Startup Bright Health is betting it can compete in thelucrative market of covering U.S. seniors as congressionaldebate keeps the future of Obamacare’s insurance plans inlimbo.

Related: 5 areas likely to lose ACAinsurers

Bright Health is preparing to offer Medicare Advantage plans inthree markets next year in close collaboration with local healthsystems: Birmingham, Alabama; Phoenix, Arizona; and theDenver-Boulder area of Colorado.

The company offered Obamacare plans in that area of Coloradothis year, but is holding off on expanding amid doubts over thehealth law’s future.

“We’ve been reticent to jump into that individual marketplace,but the Medicare marketplace we think is perfectly suited for thistype of option,” said Bob Sheehy, the company’s co-founder andchief executive officer. “We can offer better benefits forconsumers at a better price.”

Startups are increasingly betting on Medicare Advantage, as theysee a growing population of senior citizens opting for theprivatized version of the government’s traditional Medicareprogram. That pits the young companies against major insurers likeUnitedHealth Group Inc. and Humana Inc., which already havemillions of customers in the government-funded program.

Investors have rewarded the newcomers. Startup insurer CloverHealth, which offers Medicare Advantage plans in New Jersey, wasvalued at $1.2 billion in a recent funding round, Bloombergreported.

Related: Fewer insurers offering ACA exchange plans in2018

Closely held Bright Health, which sold its first health plansfor this year, has already raised $240 million from investors, mostrecently announcing in June that it landed $160 million to helpfuel its expansion plans.

Sheehy said Bright Health may also begin offering Obamacareplans in the Birmingham area for 2018, if it can gain enoughclarity on health policy. Republican lawmakers are currentlyworking to repeal and replace portions of the Affordable Care Act,often called Obamacare, fostering uncertainty about the shape ofthe markets next year.

Related: Medicare Advantage associated with more racialdisparity, study says

To start its health plans, Bright Health partners with a localhealth system, which takes on responsibility for caring for thecompany’s customers. In Colorado, the company teamed up withCentura Health for its ACA and Medicare Advantage plans. It’spartnering with Arizona Care Network in Phoenix and BrookwoodBaptist Health in Birmingham.

“We look for health systems that provide high quality care andhave great reputations in the marketplace, and then build a healthplan around them,” said Sheehy, who’s a former UnitedHealthexecutive.

Along with Sheehy, Bright Health’s founders are Kyle Rolfing andTom Valdivia, both former executives at Definity Health, which wasacquired by UnitedHealth in 2004.

“As we talk to health systems around the country, we think thetime is right for this model as system are moving from patienthealth to population health,” Sheehy said. “People get better care,more affordable care, in organized delivery systems.”

The strategy is similar to one pursued by the startup OscarInsurance Corp. as it enters new Obamacare markets. Oscar, whichwas valued at $2.7 billion in early 2016, is entering new marketsfor ACA plans in five states. In Cleveland, for instance, Oscar ispartnering with the Cleveland Clinic to build its network and sellplans.

Sheehy said Bright Health is talking with more health systems toexpand into additional regions over the next several years. Thecompany also hopes to broaden its offerings in the individualinsurance market once lawmakers finish overhauling the ACA, hesaid.

“Hopefully before too long we’ll have some clarity aroundhealthcare policy,” Sheehy said. “We’re focused right now onMedicare Advantage, but ultimately we think it’ll be the individualmarket. That market needs to be served.”

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