This Trump-in-law may lose millions if Obamacare is repealed

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Compilation photo by Dom Smith/STAT

Compilation photo by Dom Smith/STAT

Perhaps no presidential son-in-law has ever been more in the spotlight than Jared Kushner. He was President-elect Donald Trump’s “de facto campaign manager” and helps run the executive committee of Trump’s tumultuous transition team. And rumors are swirling that Trump’s team is trying to get him top-secret security clearance so he can attend the official presidential daily briefings.

But here’s something you might not know: Jared Kushner’s younger brother, Joshua Kushner, is the cofounder of a startup created to capitalize on the promise of the Affordable Care Act — which Trump has vowed to move quickly to dismantle.

Josh Kushner is not some anonymous, graying health insurance executive. A 31-year-old venture capitalist on the fast track, he’s been called “a modern day Vanderbilt,” “the boy wonder VC,” and “your mother’s dream man.” He’s dating the supermodel Karlie Kloss, who’s perhaps best known as Taylor Swift’s best friend — and who posted a photo of herself on Instagram last week voting for Hillary Clinton, with the hashtag #ImWithHer.” (Josh Kushner reportedly didn’t vote for Trump either.)

If that’s not awkward enough, Josh Kushner counts Peter Thiel, the contrarian Silicon Valley venture capitalist, among his most loyal investors. Through his Founders Fund, Thiel has invested millions in both Josh Kushner’s health insurance startup and his venture firm.

Thiel, you’ll remember, donated to Trump’s campaign, spoke at the Republican National Convention —and now sits alongside Jared Kushner on the executive committee of Trump’s transition team.

READ MORE: Trump should be good medicine for the pharmaceutical industry. Here’s why

It’s unclear whether the Affordable Care Act will be slightly tweaked or repealed and replaced with something unrecognizable. But changes seem certain, and they will surely affect Kushner’s Obamacare startup, Oscar Health, which sells individual policies to customers in several states.

While the company was founded to take advantage of Obamacare — it sells policies in the marketplaces the law created — it’s also in many ways a poster child for the problems of the health care law. The company, which is privately held, has lost $128 million in three states so far this year, on top of a $105 million loss in 2015, according to Bloomberg. It’s bowing out of two Obamacare marketplaces, in Dallas and New Jersey, and restructuring its hospital and physician networks elsewhere.

The company plans in February to begin selling insurance to small companies. Entering that market, which doesn’t depend on Obamacare, has been part of Oscar’s long-term plans from the start.

But a large part of Oscar Health’s business still hinges on the law. So its fortunes will be shaped, in part, by the Trump administration’s decisions on the ACA.

Josh Kushner does not hold a day-to-day management position at Oscar, but he participates in major business decisions and is often present in the company’s sleek Manhattan office.

It remains to be seen whether he has or will seek his big brother’s ear when it comes to reforming the law that made his business possible.

🤓🤓

A photo posted by Joshua Kushner (@joshuakushner) on

An Obamacare startup, bleeding red ink

Born into a New Jersey real estate dynasty, Josh Kushner was a freshman at Harvard when his father, Charles Kushner, went to prison after pleading guilty to tax evasion, witness tampering, and making illegal campaign contributions. The father’s absence left Jared Kushner — who’s four and a half years older than his brother — to run the family business.

Josh Kushner, meanwhile, spent a brief stint at Goldman Sachs after graduation and then went to business school at Harvard, where he met the two men with whom he would start Oscar.

They named the company after Josh Kushner’s Eastern European great-grandfather. (This is not the side of the family that survived the Holocaust — a story that Jared Kushner famously invoked during the campaign to defend Trump from charges of emboldening anti-Semites.)

Investors love Oscar, pouring more than $700 million to date into the startup. Aside from Thiel, big-name investors from Wall Street, Silicon Valley, and China have joined the party. The company was recently valued at an eye-popping $2.7 billion.

But the individual market has proven a tough nut to crack.

READ MORE: 10 steps the Trump administration can take to make America healthy again

“They’ve been met with the reality that it’s difficult to control health care costs, and it’s difficult to control people with chronic diseases, and just hanging out a shingle with a really cool logo is not enough to do it,” said Les Funtleyder, a health care investor at E Squared Asset Management, which has a holding in UnitedHealth, which competes with Oscar.

Oscar did not respond to questions about specific policies it wants to see from the new administration. Josh Kushner, Jared Kushner, and the Trump transition team also did not respond to requests for comment. More than three dozen Oscar employees across many levels of the company also declined or did not return requests for comment.

four years ago today I met my best friend ⭐️🌙 I love you more everyday.

A photo posted by Karlie Kloss (@karliekloss) on

A rising star in the venture world

Despite the speed bumps Oscar Health has encountered, Josh Kushner’s star has rapidly risen in the venture capital world.

He’s made 30-under-30, 35-under-35, and 40-under-40 lists. He’s closely watched by the tabloids, thanks to his four-years-and-counting romance with Kloss. And he’s something of a regular on the highbrow conference speaking circuit.

In one appearance nearly two years ago sitting beside Theranos CEO Elizabeth Holmes and former President Bill Clinton, Josh Kushner provocatively declaredthat there are “a lot of people” in the health care industry who are “just evil.”

READ MORE: A quick guide to the allies Trump might pick to lead HHS

Despite all the glamour, he cultivates an image as a wonky and mild-mannered workaholic. He said in one interview that he moved to a new apartment just two blocks from his office because he was too often sleeping at his desk overnight.

He’s also kept a low profile as Trump’s rise has spurred curiosity about the Kushner family. Through a spokesperson, Josh Kushner told Esquire magazinebefore the election that he has been a Democrat his entire life and would not be voting for Trump. The spokesperson also said that Josh Kushner loves his brother and did not want to say anything that would embarrass him.

An uncertain future under President Trump

Josh Kushner and his partners timed the 2013 launch of Oscar Health with the implementation of Obamacare, which created state exchanges where consumers can enroll in insurance plans. The company sought an edge by targeting millennials with playful ads and a Silicon Valley vibe.

Oscar Health has also built ties with Obama’s team. The company reportedly turned to several campaign operatives from President Obama’s successful reelection campaign to aid in canvassing before the open enrollment deadline in the company’s first year.

And a year ago, the White House trumpeted an online video from Oscar seeking to highlight the affordability of health insurance. “We are incredibly motivated by the support the White House has shown us today on this initiative,” the company said.

Oscar released a statement last week saying that “we can’t speculate” on what the election results mean for the industry and that “we hope and expect that the new administration will keep the spirit of consumer choice and competition alive in the marketplace.”

READ MORE: ‘I just feel terrified’: Women pour support toward Planned Parenthood after Trump’s victory

Obamacare experts said it’s unlikely that Trump’s win will spell either automatic doom or an automatic boon for Oscar Health.

Its future, like that of other insurance companies, depends on how the market for individual insurance plans fares — and that depends on what the Trump administration’s replacement plan looks like, said Katherine Hempstead, a senior advisor at the Robert Wood Johnson Foundation who specializes in health policy.

The Trump administration could boost Oscar, particularly if Republicans can manage to fix some of the problems with the health care law that have stymied the company. But Oscar could take a hit if the GOP reduces the amount of public money spent subsidizing coverage. It could also be hurt if fewer people sign up for health plans. That hasn’t happened yet, since Obamacare is still the law of the land.

Federal data released on Wednesday show that the first 12 days of this year’s enrollment is outpacing last year’s comparable period.

The pace of enrollment has picked up considerably since Trump’s election.

This article is reproduced with permission from STAT. It was first published on Nov. 17, 2016. Find the original story here.

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