While politicians, business owners, and consumer advocates continue to debate who does and doesn't benefit from the Affordable Care Act, one clear winner emerged recently: Mountain View, Calif.-based eHealth.
The leading online insurance exchange company, which operates the site eHealthInsurance.com, struck a deal last Wednesday that would allow it to potentially enroll millions of people in the 36 states that will have federally run ObamaCare marketplaces. The deal covers all consumers who qualify for subsidies under the new program.
eHealth has experience in the field: Since its launch in 1998, it has enrolled more than three million consumers (40 percent of whom were previously uninsured) in health plans. Consumers who do not receive insurance through work use the site to find and purchase insurance from the close to 200 insurers that work with the company.
The idea is simple — consumers "shop" for the insurance that best fits their health needs and their budgets. They can compare services and prices and make decisions based on a broader selection of plans than the average person could get from an employer.
The agreement is not exclusive, but it's the first and only one that has been announced to date. The Fiscal Times caught up with Gary Lauer, who has served as CEO of the company since 1999 and as chairman since 2002, to discuss the deal, the business of online enrollment, and his thoughts on ObamaCare.
THE FISCAL TIMES (TFT): Will you be ready for open enrollment on October 1?
GARY LAUER (GL): I hope so. We're ready today. We're been doing this for a long time, long before the words 'health insurance' and 'exchanges' were in the same sentence. The bigger question is: Will we have all the government connections working properly? We think so. We hope so. We're working closely with the Centers for Medicaid and Medicare Services. We're feeling very optimistic.
TFT: Can you talk about some challenges facing the Affordable Care Act, and how you hope to help alleviate them?
GL: ObamaCare ultimately succeeds or fails based on enrollment. We see millions of people, and we can help increase the ranks of those who enroll. The more who enroll, the more balance you have in the pools, and that's going to help to stabilize pricing.
TFT: How many additional consumers do you project will be using eHealth?
GL: We saw about 20 million people last year. There are 18 million people who have individual coverage. The Congressional Budget Office estimates between 25 and 32 million uninsured Americans will be coming into the marketplace — so the market we face easily doubles. We think given our presence and our expertise, we hope to be able to enroll a significant number of people.
TFT: You get paid, of course, for every consumer who comes through eHealth. Right now you get about a seven-percent commission from the insurers for plans sold. Is that going to continue after this deal?
GL: That will probably hold for the products we market to people who are over 400 percent of the federal poverty level. For the lower-income people, the subsidized population, these products may have a lower commission rate, and that's OK with us because it's all incremental business.
TFT: How will your business model change after the Affordable Care Act?
GL: We'll continue to do what we do and focus on the consumer experience and doing a good job with the consumers. There's just going to be a lot more of them.
TFT: Your company fields a lot of phone calls from consumers about health insurance. What do you hear from them about ObamaCare?
GI: Confusion. Lack of knowledge. Surveys indicate that over half of Americans don't even know what it is, so we're dealing with a lot of that.
TFT: You also work with the big insurance providers. What do you hear from them?
GL: Different things. Some are going about it aggressively. Others have pulled back because they're not sure what the risk pool is going to look like and how this is going to work. What they want and they need is enrollment. You have to have abroad pool of people to spread the risk across.
TFT: There have been various projections about premiums. What's your sense of how costs will change for consumers after ObamaCare?
GL: Again, it comes back to enrollment. The people who most likely are going to enroll first are those who haven't been able to get insurance because of health reasons. They're higher utilizers. To keep this in balance, you've got to get younger, lower-utilizing people into the pool. If that doesn't happen, the ways it's going to get mitigated is through pricing, and pricing will go up. The last thing we want is for pricing on these products to become prohibitively expensive.
TFT: How will you market your services to new customers?
GL: We do a lot today. Almost half of consumers come to us directly, because anecdotally we [get] a lot of word of mouth. We are very present in the world of search with Google, Yahoo, and Microsoft. We do really well in natural search and get a lot of media attention. We'll continue that and then some.
TFT: But that's what you've done in the past, and reached more affluent consumers. How will you reach out to the subsidy-eligible population?
GL: We get lower-income people as well. We get to them through community centers, churches, schools — we're talking to hospitals. It's a long list.
TFT: What's your biggest concern about the open enrollment process?
GL: Just getting the other 14 states on board. That's our objective. We want to help them.
TFT: We know why that would be good for you. Why do you think it would be in the states' best interest to work with you?
GL: We think the residents of these states should have the same choices as residents of states that are on the federal exchange. The irony is that many of these states that the federal exchange is going into are states that didn't support ObamaCare and wouldn't build exchanges, and we're going to be there, and people are going to have choices. In some of the Democratic states, if they don't embrace us, the residents won't have the same choices.
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