Why Tech Guys Think They Can Sell Health Insurance

When New York State announced the participants in its Obamacare exchange last week, there was an unfamiliar company on the list: Oscar Health Insurance. Started by tech venture capitalist Josh Kushner, and backed with $40 million from Silicon Valley investors such as Vinod Khosla and Peter Thiel, the company is seeking to solve a challenge few tech entrepreneurs have tackled: health insurance.

The pessimist’s take on state-sponsored insurance exchanges created by the Affordable Care Act goes something like this: Beginning in October, health insurers won’t be able to deny coverage to Americans with preexisting conditions; to offset the cost of carrying the sick and aged, insurers will need to convince young, healthy people to buy insurance. The Affordable Care Act takes a stick-and-carrot approach to getting Americans into the system, but neither premium subsidies nor tax penalties may be enough to convince healthy people to buy insurance. Rates rise for everyone.