[supster]

An insurance company makes money from the difference in premiums collected and expenses paid. Because Oscar is a startup you are right that they have a significant disadvantage in negotiating rates with providers. But they can lower costs in clever ways by lowering utilization. For example they offer free preventative routine care like immunizations, flu shots; free generic drugs (thus shifting consumption away from brand name drugs); and free primary care visits (which over the long term shift costs away from costly complications (e.g. in diabetes), or ER visits). In addition Oscar appeals to a younger tech savvy crowd which will inherently utilize health services a lot less.