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EHealth sails through the reform storm

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Executives at eEHealth Inc. (Nasdaq:EHTH) — the for-profit company that the new government-run health insurance exchanges are trying to imitate — say some Patient Protection and Affordable Act (PPACA) confusion seems to be behind it and some ahead of it.

Gary Lauer, the chief executive officer of Web broker’s parent company, said the end of confusion about whether the U.S. Supreme Court and Congress would allow PPACA to come to life has helped the site attract more commercial health coverage service members in recent quarters.

PPACA “is not going away,” Lauer said today during a conference call held to discuss the company’s latest financial results. “Ithink many people know that now.”

But, at the same time, the company is predicting that user growth will be only in the “mid-single-digit” range this year.

PPACA health insurance exchange enrollment is supposed to start in the fourth quarter, and “it’s just hard for us to see right now what the market is going to look like in that 90-day period” Lauer said. “There may be a high confusion factor. There’s a lot of education that’s required.”

EHealth is reporting $2.5 million in net income for the fourth quarter of 2012 on $45 million in revenue, up from $2.3 million in net income on $43 million in revenue for the fourth quarter of 2011.

Commission revenue increased to $37 million, fro $31 million.

EHealth began feeling the effects of health insurance commission cuts in early 2011.

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The year-over-year increase in commission revenue in the latest quarter is the first year-over-year increase the company has reported since early 2011.

“We believe this reflects a turning point,” Lauer said.

EHealth is better known than it was, and, “we also think that, because of the commission rate cuts that occurred, there are probably fewer agents and brokers out there marketing and selling these products today,” Lauer said.

Some consumers who would have bought coverage from a traditional health insurance broker in the best now are signing up for help from, Lauer said.

EHealth also is trying to talk to the managers of federal PPACA exchange program and the state exchanges to come up with ways can operate alongside the PPACA exchanges, Lauer said.

The issuers of the plans sold through the exchanges might pay relatively low commissions, because of the nature of the plans, but eHealth sees no evidence that commissions on the non-exchange plans that employers and individuals use to meet PPACA coverage mandates will be lower than commissions on comparable plans sold today, Lauer said.

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