The nation's biggest online seller of health insurance has joined forces with the federal government to enroll people across the country in
The state's new insurance exchange, Covered California, is handling online enrollment on its own and, for now, it has spurned help from Silicon Valley's EHealth and other online brokers. In contrast, the federal exchange for 36 other states has embraced EHealth's website — EHealthInsurance.com — and other popular shopping sites to help reach millions of uninsured Americans.
This split reflects how different the rollout of the healthcare law will look among many states and the various measures officials are taking to boost enrollment.
EHealth and other Web brokers expect to begin selling policies alongside the federal exchange in coming weeks, once technical details are ironed out.
The tactic of using online brokers has drawn fire. Some consumer advocates say EHealth and other websites shouldn't be allowed to sell subsidized coverage as part of the federal healthcare law. Critics say they tend to promote policies by insurers that pay them higher commissions and don't always share pertinent information about all health plans.
"I worry that these Web-based brokers will steer consumers inappropriately," said Lynn Quincy, a senior analyst at Consumers Union, the policy arm of Consumer Reports. "It's not clear government needs them to drive up enrollment."
EHealth's chief executive, Gary Lauer, says new federal rules address those concerns by requiring online brokers to treat all insurers equally on the exchanges.
"The real objective here is to enroll as many people as possible, especially younger people," Lauer said. "I'm really puzzled why Covered California continues to resist working with us. I think they are making a big mistake."
EHealthInsurance.com, GetInsured.com and other sites rank high in online search results and attract significant Web traffic.
Their easy-to-use websites and proven technology can be a stark contrast to the numerous glitches many consumers experienced when they tried using government-run exchanges starting Oct. 1.
Covered California's website, http://www.coveredca.com, has fared better than most after some early technical problems, and it said that nearly 29,000 people applied for coverage in the first five days of enrollment.
State officials have enlisted enrollment help from community groups, hospitals, colleges and insurance agents to help reach their goal of expanding coverage to more than 2 million people by the end of next year.
Covered California, although not interested in their help this year, says Web brokers may be an option down the road.
"We expect to consider some level of integration with online brokers in 2015," Covered California spokeswoman Anne Gonzales said. "But we need to spend some time on how that might work."
The federal government paved the way for these partnerships by setting rules for Web brokers wanting to sell health plans under the Affordable Care Act. They require the participating websites to list all health plans sold in a particular exchange regardless of whether they are receiving commissions or any other incentives. The various rates consumers pay would be the same as those listed on a government site.
These online shopping sites generally earn money from fees insurers pay for placement on the sites and commissions on each policy sold. EHealth says commissions vary by insurance company, but it collects about 7% of the premium, on average.
In July, federal officials reached agreements with five of these online brokers, opening up new ways for consumers in 36 states to sign up.
GetInsured.com was one of the companies selected by federal officials and its chief executive, Chini Krishnan, thinks state exchanges will eventually follow suit.
"As states get past the basic launch, many or all of them will ultimately begin to think about leveraging the private-sector capacity and innovation we have," Krishnan said. "I do think market forces will eventually drive them in that direction."
GetInsured.com won't be taking applications online for Covered California policies, but the Palo Alto company has played a supporting role for the state. It served as a subcontractor to consulting firm Accenture, which built Covered California's $313-million website and online enrollment system. GetInsured.com is also running the small-business exchange for New Mexico.
EHealth's stock has soared 46% since the Mountain View, Calif., company announced its federal contract in late July.
"It's a potential windfall for the company," said Steven Halper, a managing director and healthcare analyst at Lazard Capital. "EHealth spent a lot of time working with the federal government on how they could help them with enrollment."
EHealth said it has signed up more than 3 million people for health insurance since 1998, and about 40% of them were previously uninsured. It also says about half its Web visitors are ages 18 to 34, a prized demographic for the new government-run marketplaces.
It's crucial for the exchanges to find enough young and healthy policyholders to balance out the higher costs from older, sicker enrollees so premiums don't soar in future years.
Lauer agrees that EHealth stands to benefit financially from working with the exchanges. "You bet we will make more money," he said. "But they should view us as a complement to what they are doing, not a competitor."