As Congress continues to debate the future of Obamacare, efforts to repeal the health care law and make changes to the health insurance landscape are opening the door for private health insurance exchanges that serve as private sector alternatives to HealthCare.gov.
Over the past three years, web brokers like eHealthInsurance, GetInsured, and HealthSherpa have effectively competed with the government-backed exchange for business. Now, they’re looking to President Donald Trump and his administration to shift the task of enrolling Americans in health plans back to the private sector.
But first, companies are looking for a little clarity on the future of the health insurance market.
“The uncertainty is the biggest problem,” George Kalogeropoulos, CEO of HealthSherpa, told The Daily Signal. “There are ways to make it work, but it’s just a question of not knowing what the rules are going to be. The worst possible thing is uncertainty.”
The Affordable Care Act has proven to be both a boon and a bust for web brokers, which are online marketplaces where individuals and groups can research, compare, and purchase insurance plans.
At first, the failed October 2013 roll out of HealthCare.gov left an opening for web brokers, which make money off of commissions paid by insurers.
When the federal exchange crashed, a number of private companies stepped in for the federal government.
Gary Lauer, then-CEO of eHealth, sent a letter to the Centers for Medicare and Medicaid Services offering to let his company, which was created in 1997, run HealthCare.gov’s enrollment process for free.
The government ultimately declined, and officials worked to get HealthCare.gov back up and running within a few months.
California-based HealthSherpa launched immediately after HealthCare.gov’s failure and provided consumers with tools to compare policies and get price quotes.
In its first month of existence, the startup had 1.5 million visitors to the site.
Both eHealth and HealthSherpa, along with more than three dozen other web brokers, have entered into agreements with the Centers for Medicare and Medicaid Services to work hand-in-hand with HealthCare.gov and enroll subsidy-eligible consumers in coverage.
The Centers for Medicare and Medicaid Services effectively gave approved companies access to the federal data hub, which verifies eligibility for Obamacare’s tax credits.
For the last few years, the partnerships have worked well for some of the web brokers.
Kalogeropoulos said HealthSherpa, for example, has enrolled 820,000 people in exchange plans since 2014.
But the relationship between the federal government and web brokers shifted last year.
Up until 2017, consumers who shopped for coverage through a web broker could complete their entire application on that single site, even if they qualified for a subsidy.
But as of this year, consumers shopping for coverage through a web broker were redirected to HealthCare.gov to complete their application, and then sent back to the web broker’s website—what’s called a “double-redirect” process.
The “double-redirect” process was confusing to consumers, web brokers said, so in May 2016, the Department of Health and Human Services issued regulations to use the “single-site” approach, in which consumers could start and finish their application through a web broker.
But in December 2016, the government delayed implementation of the regulations to “ensure technical readiness and sufficient oversight of the eligibility application processes.”
Scott Flanders, now CEO of eHealth, said the change had a “materially adverse impact” on the business.
“From our point of view, this was government overreach in terms of what the secretary of Health and Human Services permitted HealthCare.gov to evolve into and, ultimately, froze out the private sector,” Flanders told The Daily Signal of the federal exchange.
Though eHealth initially reached out to the federal government after HealthCare.gov launched, the company had a rocky next few years.
eHealth excelled at enrolling a segment of the population crucial to Obamacare’s success, millennials, by focusing its outreach efforts on social media. Of the consumers who selected plans on eHealth’s website from January 2014 to March 2014, more than 54 percent were between the ages of 18 and 34 years old.
During that same time frame, just 27 percent of HealthCare.gov users were young people.
Additionally, the company said that more than half of eHealth customers who applied for a subsidy on its website completed their application in less than 10 minutes. Eighteen percent of consumers who applied for a subsidy on its website completed their application in less than five minutes.
But Flanders said that while eHealth and HealthCare.gov shared a common goal—expanding the number of Americans with health insurance coverage—private web brokers ended up competing with the federal exchange.
In early 2015, the company announced it was laying off 15 percent of its workforce, or roughly 160 positions.
At the time, the company said it had trouble enrolling individuals and families.
Now, Flanders said the federal government has made it difficult for consumers to enroll in health coverage through sites other than HealthCare.gov.
“The stated objective was to expand enrollment,” Flanders said. “By limiting the private sector’s ability to go out and bring people in properly, they reduced total enrollment.”
Kalogeropoulos of HealthSherpa agreed that HealthCare.gov is a competitor to his company, but specifically because the federal government was able to directly market to consumers easier and had more resources at its disposal.
However, he said the infrastructure put in place by Obamacare proved to be a boon for HealthSherpa and other web brokers who needed to interact with federal agencies to verify information.
“It’s positive and negative,” he said. “Where there’s some competition, there’s a huge advantage, which is that the federal data hub provided a common infrastructure that’s valuable.”
‘Let the Private Sector Compete’
Both eHealth and HealthSherpa have been tracking the Trump administration, as well as efforts to repeal and replace Obamacare, closely.
Though Congress stalled in its initial attempt to pass a bill dismantling the health care law, Health and Human Services Secretary Tom Price still has the power to make changes to Obamacare through the administrative process.
Some of those changes could directly impact web brokers like eHealth and HealthSherpa, Tim Jost, an emeritus professor at the Washington and Lee University School of Law, said.
“Presumably, Price and [Centers for Medicare and Medicaid Services Administrator Seema] Verma could change those rules to make it even easier to sell coverage directly through web brokers,” he told The Daily Signal.
But Jost said there is difficulty with allowing private companies to determine whether a consumer is eligible for tax credits.
“I just don’t see any way that the administration can, consistent with the Affordable Care Act, allow plans to be sold off the marketplace with premium tax credits and with no government involvement,” Jost said.
The House GOP’s Obamacare replacement plan did away with the income-based tax credits implemented under Obamacare and replaced them with age-based, refundable tax credits.
In its original form, the proposal failed to gather the support of the majority of Republicans. But Flanders said the form of financial assistance implemented in the bill would be easier for companies like eHealth to verify, and also help more middle-class consumers who saw their premiums increase yet didn’t qualify for a subsidy.
“For the American consumer, it’s less complicated and confusing for them,” he said. “And they’re less likely of having to repay it.”
Jost also noted that since insurers pay web brokers a commission for each plan sold, there’s a concern that web brokers would direct consumers to specific plans. HealthCare.gov, he said, is a more “neutral source.”
Since Trump took office in January, Kalogeropoulos of HealthSherpa and Flanders said they have been in talks with the new administration about the path forward for web brokers and consumers.
Both said administration officials have indicated a willingness to move forward with a single-site approach—in which consumers remain on the same website throughout the entire enrollment process.
“We’ve had encouraging signals from the administration that they want to place HealthCare.gov back where it should’ve been from the beginning, which is an information site more similar to Medicare.gov,” Flanders said.
The eHealth CEO, who took over for Lauer last year, said moving HealthCare.gov away from an e-commerce site to an “information site” is more “aligned with the mission of expanding affordable health coverage.”
“The federal government’s process is extraordinarily burdensome, time-consuming, and frustrating for many people who try it,” Flanders said. “It’s another example where the private sector does it better. [The government] should establish and enforce the rules, be an information site, and let the private sector compete to establish a consumer-friendly experience.”
The Centers for Medicare and Medicaid Services said in an email to The Daily Signal that the Trump administration is aware of the challenges web brokers currently face.
Kalogeropoulos, meanwhile, said HealthSherpa evaluated the Obamacare replacement plans proposed by Republican members of Congress and said they bode well for his business and others like it.
But the biggest issue they face right now is the uncertainty of what the health insurance market will look like in the coming months and years.
“What we want is clarity,” he said. “We want there to be a clear sense of what’s going to happen moving forward, whether it’s we replace the Affordable Care Act or keep it.”