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Web broker to focus more on Medicare sales

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A health insurance Internet sales pioneer says it’s overhauling its business in response to problems with selling individual and major medical coverage through the Web.

The Web broker, eHealth Inc. (Nasdaq:EHTH), expects to eliminate about 160 of its 1,070 positions and focus more on selling Medicare-related products.

Web health insurance brokers reported strong sales during the first Patient Protection and Affordable Care Act (PPACA) major medical open enrollment period, which lasted from Oct. 1, 2013, to April 2014 in most of the country, and they were hoping to get even more business during the second annual open period, which started Nov. 15, 2014, and has now ended in most of the country.

But eHealth reported in February that it lost $19 million in the fourth quarter of 2014 on $45 million in the fourth quarter. Part of the loss was due to changes in how the company recorded Medicare sales revenue, but part was due to a sharp drop in major medical application volume.

The number of major medical applications submitted fell to 100,400, from 169,800 in the fourth quarter of 2013, and the number of applicants who got through the approval process fell to 66,600, from 125,300.

The number of people who bought Medicare plans through the company’s system increased to 143,500, from 118,200.

Most of the position cuts will probably come from the customer service, enrollment, technology and content operations, the company says.

Gary Lauer, eHealth’s chief executive officer, said the company wants to expand its Medicare business “while preserving the flexibility to adapt quickly and capitalize on future developments in the individual and family marketplace.”