Good afternoon. My name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to Oscar Health's Second Quarter 2021 Earnings Call. All participants are in a listen only mode. After the speakers' presentation, there will be a question and answer to ask a question during the session.
Thank you. I would now like to turn the call over to Cornelia Miller, Vice President of Corporate Development and Investor Relations to begin the conference.
Thank you, Joanna, and good afternoon, everyone. Thank you for joining us for our Q2 earnings call, where we'll discuss our financial results, the momentum in our business and updated guidance for 2021. Mario Schlosser, Oscar's Co Founder and Chief Executive Officer and Scott Blackley, Oscar's Chief Financial Officer, will host this afternoon's call, which can also be accessed through our Investor Relations website at ir. Hioscar.com. Full details of our results and additional management commentary are available in our earnings release, which can be found on our Investor Relations website at ir.
Hioscar.com. Any remarks that Oscar makes about the future constitute forward looking statements within the meaning of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward looking statements as a result of various important factors, including those discussed in our quarterly report on Form 10 Q for the quarterly period ended June 30, 2021, filed with the Securities and Exchange Commission and our other filings with the SEC. Such forward looking statements are based on current expectations as of today. Ophir anticipates that subsequent events and developments may cause estimates to change.
While the company may elect to update these forward looking statements at some point in the future, to the call. We specifically disclaim any obligation to do so. This call will also refer to certain non GAAP measures. A reconciliation of these measures to the most directly comparable GAAP measures can be found in our Q2 2021 press release, which is available on the company's Investor Relations site at ir. To hiofskar.com.
With that, I would like to turn the call over to our CEO, Mario Schwasser.
Good afternoon, everybody, and thank you for joining us. To wherever you may be listening in from, we're excited to have you. Our results this quarter show our member centric, tech first approach to health to Clear continues to generate value for our members and clients. Today, we reported that direct and assumed policy premiums increased 45% year over year to $841,000,000 for the Q2 of 2021, ahead of our expectations. We have positive momentum in the business and we are to speaking on our plan.
Before I jump into the details, I would like to start you by reminding of our core thesis, how we benefit from being a health insurance business and a tech to platform business. We believe that the tech and services we build for our insurance business give us battle tested assets and insights we can bring to the broader healthcare markets At a time when those markets are undoubtedly in a period of transformation, a profitable insurance company will provide support to continue to expand our to the SEC filings and earnings. The synergies of insurance and tech company allow us to access a growing portion of the poor dollar healthcare marketplace Deliver increasing profitable business over time. Now let me expand on our approach. We combine a human touch with technology and data to make complex decisions simple and intuitive for our members and for our providers.
We are the only ones in healthcare that run this on a full stack platform that we control and build end to end. We have purposely built this Since day 1, always with the ambition of powering as much of the healthcare ecosystem as possible. Now our core systems impacts is compounding the systems that has helped members find the right doctor, access virtual care, to PowerCare to use the system in navigating the healthcare system. We can constantly test, retest and optimize what we do. And all this makes us 1, a better managed care company 2, a better technology partner to our Plus Oscar clients.
Our strategy continues to be focused on reaching profitability as our insurance and Plus Oscar businesses scale. To driving towards this by 1, growing strategically across all of our business lines 2, constantly improving our technology and our tooling to drive to operational efficiency, reduce medical costs and to increase our industry leading member engagement rates. Our members tell us that our investments in their experience matters to them as evidenced by our consistently high net promoter score, Which reached 40 in the Q2, up from 30 in the last quarter of 2020. This number is significantly higher than what is typically seen in healthcare, to the loan among health insurance companies. And moreover, engagement matters when it comes to our business as well, as we see that our digital engagement groups were about 10 percentage points more likely to stay with us than those who are not engaged even when controlling for other factors like premium increases and demographics.
Now I want to spend a moment talking about COVID and the trends we are seeing among Askr members. Our systems give us a Good look into COVID utilization and trends. First, with respect to the COVID vaccine, like the whole country, we saw a slowdown in vaccinations in May June. But Fortunately, we're clearly seeing a rise in data vaccinations again since mid July, and we are pushing in our own population health campaigns and channels to keep that going. To give an idea of where we are targeting our future campaigns, it is where we still see gaps.
For example, our health members are still vaccinated 42% less to the now chronic complex numbers. Additionally, we see in our data that the overall probability of being hospitalized will have a positive COVID diagnosis Has edged up only slightly with the rise of the delta variance. But what we are seeing is that in June, July, this probability amongst to 18 to 35 year old COVID positive members has gone up by about 2.5 times against its own long term COVID baseline. So The probability of younger members getting hospitalized for COVID positive has gone up against their own baseline. That closely tracks the right of delta.
Turning to COVID testing and treatments. In some markets, we are seeing that COVID case rates are approaching similar levels to what we saw in the second half of twenty twenty. Unsurprisingly, in those markets, we are also seeing early indicators of a decrease in non COVID utilization. In Florida, specifically, our tracking shows a 33% decrease in our authorization volume of elective surgeries and non surgical procedures from June into July and a continued decrease into the 1st 2 weeks of August. Now like our peers, we have seen NLR pressure in the second Quarter driven by higher than expected COVID costs and the return of non COVID care that resulted in utilization slightly above baseline.
We We are keeping a close eye on our data, MLR progression throughout the rest of the year. We are interleading with our population health campaigns. And Scott will discuss to the progression of the MLR in greater detail later on the call. Now let me switch over to talking about our 2nd quarter growth. We ended the Q2 with membership of approximately 563,000 members, increasing 35% year over year.
Within the individual markets, starting there. Oscar is offering a differentiated product that delivers a unique member experience built on top of a network of high quality to the portal providers. We are thrilled that we've continued to grow throughout the special enrollment periods, reaching around 120,000 new members as of June 30, to 2021, while also at the same time driving toward our goal of profitability for the business. We gained market share in the last open enrollments And we've maintained this stronger market share throughout the Q2 with some markets performing exceptionally well. For example, nearly 1 in every 5 to the Exchange Members in Arizona Markets is an Oscar member.
Looking ahead now to 20 22 individual open enrollments, we're excited to announce that Pending regulatory approval, we plan to enter 3 new states Arkansas, Illinois and Nebraska and expand into a total of 146 new counties. That would bring the overall Oscar footprint to a total of 22 states and 607 counties beginning in 2022. Our technology platform lets us quickly spin up new programs in Planet Xion. And those let us expand and drive growth While also reducing MLR, let me give you two examples for what we're doing now. 1, our surveys to clearly show that members want to join an insurance company that offers culturally competent care aligned with their needs.
So we are using our configurable systems to load new data on provider race, ethnicity and other factors to give our members more information when they are choosing a provider through our carer language tools, leading into this possibility of grabbing members' attention with us in the sales process. As another example, we are planning to launch to innovative new plan designed to better serve diabetic members. The plan, which includes $0 PCP visits, dollars 0 diabetic labs End out of pocket costs for insulin capped at $100 a month is another example of how we are using our tech infrastructure to implement more flexible benefit models for our members. This kind of plan design is designed to save members money and it has the potential to attract members to OSCAR based on more vendors' premium costs. Turning to Signapas Oscar, in our small employer business.
For Signapas Oscar, we are seeing steady growth and expansion. Since the last quarter, we have expanded into Connecticut, Kansas and into additional markets in Georgia, And we have plans for even more expansion before the end of the year. And our pace of growth so far in markets like Tennessee Put us among the fastest growing small group entrants ever, and we have a lot of runway ahead of us. And I'll remind you that the majority of small group growth happens at the end of a given year. Now in our Medicare Advantage product line, we delivered another quarter of solid growth and performance.
Today, we have 3,749 members and we have grown organically 117% year over year. In fact, we were the fastest growing HMO and A plan in the Bronx, and we expect to see continued organic growth from our existing markets. Looking ahead, we will also seek to scale our Medicare Advantage business with Shifting the Platasco platform to our care and provider clients shift people to value based care, while offering a best in class experience for their members and their patients. Providers and payers have access to fast moving data that is linked to decision making technology so that they can make the to the next question. That's exactly what we built the differentiated Plus Oscar product for and what is positioned to deliver.
To take you through how we are engaged in selling Plus Oscar platform business deals. We have a dedicated enterprise sales team and that's an active conversations with potential clients about a suite of offerings. To the operator. That suite of offerings includes business processes as a service, standalone technology as a service and modularized components of our technology. We're receiving organic inbound interests and we're engaging in active prospecting.
Over the past few months, the majority of our initial conversations have resulted in meaningful follow-up. And our pipeline is stronger than ever with a multitude of conversations with potential clients within the total addressable market of more than €230,000,000,000 in annual premiums. Since we officially launched B plus Oscar brand name, We feel more confident than ever about this business. Now, as I mentioned above, one of the powerful elements of the Plus Oscar platform is that we are using it actively today and we have confidence about the potential of this business in part because we are demonstrating real return on investment for our 563,000 Oscar Insurance members and for our existing Class OSCAR partners. Let me give you an example for the type of work we do with A Plus Oscar partner.
We partnered with ACHN, one of our Medicare Advantage to our participants as Oscar to help drive more qualified PCP visits. We launched a digital engagement efforts that was built entirely using our own internal campaign After this 1 month, our Board members who visited an ACH and primary care doctor after receiving to share some insights there. We saw actually the greatest lifts on the members with disease risk factors to our shareholders who received task based messaging and members with chronic conditions who received relationship to those different types of messaging and target those very, very carefully. We know that risk adjusted medical costs are 10% lower for members Seeing APCP. So this gives us tremendous confidence in our ability to leverage our technology platform to scale our campaigns with partners And therefore drive ongoing value for both our members and partners.
Our continued Plus Oscar technology improvements Are also making us a better managed care company. We're actually seeing in our own claims operations That we are now at or above 95% auto adjudication rates. That's the amount of claims that get paid without human intervention. That's up from 92% in 2020 and we also see lower escalations and customer service complaint rates year over year. Another example would be that our data driven approach for drug formulary design, which we manage in house, has already saved us to over $1 PMPM through the Q2 of 2021.
Now these improvements also hold true for our to virtual care platform. For example, Oscar Insurers is leveraging virtual primary care, based on the Plus Oscar platform to drive better results and risk adjustments in terms of value per charts and efficiency of the coding. Members who use the virtual PCP service Also, at 25% lower our network expense relative to other PCP users. And our virtual primary care providers are 24% less likely to prescribe a more expensive drug when there's a cheaper alternative available, demonstrating the power of highly integrated data flows between to insurance company physician groups in our own internal systems. These early year 1 results give us the confidence to expand to these virtual primary care plans into our Signa Plus Oscar portfolio.
We're thrilled here that Plus Oscar's virtual primary care offering will be made available to Signa to Oscar members in Georgia and Tennessee in the small employer markets there beginning in 2020. Plus Oscar's virtual primary care Offering is staffed by the OSCAR Medical Group, a team of about 125 providers that in turn are enabled by the Class OSCAR EHR And that EHR helps them deliver higher quality and lower cost care for members. We see this expansion of virtual primary care It's a clear sign that we are able to deepen relationships with existing Plus Oscar clients. Double clicking on the Plus Oscar implementation work underway with Healthfirst. We are on track to bring over Healthfirst to the Plus Oscar platform.
We are particularly excited about the simplicity and ease Plus Asco will bring to stakeholders across the Healthfirst ecosystem. For example, Healthfirst Grovers will shift from using 8 different portals to now needing just 1, Highlighting the value Plus Oscar brings by significantly increasing the efficiency of health first brokers in their go to market efforts. And that of course is our own broker portal built on the PASOSTRA platform. As we said before, the work with Now in closing, I would like to reiterate that we see concrete examples every day that our strategy of having built a text first healthcare company has created a powerful flywheel that drives better care at lower costs. Our fast growing insurance business is well positioned and we are targeting for it to deliver profits in 2023.
Simultaneously, we are growing a services and software business, which Leverages the investments we have made over the past 9 years. Our solution to combine the power of being a great insurance company with the power of technology to the company's position to improve the overall insurance experience, to improve outcomes and to lower costs. Today, all of our businesses are showing traction and we are seeing that coming through in the strong results for the first half of twenty twenty one. So with that, I would like to turn it over to Scott Blackley, our CFO, to take us through the Q2
Thank you, Mario, and hello, everyone. Today, I'm going to walk through how the momentum we see in our businesses is showing up in our results, to how we are thinking about our MLR trends and then close with updates on guidance. I'll start with to our membership. We ended the 2nd quarter with approximately 563,000 members, an increase of 35% year over year, Driven by growth in our individual Medicare Advantage and Cigna Plus Oscar books of business. Membership growth exceeded our expectations As consumers continue to select Oscar's innovative plans during the ACA special enrollment period.
As Mario mentioned, From the start of SCP in January through June 30, we've enrolled around 120,000 new members. 2nd quarter direct and assumed policy premiums increased 45% year over year to 841,000,000 Driven by higher membership as well as business mix shifts towards higher premium silver plans and modest rate increases. Premiums before ceded reinsurance were $724,000,000 in the quarter, up 84% year over year, driven by both higher premiums and lower risk adjustments year over year, both of which exceeded our expectations. We recognized $34,000,000 of favorable risk adjustments relative to our expectations for the 2020 planned year driven by outperformance in our value capture activities. Based on a favorable report from lately.
We also recognized an incremental $34,000,000 of risk adjustment benefit related to 2021 as we have been increasing our mix of to Silver plans and we are seeing that result in a lower transfer estimate for members with higher acuity. We recognized a comparable offset in medical claims and in our adjustments. So net net, this had an immaterial impact on the quarter. Premiums earned of $528,000,000 increased to 3 64% year over year in the Q2 as we further reduced our use of quota share reinsurance from 76 in the Q2 of 2020 to 33% in Q2 'twenty one. As a reminder, given our recent IPO and the momentum in our businesses, We chose to decrease our utilization of Quovascare reinsurance this year.
We would expect Quovascare to stay at approximately the Q2 levels over the balance of the year. Our medical loss ratio was 82.4% in the quarter. In terms of drivers, COVID related medical costs declined slower than we expected and were roughly $35,000,000 in the quarter, contributing 500 basis points to the MLR. We had approximately $34,000,000 of favorable prior period development related to the prior year, a benefit of 400 basis points in the quarter. The prior year period development impacted our risk adjustment, which is included in the denominator of the MLR calculation.
So while the dollars The COVID related medical costs, MPPD item basically offset the COVID costs had a larger impact to MLR. In the comparable period last year, we experienced a very significant decline in medical costs due to a COVID related drop in utilization. So the year over year trends are understandably unfavorable. Let me offer more color on COVID and the overall utilization environment. To the Q1 'twenty one levels, but not as quickly as anticipated.
Direct COVID testing and treatment costs were higher than expected, partially offset by lower vaccine administration costs. That said, costs peaked in April and declined through June. As Mario mentioned, In our current data, we are seeing an increase in our members who are currently receiving care for COVID and at the same time in those geographies, we are seeing a decrease to non COVID utilization. In terms of non COVID utilization, during the quarter we saw a resumption of routine care, a a portion of which we believe is a pull forward of demand from the second half of twenty twenty one as opposed to a catch up from deferred care in 2020. Specifically, we saw increases in to professional visits, largely in the routine and preventative visit categories.
We're managing this increase through our strong utilization management capabilities and are intervening based on real time data to our concierge teams. Our 2nd quarter insurance company administrative expense ratio of 19.8 percent improved 330 basis points year over year. The meaningful year over year improvement in the insurance company Administrative expense ratio was driven primarily by increased operating leverage from our significant net premium growth of 85 has helped us scale and grow premiums at a faster rate than administrative costs. Our overall combined ratio, The sum of our medical loss ratio and insurance company administrative expense ratio was 102.2% in the quarter. On a year to date basis, this metric was 98.5%, continuing to reflect the consolidated profit across our to the company's earnings release.
Our adjusted EBITDA loss of $50,000,000 increased by $22,000,000 year over year. To the year to date basis, the loss was 77,000,000, a 38,000,000 improvement year over year. COVID related care is a headwind to our year over year results. Even with these headwinds, we delivered year to date improvement in adjusted EBITDA year over year, demonstrating that we to our tech enabled model to fuel strong premium growth and capture administrative efficiency. Turning to the balance sheet.
We ended the quarter with over $3,000,000,000 in total company cash, including $1,100,000,000 of cash and investments at the parent and another $2,000,000,000 of cash to our insurance subsidiaries. Now let me turn to our updated 2021 guidance. We now expect Direct and assuming policy premiums for the full year 2021 will be approximately 3,200,000,000 to 3,300,000,000 Compared to our prior guidance, that is an increase of $125,000,000 at the midpoint, largely driven by membership increases from the special enrollment period. We now expect our MLR will be in the range of 85% to 87% for the full year, an increase of 100 basis points at the midpoint from guidance. For the 1st 6 months, our MLR was 78.7 percent and our guidance continues to assume a seasonal ramp in the second half of twenty twenty one.
We previously expected around 3.5 points of direct COVID cost for the full year and our updated guidance now assumes roughly twice that amount. We are also assuming that non COVID utilization will be around baseline in the second half of the year. We project our insurance company administrative expense ratio will be between 21% 22%, an improvement of 150 basis to the midpoint as increased revenue and scale are driving higher leverage in this metric.
Based on the above changes,
We are maintaining our insurance company combined ratio guidance of between 107% 109%. Finally, we are maintaining our 2021 full year adjusted EBITDA loss range of $380,000,000 to 350,000,000 Which is a meaningful improvement from 2020. And with that, let me turn the call back over to Mario.
Thank you, Scott. I want to thank everybody for joining our call. And I just want to share two points before we close. First, I want to thank the incredible Oscar to the team. We talked a lot about our differentiation and why our technology surfaces as a part, we are truly powered by people.
Without this team, we wouldn't be able to keep raising the bar for our members and for the industry. And second, I want to reinforce our priorities and the path forward. 1, we remain dedicated to growing our insurance business, while at the same time, entering costs. 2, we are driving forward the expansion of the Plus Oscar platform with active partner conversations while simultaneously demonstrating real ROI for our current partners. To the 3, we are fully committed to becoming profitable as our businesses are reaching scale.
Now with that, we'll turn it over to the operator for the Q and A portion of the call.
Thank you so much. Your first question from the line of Ricky Goldwasser from Morgan Stanley. Your line is open.
Yes. Hi. Good afternoon, and thank you for all the details. So I have a few questions here. First, just wanted to get a better Thanks on the MLR and sort of the underlying assumptions as we think about second half of the year.
I mean, clearly, you gave us a lot of data on what impacted MLR into queue. But it sounded like you're seeing, toward the end of the quarter, you saw a decrease in non COVID utilization, but you are Raising MLR and you're kind of like modeling higher MLR for second half of the year. So just kind of trying to understand what's embedded in that to new guidance around just core utilization versus baseline to the underlying COVID assumptions. And also what type of acuity are you seeing among the new members, especially the ones that kind of like onboarded during the extended opening enrollment season.
Okay, Ricky. So I'm going to try to take through those things. I'm sure
I'm going to skip a few. So, if
I missed any of your questions, please go ahead and come back to me on any of those. So, let's start with to overall what we're seeing in utilization. So I mentioned in my talking points that we saw through the quarter, we saw COVID utilization declining. On the other hand, for non COVID utilization, we did see that above baseline and accelerating. Big picture, I would say that non COVID utilization, again, it was slightly above the baseline, which looks like to us that it's being by to the intense up demand.
We saw specifically that there was elevated professional utilization, PCP visits were up, preventative care and diagnostics. The nature of those gives us increased confidence that that's really And as another data point, we saw that inpatient costs were also elevated in the quarter, And that was driven more by increased medical admissions versus surgical admissions that were roughly to baseline. So overall, it feels like in the Q2, we were seeing a bit of pull forward demand on non COVID utilization. Now With respect to guidance, just want to go back and make a couple of points. The first is that in our full year guidance, we are assuming that The costs that we will incur for COVID are basically the same as what we experienced in the first half of twenty twenty one.
With respect to non COVID utilization, we're assuming that non COVID utilization is basically at baseline in the second half 2021. So I would just comment that with respect to that guidance, we're not assuming that the increase in COVID care that we've modeled It's going to result in a decrease in non COVID utilization. As Mario and I both talked about, we have seen evidence that that's In markets where there
are spikes, that gives us confidence that the guidance that we're putting out there is balanced. Yes. Ricky, maybe I'll add one more thing on the question of what the nature of the demand is. One question that I think a A lot of people have had in their minds is, is there sort of a not just pent up demand on things like Crevecliff and so on, which we are seeing, But is there also higher acuity from deferred care from last year kind of flowing into this year? For example, are there more Cancer diagnoses, are they of higher severity and things like that?
And our members who lastly perhaps were less well managed as a result of not leaving the house now coming to higher duty levels. And so that we're not seeing. Example, so that would be that new cancer diagnoses to have about the same likelihood to be metastatic as in 2019, 2020. So that would be inconsistent with the average numbers misdiagnosed last year and our to this year. If you look at numbers with certain chronic conditions, diabetes, autoimmune disorders, their rates of Emergency room and inpatient units are about the same as 2019, 2020 and now also 2021.
So that seems all So in terms of the fact that utilization isn't driven by that. The utilization in the second quarter wasn't driven by that. Yes. And the other question I think was to SEP versus OE, right? Scott, do you want to take that?
Yes. With respect to OE versus to SEP. Basically, what we're seeing is that the SEP population this year has about the same to comorbidity as the OE population. We've seen generally an increase in morbidity in our total book and that is being driven by an increase in our membership mix. We've been working to drive towards a more silver heavy population.
And now what we're seeing now is that we've got a slightly older population. We've got a higher mix of silver plans and that in turn is causing a bit of a higher overall morbidity. The consequence of that is kind of twofold. 1, we're seeing a stronger risk adjustment. So there's lower Transfer for us.
It also gives us the opportunity to use our customer engagement engine to really help manage those More acute members and we think over time that delivers a higher amount of profit to the company.
Okay. And then one question on Plus Oscar. Mario, it sounds like you're having conversations with providers and payers. And it seems that now also sort of interaction and member satisfaction is becoming increasingly more important for star ratings. So maybe can you share with us sort of the profile of payers that are engaging with you on Platts Oscar?
So let me point you to mostly really our history there. It is pretty to we HealthFirst is a good example for a regional payer Owned in that case actually by a provider, where we're taking 37,000 MA members, 20,000 IAP members, bringing them onto our platform. So that is sort of like one archetype of client we're talking to. There is another archetype, which is Providers who are either already taking risk, in some shape or form, want to go deeper into to Sures, one of potentially independent their own insurance company and that is the other essentially push we have been making both inbound and outbound. So that the example there obviously is ACHM in South Florida, while also Montefiore in the Bronx.
And that can actually go all the way towards, As I mentioned before, us slicing into a stack and taking just a piece of it and for example, helping A physician group has only taken risk to also start paying clients. And that's obviously part of our core offering on the admin side. And we think we do this very efficiently, 90% orientation rate and so on. And so we could like slice them into somebody who's only doing the activity that wants to do it better. So those are the archetypes and then leaned on our conversations.
Thank you.
Your next question is coming from the line of Stephen Baxter from Wells Fargo. Your line is open.
Hey, good afternoon. Thanks for the question. So I wanted to come back and ask about the tech stack and your claims visibility. I was hoping you could talk a little bit about your level of visibility into Q2 costs as you booked the quarter. How many months of good data do you feel like you have on the acute side, also on the non acute side?
Just would be great to hear a little bit more about your process here in a dynamic environment and higher technology is helping you.
Thanks. Yes. It's a great question, Dean. So It's a lot to unpack there for sure, but let me give you a couple of examples. The benefit we have is that we've got one big data lake where everything flows together.
And so we can very easily say what is happening with our COVID searches, for example, in our membership app, what is happening with conversations in customer service, what is happening with utilization management volume really all the way to the present day. I mean, all the That is really available to mute my finger sets if I care to look at it, and obviously, I do quite a bit. And so, for example, Let me pull this up here. If I look at, let's say, COVID conversations in our virtual primary and urgent care, those are up from the kind of like trough or bottom where they were in about May, But this is only at about half of the peak we had in December, January. Our kind of all mentions of COVID in all customer service channels, Whether it's chats with the concierge teams, conversations with the phone with the concierge teams, things like that are also Certainly up over the past 1.5 months or so, but they are still 34% off from kind of the peak we had there also earlier in the year.
And so these are all numbers that we can pull up By the minute, basically. And they generally track quite well within the eventual number of positive cases we see, Which then eventually come into the claim system and so on. Even on the claim side, we generally think we've got really good visibility there. This is obviously also single source of truth, Which means the claim comes in and we can see it right away as opposed to having run through the system and taking a while to kind of get processed there. So that gives us a little bit backup to these leading indicators to these coincident indicators that we can generate more quickly.
So that's, for example, how we then see the point I made earlier that if we look at electosurgery We are a nice lease time indicator. It's for us the UN decisions, the decisions we make on those surgeries every day And that those decisions are down by about 33% in July versus June, and they're down a bit more actually in 1st, where are we now here in the 1st 10, 11 days or so in August. And so these things look like then we can see them ripple through eventually when the claims come in. One last thing I tell you and that I'm always excited about is that we can tie these things together, also It was going to be before and after the fact. When I look at our cost estimation tool now where the considerations can go in and generate costs with Respectively for what a particular kind of pathway of care will cost you as a member or member is single when you can do this.
We track quite actively there as well. When you get a cost estimate, then a couple of weeks later, we or whenever you actually go and get the service, We put all that together automatically in the back end, and we can then see how close we are generally Within kind of like 10% or so. That's also a really high number. That's kind of like above 50%, 60% or so. And Actually, I now recently also estimates we did kind of way in advance of how much it will actually later on cost you.
We did this now for about 93% Of all utilization that generally happens in our system, we can create these kind of prospective cost estimates. And that goes back into our claim system as well in prices we have done. So that's the kind of, I think, good start with the wins there.
Very interesting. Thank you for all the detail there. And Just on philosophically, as you guys are approaching the individual market in 2022, it would be great to get a little bit of insight into how you are thinking about, I guess you already would have priced that market. I guess any way you'd characterize kind of what you're assuming around baseline levels, like kind of extended COVID to 2022. Any thoughts around pent up demand or potential for pent up demand?
Just be great to get a sense of how you guys thought about approaching the pricing for next year. Thanks.
Yes. Thanks for the questions. And I'll just comment that if you were here with me, you would see that Mario literally pulled up the dashboards and was giving to answer using real time data. It is really one of the most amazing parts of this company that I've seen since I've joined. Coming to your 'twenty two question, I will just say that.
So first of all, we did the majority of our filings, as you've mentioned, in May June. When we went about putting those filings in, we really tried to be thoughtful about the environment. We at that time all of the information that we were seeing in our real time data. We've always talked about that we try to balance to both risk and our ability to grow, and we think that we achieved that in the pricing that we put in. So At this point, even given what we've seen thus far with COVID and with utilization trends, we feel like We put that into a good spot with pricing.
We have had a chance to refile in a couple of locations where it was appropriate to do so, and we think we're well positioned to move forward.
Thank you so much. Your next question is from the line of Kevin Fischbeck from Bank of America. Your line is open.
Great. Thanks. One of your peers provided a pretty wide range for MLR in the back half of the year and what they attributed it to was, I guess, less about utilization, but more about The uncertainty around the risk scoring for the back half of the year that in particular the FEP enrollment has fewer days to just get coded and to get that risk board together. Are you at all worried or is that a concern or issue for you around the risk capture in the back half of the year? Look, I think that
excuse me, risk capture is always one of the factors that you have to deal with when you're in an SEP to the environment. I think we've got some experiences we talked about. The numbers that we're seeing come in look a lot like what we As part of the OE process, so we've tried to give reasonable accommodation for that in the MLR guidance that we've provided.
Okay. And I mean, even in prior years, we obviously have a decent chunk of our book come through special enrollment as well. And so we have to the risk of numbers when they come in. I point you there, I think, to the PPD we had on risk adjustments For last year in Q2, weather came in better than expected. And I think as Scott said, that was due to our own improvement in systems build outs in We got well.
And so I think that the machinery will work just as well as here.
Okay. And then, obviously, G and A coming in Well, I guess oftentimes we see this though, I guess, as administrative companies in MLR is a little bit high, G and A is a little bit lower either because Of lower bonus accruals or companies kind of act to take out costs when G and A is higher. It sounded to me like you That wasn't the driver, but I just want to make sure that how are you characterizing that the G and A leverage? Is it really more about just revenue coming a little bit better In getting efficiencies faster or is this kind of anything kind of one time in here that we shouldn't think about you being on a different trajectory into next Sure. We should be kind of back to our original 2022 assumptions on G and A.
We are There's nothing unusual in the trend there. There's no reversal of bonus accruals or anything like that. What you're seeing is really the leverage that we're generating in our business. And we are basically seeing our expenses grow at the same pace on the variable With revenues and then we're getting some leverage on fixed costs. And so we think that, that demonstrates the traction in that business and one reasons why we feel optimistic about the trajectory of our ability to target getting that business to profitability in 2023 in the insurance company.
Okay, great. And then maybe just last question. I guess when we think about
to the MA business.
I guess there's now hasn't been a lot of talk there about that. I mean, how are you thinking about your cost trend there and how your thought about pricing for that next year.
So I'd say it goes to the same cautious pricing process and plan design process we have internally for the IAP business and for This morning, Boyer business, which I think we've now demonstrated that we can land that in the way that we need to. I would also say that we have not obviously people have not seen the bid publicly, so I don't want Not too much about that. But again, this year, we try to really be thoughtful in the same way we launched. We're launching now these diabetic plans, For example, in IFP also about MA benefits and plant designs. We're proud of the work we've done there.
On the for MA growth, Our focus next year is on really 2 different things. We, first of
all, think that there's
a lot of runway in the existing footprint we have, right, these are, for the most part, plants we build together with other health systems that are co branded oftentimes and that we're excited about to. And then the other part is really taking over the big book from Healthfirst and flipping that over for 1, 1, to 'twenty two where they actually did the pricing in that case. But so we're kind of same pricing process, Therefore, similar assumptions, but obviously sort of like tailored really for the population we have there, which is different, higher vaccination than Individual and so on, then you've seen the individual markets, but that is all kind of incorporated there.
Okay, great. Thanks.
Your next question is coming from the line of Jay Lenard Sink from Credit Suisse. Your line is open.
Thank you. Thanks for taking
the question. I was wondering if you could spend some time on the competitive landscape for the individual market next year. We have some large insurers trying to enter in the new entry market in next year and some other insurers expanding. Just wondering if how this impacts your thought And related to that, I mean, 3 states you're in 146 counties you're entering. How did you go about picking those markets?
Was it what are the criteria, demographics or landscape? Just curious like any thought process there.
Yes. Good question, Rune. So I'd say for a number of years, we felt now that the individual market is competitive. And that's in my view, it's shifted away a bit from just kind of premium level more towards can you save members money on total cost of care. And I think that shift has been generally a tailwind for us Because that's what we do in diabetic plan designs, virtual family care plan designs.
We I always like to remind people of the fact that I think we were the first ones to put the No, good luck to brass and also silver plants out there. And these kind of plant design movements and moments have really helped us In timber gain share, we've not always or not generally pricing the lowest, right? We now grew premiums as compared to a year ago by 45%, even though we were only the lowest priced in 10% of some of the markets we are in. And so it's that same approach, a very disciplined approach now on pricing that we've It's already done now. We balanced growth and profitability, and we'll follow that playbook again for next year.
But obviously, pricing isn't public anyway yet, and so I don't want to talk too much to And so on, but that same playbook we followed there. And from that point of view, I don't see too much all that difference in the markets right now. The pricing we've seen nationwide, I would say, has not surprised us in either direction. And I think the balance we've been driving towards there, it's going to be the right one. And we picked these new counties also with an eye towards where do we have a right to win.
Where can we get the right provider partners that we work with more closely that could, by the way, eventually turn the That's happened to us a couple of times. We had a footprint in IAP in a particular county and then we build out overall platform relationship over time. In case in Orlando and Broward County as well. And so we pick countries who have the right provider partnership. With the counties where we think the offering we have will resonate for the population, such that we can really make sure we can do well.
That to for example, I think we brought some really good Spanish speaking concierge team solutions into Florida back in the day, so that we helped us early on. And we pick counties where we think the pricing makes sense and we can really Again, kind of the number of margin there. So that's how we picked it, and I think that's exactly what we see into next year as well. And our frankly, can't wait to get into open enrollments And start getting going there. You see me at broker dinner starting in September actually, at the end of in the beginning of September, the end of August, Hopefully, in person,
but not. Okay. That's helpful. And just my follow-up, going back to Iba's comment around non COVID utilization being pulled forward in Q2. How much of that was like self imposed given you have this higher member engagement in care management model?
And as people were getting vaccinated, I mean, you are pushing for them to see their doctors and just if that was one of the driver or Was it even beyond just which might have come across from your higher care management model?
Yes. So that is really always in what we do in the outreach is always intended to to guest members to utilize in channels of care that are going to be better for them and more efficient overall, more effective overall. So yes, we see higher drug utilization from our members who are attributed to our virtual primary care Adherence goes from 65% level or so to drugs, which is sort of like standards in the U. S. Health care system to 85% medication adherence when you are a member who's attributable to an Oscar virtual primary care physician.
Because I for two reasons really. One is we can remind you, yes, that's under engagements and there's nice automated follow ups and all that kind of stuff. But the second reason is that we Make those drugs free in our plan designs. So the Oskar can reschedule drug and it becomes free and that itself drives medication reservoir. So that does mean that medication costs Our medication utilization ends up being higher and that is an increase that ends up being an increase utilization.
But even with that, We see in those virtual plant care plan designs that the benefit we're getting on lower Yara utilization, better specialist care routing and so on actually outweigh that. And so that's how we generally think about our campaigns. We don't always get that right, which means we just kind of constantly churn through ideas there of how to tweak these campaigns, how to get them right. And so that's, I think, how you can think about that. And the above based on utilization there in the Q2, therefore, I will not say it's driven By that, but as Karl said, it's more of that pent up demand we saw, right?
It's concentrating on preventatives, concentrating on some of the things people do when they first get When they first get coverage, see that in SEP when they come in, there's a little bit of kind of increase there, same as a newly show member in OE. But As we said, we are just kind of prescribing at if you just look at the entire first half, the entire half of the year is below was below baseline. And so as you described, we're starting forward into the second half of the year at baseline, which we feel like is again the kind of prudent thing to do in terms of the developments we could have in the second half of the year. Great. Thanks a lot.
Thank you. Your next question is coming from the line of Josh Raskin from Nephron.
First question just and I should know this, I think, is that the MLR on the ceded premium seems to move in the opposite direction of the retained premiums. And I'm just Still trying to reconcile why that's happening. Why would the MLR be better on the ceded premiums or am I just completely reading that wrong?
Yes, Josh. Well, you can certainly pull up with, Cornelia, who can walk you through all that math. But When you look at the way that the MLR for Seated works, there is puts and takes related to prior period Development that come in and impact that. So it can skew and make it look different than the rest of the MLR for the non All
right. I'll follow-up accordingly. And then on the Plus Oscar pipeline, I'd just be curious, you mentioned As robust as you've ever seen it. Where are you seeing the most interest? And how should we think about the cadence or the timing of to potential announcements, and I know these are long sales cycles and that sort of thing.
But I'm just curious kind of where you feel like that pipeline is moving.
Definitely continues to be a shift of providers saying, I want to reinvigorate my insurance company, if I already have 1 or I want to to the stock insurance company. That is clearly one area. But we're actually also now seeing demand for eBB core admin systems and slicing kind of into our service there. And that can actually either be as a business process as a service What can even be as a software service offering where we can actually do both there. And It's a pretty equal fit at the moment between these three different ways of going And yes, when we have a new deal to announce there, we'll be excited to do that.
Understood. Thanks.
Thank you. Speakers, I am not seeing any other questions at this time. I'd like to thank everyone for joining the conference today. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining.
You may now disconnect.