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Sales of Medicare plans, and sales of individual major medical coverage to people who qualify for Affordable Care Act subsidies, have been strong.

Sales of individual major medical coverage to people who do not qualify for ACA subsidies, and who must pay all of the premiums out of their own pockets, have been weak.

A pioneer in efforts to sell health insurance through the web, eHealth Inc., gave that assessment Tuesday, in a preview of the company’s earnings for the fourth quarter of 2017.

The Mountain View, California-based web broker warned that it expects to report a net loss for the quarter of $22.5 million to $23.5 million, on revenue of $39 million to $40 million.

The company also announced plans to pay $20 million in cash and stock to acquire Health, Wealth and Life Advisors L.L.C., which is known as GoMedigap. GoMedigap connects consumers with agents who sell Medicare supplement insurance coverage.

Individual Major Medical

Because of concerns about claim costs and regulatory uncertainty, some insurers dropped out of the individual major medical market in 2018. Some of the insurers still in the market increased 2018 rates by an average of 25% or more.

Before the individual major medical open enrollment period started, analysts predicted that ACA premium tax credit subsidies could hold down the amounts low-income people really pay out of pocket for coverage, if low-income people shopped carefully for coverage and chose their plans based mainly on their share of the premium costs.

(Related: Colorado’s 2018 Individual Health Rates Will Be Weird: Wakely)

One question was how aggressive lower-income people would be at minimizing their share of the premium bills.

Another question was how big increases in the full cost of coverage would affect higher-income consumers, who would lack access to premium subsidies.

A third question was how changes in the way the ACA public exchange system works might affect coverage sales.

This year, for the first time, ACA exchange program managers at the Centers for Medicare and Medicaid Services let consumers apply for ACA premium tax credit subsidies directly through commercial web brokers’ websites, without having to go to HealthCare.gov.

In most states, the open enrollment period for individual major medical coverage ran from Nov. 1 through Dec. 15.

The number of applications for individual and family plan coverage filed through eHealth systems was 23% lower in the fourth quarter of 2017 than in the fourth quarter of 2016, eHealth said.

Scott Flanders, eHealth’s chief executive officer, said in a statement that the new, simpler shopping process helped sales at the company’s eHealthInsurance.com website: Application activity for consumers who qualified for subsidies was up.

“At the same time, we experienced a decline in non-subsidized plan applications as a result of premium inflation and lack of inventory across the market, among other factors,” Flanders said.


Medicare Plans

EHealth sells Medicare plans as well as individual major medical coverage.

The annual enrollment period for Medicare Advantage and Medicare Part D prescription drug plans ran from Oct. 15 through Dec. 7.

At eHealth, Medicare plan application volume was 16% higher during the fourth quarter than it was in the year-earlier quarter, the company said.


GoMedigap Deal

The $20 million that eHealth has agreed to pay for GoMedigap would amount to about $770 for each of GoMedigap’s 26,000 customers.

If eHealth completes the GoMedigap deal, and GoMedigap does well, the current owners of GoMedigap could get another $30 million in cash and eHealth stock over the next two years, eHealth said.

Flanders said eHealth believes the GoMedigap deal will complement eHealth’s expanding presence in the Medigap market.

—Read HealthCare.gov Volume Flattens Out on ThinkAdvisor.


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