The new Patient Protection and Affordable Care Act (PPACA) enrollment calendar system made individual major medical sales fall off a cliff between the first quarter of the year and the second quarter.
A publicly traded Web-based health insurance broker, eHealth Inc., showed just how steep the cliff was in its latest earnings report.
Insurance regulators, exchange managers and insurers created the enrollment calendar to try to keep consumers from using PPACA’s new underwriting restrictions as a chance to wait until they get sick to pay for coverage. The system requires most consumers to buy coverage during an open enrollment period, or else show they qualify for a special enrollment period (SEP) later.
The first open enrollment period started Oct. 1, 2013, and ended in mid-April in most of the country.
For eHealth (Nasdaq:EHTH), overall second-quarter results looked good: The company is reporting $3 million in net income for the quarter on $43 million in revenue, up from $1.1 million in net income on $40 million for the second quarter of 2013. Commission revenue increased to $39 million, from $35 million. The number of customers with commercial individual and family coverage in force increased to 751,000, from 748,000 a year earlier.
But the number of individual and family coverage applications submitted during the quarter plunged 78 percent, to 24,800. That was down from 110,600 applications in the second quarter.
In the first quarter, eHealth took in 169,500 applications — 34 percent more than it received during the first quarter of 2013.
Now that eHealth has seen PPACA world up close, it’s cutting its revenue flow projections for the full year to about $185 million to $194 million. Originally, the company hoped to take in $206 million to 213 million.