Benefits Firms Wrestle With Storms

Benefits market players are facing a strange year: Clients and prospects are desperate to hear ideas from them about how to cope with the storm in Washington, but the all of the confusion is increasing uncertainty about what insurers will sell and what individuals and employers should try to buy.

(Related: ‘Senior Officials’ Want to Close HealthCare.gov, Exec Says)

Executives at eHealth Inc., a company that sells insurance through the web, and Benefitfocus Inc., a company that sells systems for selling and administering benefits online, last week took pains to reassure investors and securities analysts about their ability to handle choppy seas.

Here’s a look at some of what those and other benefits players, such as Aflac Inc., have been saying about their operations and market conditions, based on the companies’ earnings reports for the first quarter and the conference calls the companies’ executives held with securities analysts to go over the earnings reports. All of the companies have posted recordings of the conference calls on the investor relations sections of their websites.

EHealth Inc.

EHealth, a Mountain View, California-based company, is reporting $33 million in net income for the first quarter on $79 million in revenue, compared with $18 million in net income on $74 million in revenue for the first quarter of 2016.

The number of Medicare product applications increased to 31,300, from 30,900.

The number of applications for commercial individual and family major medical coverage fell to 22,000 during the quarter, from 74,300 during the year-earlier quarter.

The company runs eHealthInsurance.com, a pioneer in efforts to sell ordinary major medical coverage through the web. The company originally hoped that the Affordable Care Act public exchange system, the ACA health plan standardization rules, and the ACA curbs on medical underwriting would help it, by making it much easier for the company to sell major medical coverage to consumers.

Instead, managers of the ACA exchange system have always limited eHealth’s ability to connect with exchange system data pipes, and, this year, carriers have mostly eliminated or sharply reduced the commissions they are willing to pay for coverage sales made outside the main ACA individual major medical open enrollment period, according to Scott Flanders, eHealth’s chief executive officer.

For 2017, the open enrollment period extended from Nov. 1 through Jan. 31.

The individual major medical business is still very profitable, but eHealth is trying to improve results by eliminating major medical marketing after the end of the ACA open enrollment period, focusing more on year-round sales of Medicare products, and seeking contracts to help large insurers and benefit plan sponsors with sales and enrollment processes, Flanders said. UnitedHealth Group Inc., for example, is using eHealth systems to provide online enrollment services for small groups, and to reduce involvement of brick-and-mortar agents in the small-group enrollment process, he said. He said eHealth also has major new relationships with USAA and with a union benefits enrollment platform affiliated with the AFL-CIO.

Flanders praised recent efforts by the Centers for Medicare & Medicaid Services to try to stabilize the individual market.

He said eHealth also likes recent efforts by Republicans in Congress to give states more control over their essential health benefits packages, or standard ACA benefits packages.

Consumers who take eHealth surveys say they want lower premiums, and that they also want more choices, Flanders said. The current Republican ACA-change proposals could help provide those choices, he said.

Benefitfocus Inc.

Benefitfocus, a Charleston, South Carolina-based company, is reporting a $7.7 million net loss for the quarter on $64 million in revenue, compared with a $13 million net loss on $55 million in revenue for the first quarter of 2016.

Shawn Jenkins, the chief executive officer, said that the number of employers using the company’s systems is increasing, and that retention rates have been high.

Many employers like the idea of using cloud-based systems from Benefitfocus, Jenkins said.

In the near term, uncertainty in Washington about health insurance policy could affect sales, but, in the long-term, Benefitfocus should be in a good position to handle whatever comes out of Washington, Jenkins said.

Aflac CEO Dan Amos says work on fast claim processing systems can set Aflac apart from the competition. (Image: Thinkstock)