An Oscar-branded Misfit Flash device.

Oscar, a small New York City-based health insurer noted for its individual focus and digital health savvy, has secured a $32.5 million investment from Google Capital, one of the search giant's two investment arms. The investment may well be strategic, according to the Wall Street Journal, which broke the story.

Last April, Oscar raised $145 million in a round led by Peter Thiel and Brian Singerman from Founders Fund. Other contributors to that round included new investors Li Ka-shing of Horizons Ventures, the Wellington Management Company and Goldman Sachs, in addition to all existing investors, a group that includes Box Group, Thrive Capital, Khosla Ventures, General Catalyst Partners, and Red Swan Ventures.

This investment brings the company's total funding to $352.5 million. Oscar told WSJ it needs that money to circumvent something of a catch-22 in the health insurance business: that one needs significant enrollment to get good rates from health providers, but needs those good rates in order to attract members.

As Google moves deeper into healthcare, through its Life Sciences group, Oscar co-founder Mario Schlosser believes Google will need third party partners to help distribute technology like the smart contact lenses it's developing in partnership with Novartis subsidiary Alcon.

“Google right now would need somebody to get these contact lenses to their patients and that somebody would have to have some economic incentive,” Schlosser told WSJ. “We can connect all those dots."

Google was apparently impressed by Oscar's commitment to technology, including its delivery of fitness trackers to customers in partnership with Misfit Wearables and its offering of telemedicine services via Teladoc.

Oscar told WSJ that even though it operated at a loss last year, that was due to its investment in hiring and new technology, and that the "core business of offering healthcare services" made a profit. The company has hired 45 engineers to continue focusing on the customer experience.

A reaction from Forbes speculates that, given Google's recent interest in diabetes -- through its partnerships with Dexcom, Sanofi, and Novartis -- the company forging a relationship with a payer could be an even bigger game-changer than it appears.

Forbes contributor David Kliff suggests that "what’s truly intriguing here is that Oscar could become the first health insurer to dynamically price their policies. As interconnected diabetes management moves closer to becoming a reality, this technology can not only transform how patients manage their diabetes but also what they pay for their health insurance. As we have noted in the past just as drivers receive a discount on their car insurance for attaching a monitoring device to their car, so to could patients with diabetes receive discounts on their health insurance for achieving better outcomes."