI and large language models deeply into their platform. This isn’t just a UX difference. It’s an entirely different architecture, enabling a level of efficiency and adaptability that incumbents can’t easily replicate.
Of course, scale matters, but I believe Oscar’s vertical build, data stack, and tech-native DNA give it a long runway if executed well. And customers love Oscar (Net promoter).
Thank you for the reply.
Oscar’s tech stack is impressive, but without an in-house PBM it misses the high-frequency Rx data that fuels many real-time AI use-cases (adherence, formulary optimization, risk scoring). UnitedHealth, Cigna, and CVS integrate payer + provider + PBM data end-to-end, giving them a broader AI feedback loop.
How do you see Oscar overcoming that data gap, and can +Oscar truly scale its AI models without owning the pharmacy layer?
Thanks for the insights.
The lack of an in-house PBM is a real gap in Oscar’s data loop compared to fully integrated giants like UNH or CVS.
That said, Oscar’s edge isn’t about duplicating the full-stack model. It’s about building a modular, interoperable platform that can plug into pharmacy data sources via partnerships and APIs.
They don’t need to own the pharmacy layer if they can access the data at the right points and layer AI on top intelligently. That’s a different approach…lighter, more flexible, and possibly more scalable in the long run.
Thanks for the article and update!
My first thought was: the risk of changes to the ACA marketplace, looking at the current crazy current politics, isn’t large enough to keep you reserved about making it your #1?
Great question, Wouter, and definitely something I’ve thought a lot about.
I do take ACA risk seriously, especially in today’s political climate. But my view is that the combination of growing red-state enrollment, deep system integration, and Oscar’s positioning as a tech-driven infrastructure layer gives it more staying power than many expect. And I believe Oscar’s management, especially Mark Bertolini and the team around him, are well equipped to navigate the policy jungle. They’ve been in the system long enough to understand how to adapt and secure their piece of the pie, regardless of how the landscape shifts.
Thanks again for reading.
I already have an opening position in Oscar, I do see all the positives you wrote about but I am not entirely sure if they miss out on the ACA part how it’ll financially look like. If there is a way around it..it’s not just policy it’s dollars they’ll miss out on. You think they have a back-up plan jn place? If they would share such a plan, thát would be a catalyst ;)
Nice write up. I appreciate the content. The following immediate questions remain:
What are the major risks to growth?
How do margins compare to competitors?
Is Oscar managing costs better than incumbents, or dealing with similarly rising benefits ratios?
Where is valuation today?
What is a reasonable trajectory for growth expectations?
Thanks a lot, Blake! Really appreciate your thoughtful engagement and sharp questions.
Just to be transparent: I can’t go into full detail on all of this here in the comments. It’s exactly the kind of work I share with full members, and I hope you understand that I try to keep the deeper research reserved for those who support the project.
If you ever decide to join as a full subscriber, I’d be more than happy to dig into each of your points properly.
Thanks again for engaging. Means a lot.
Right on. This dialogue actually makes for a solid advertisement haha.
Appreciate the primer. Oscar has come enough for me now that I’ll have to take a look myself. Enjoy the weekend man.
Fair enough :) Glad to hear Oscar sparked your interest. Definitely worth a deeper look. Let me know if you end up diving in…always happy to trade thoughts with thoughtful readers. Enjoy your weekend too & Thanks again!
I ended up just diving in now.
I don’t love the timing as it seems likely the ACA subsidies will not be extended, and those expirations will lead to a significant drop in memberships next year.
If Oscar is able to offset this with penetration into new markets with similar success as measured by operational efficiency and customer satisfaction, then I will consider an investment.
That can be easier said than done as I’ve invested in competitors and watched them get caught offsides on pricing despite significant experience and expertise in the industry.
2026 will be a genuine test to Oscar’s business model and will indicate to me whether it is superior to incumbents or not.
I don’t love the share dilution, but appreciate that it has slowed materially.
If Oscar can compound near the 20% it is guiding for, or even in the high teens, it can provide excellent returns.