You know how a couple of guys, after a couple beers, will float the idea that they should totally open a bar someday?
Well, nobody says that about health insurance companies.
Except that Josh Kushner, Mario Schlosser and Kevin Nazemi are totally opening a health insurance company.
It's called Oscar Health Insurance, and the New York trio of co-founders is treating this venture much like any other tech business that they've been involved in or invested in -- including the likes of Instagram, MakerBot and Microsoft. It's an opportunity, they say, to bring their digital know-how into an industry in the midst of a consumer-directed transformation.
"Where we are today [in health insurance] is where we were not so long ago with personal retirement," said Mr. Nazemi, a Harvard Business School grad who spent five years in marketing and product management at Microsoft before moving into the consulting world. The day of the pension is coming to an end, just as the one-size-fits-all corporate health plan seems to be.
The employer "will curate your choices, but ultimately, you're in control ... that same shift is happening [in] the health care world. That shift really does create room for a brand new insurer."
And Oscar really is a brand new insurer -- it's not an alternate nameplate for an established national operator. Oscar will be one of 16 insurers offering coverage on the New York Health Benefit Exchange come Oct. 1. If all goes well in New York, there's a possibility Oscar will begin offering health plans in neighboring states.
"We're not writing this business on someone else's book of business," Mr. Nazemi said. "Oscar is an insurer just like any other."
Except that they hope it will be different from every other insurer out there, focusing sharply on the online, interactive end of things where design meets operability.
Logging into your health insurance account via Oscar (hioscar.com) will bring you to a Facebook-style timeline of your interactions with doctors, pharmacists, hospitals and so on. Clicking one icon will refill your prescription. Click another and you are connected with a 24-hour-a-day physician consultation service.
Because they are building their system from scratch, Oscar won't be encumbered by trying to install new technology on top of years and years of legacy systems, as is the case with established insurers.
They want "a consumer experience that's extremely easy to use. That's a contrast to the existing systems that are out there today," Mr. Nazemi said. "They have functionality. But it feels like a visit to Times Square."
The trio, backed by $40 million from several Silicon Valley investors and 30 full-time employees, is undeterred by the ludicrousness of it all.
It's been 15 years since a new commercial health carrier entered the New York market. The trend in heath insurance -- as with hospitals -- is mergers and consolidations, not new offerings. Aetna completed its acquisition of Coventry Health Care in May; in the same month, Blue Cross Blue Shield of Delaware became Highmark Delaware, reflecting Highmark Inc.'s new controlling stake. Before that, WellPoint Inc. announced it would acquire Amerigroup Corp., while Cigna Corp. bought HealthSpring Inc., each insurer hoping to bolster its Medicaid and Medicare units.
It's an arms race that shows little sign of abating, given the additional regulatory and financial restraints imposed on the industry by the Affordable Care Act -- profit caps, new fees and new rules on who can (or rather, can't) be denied health insurance.
Is there even room for a boutique insurer?
"I never want to count [out] people who start with a blank slate," said Robert Laszewski, president of Health Policy and Strategy Associates, a Virginia consulting firm. That's a good way to discourage, for example, the Southwest Airlines of the world, those who enter a market dominated by legacy carriers and beset by mergers.
But "that doesn't mean that their chances of success are great," he said. "The chances that they will fail are great."
On the other hand, "This is much of what policymakers were hoping for when they decided to construct the exchanges," said Duke University School of Law professor Barak Richman, who teaches health care policy and antitrust law. "That the rules of the game would be fairly clear, and that the marketplace would be opened up to people who have creative ideas."
All of the co-founders (Mr. Kushner started at Goldman Sachs, has launched his own venture capital firm and co-founded a social gaming company Vostu; Mr. Schlosser was also at Vostu and he'll serve as co-CEO at Oscar) know something about long odds and rapid success at a young age (each is in his late 20s or early 30s).
Mr. Nazemi, when he was in sixth grade, scored a televised interview with President Bill Clinton. It started as a class assignment at the Fairview Elementary School in Missouri. The assignment: Interview someone. Mr. Nazemi selected the president, and began calling the White House every day, before and after school.
His interview aired on NBC, and lasted 25 minutes.
"It certainly was formative," Mr. Nazemi said of the now 20-year-old interview. "This effort parallels that. We're thinking out of the box ... the conventional rules shouldn't apply. We should try something bold and different."
To Mr. Laszewski, "bold and different" sounds a bit like an effort to market to a younger, more technologically savvy subset of consumers.
In other words, Oscar's customer base could skew young and healthy -- and toward the more profitable end of the health insurance customer base, since those in their 20s and 30s tend to use less health care.
"This is one of the better cherry-pick strategies that I've seen in a long time," Mr. Laszewski said. "Who's on Facebook? ... Who is constantly playing with their cell phone on the subway?"
Backdoor risk selection is limited to a degree by the risk-transfer formulas built into the Affordable Care Act -- if one insurer takes on too many young and healthy people, while another ends up with too many sick people, the insurer that ended up with the disproportionate number of young folks will have to send some money to the plans that took on the higher risk.
Mr. Nazemi said, for all the bells and whistles, each of the interactive components will have a telephone counterpart. Oscar hopes to win converts across the age and risk spectrum by offering a robust health network at a good value -- free generic medications, free telemedicine, streamlined claims rules.
"The basis for starting Oscar was that we looked at the existing offerings, [and] simply thought that consumers deserved a lot better," Mr. Nazemi said.
Oscar has set aside $26 million of its funding for reserves against losses, enough to cover between 50,000 and 100,000 New York customers, according to Bloomberg Businessweek.
Bill Toland: email@example.com or 412-263-2625.