A Web broker that may be a pretty good indicator of the state of the traditional commercial health insurance markets says the third quarter was an adventure.
The broker, eHealth Inc. (Nasdaq:EHTH), helped turning the idea of “creating an Amazon.com for health insurance” into a reality. It’s been selling health insurance online since 1997. Like Health Insurance Innovations Inc., a distributor of short-term health insurance and hospital indemnity insurance, the health insurance unit at Assurant Inc., eHealth focuses on reaching the kinds of individuals, families and mom-and-pop businesses that brick-and-mortal agents and brokers serve.
The new Patient Protection and Affordable Care Affordable Act (PPACA) enrollment calendar system sent the company’s new major medical insurance sales down toward the center of the earth. Revenue fell a little. Marketing and advertising spending decreased a lot.
Profits were up.
Now, Gary Lauer, eHealth’s chief executive officer, is keeping his fingers crossed, and hoping the U.S. Department of Health and Human Services (HHS) will get the HealthCare.gov HHS exchange enrollment and administration system working well enough that they can expand efforts to help consumers use the PPACA public exchange system.
“We’re largely dependent on the stability of HealthCare.gov and some of the state exchanges,” Lauer said Thursday during a conference call with securities analysts. “If they are working reliably and up and running for most hours of the day, if not all, we really do believe that we can achieve some very good scale here.”
To learn more about what eHealth is seeing that might affect other players in the health insurance market — including, possibly, you, read on.
1. The percentage of consumers who qualified for special enrollment periods (SEPs) and had the energy to get through the SEP qualification process was small.
In the third-quarter earnings release, eHealth is reporting $1.5 million in net income on $41 million in revenue, compared with $174,000 in net income on $42 million in revenue for the third quarter of 2013.
Starting this year, federal and state regulators have implemented PPACA in a way that mostly limits health insurers to selling all major medical insurance, on and off the PPACA public system, during an open enrollment period.
The first open enrollment period officially ran from Oct. 1, 2013, through April 1, 2014. This year, HHS says it wants the second open enrollment period to extend from Nov. 15 through Feb. 15.
To buy health coverage outside the open enrollment period, consumers must show that they qualify for a “special enrollment period” (SEP) because of a major life change or a major problem with their coverage.
Because of the new enrollment period rules, the number of major medical applications submitted via eHealth’s eHealthInsurance.com website fell 81 percent, to 23,800.
2. Executives close to the public exchange system nightmares of late 2013 are starting to recover enough from the terror to talk about it.
The total number of people eHealth-sold major medical programs were covering fell to 653,700 at the end of the third quarter, from 765,500 a year earlier — partly because eHealth had a hard time serving all of the consumers who wanted to use its services to sign up for public exchange qualified health plans (QHPs).