Issuers of 'Other Health' Products Hope for Trump Boom

Two issuers of “individual health insurance products other than major medical insurance” are hoping Trump administration regulation changes will make sales soar later this year.

Executives from Independence Holding Company (IHC) and Health Insurance Innovations Inc. talked about their expectations for the short-term health insurance market in the past two weeks when they have announced their first-quarter earnings.

Roy T.K. Thung, the chief executive officer at IHC, said his Stamford, Connecticut-based company has been investing heavily in short-term health insurance lead-generation systems call centers and products, in part to take advantage of the new opportunities.

Thung mentioned both the proposed short-term health insurance changes and a new federal tax law. The tax law is on track to eliminate the Affordable Care Act penalty on individuals who fail to have what the government classifies as solid major medical coverage starting in 2019.

“We believe that these developments, and the expecting continuing increases in [ACA- compliant coverage] premiums, will make our alternatives much more attractive as individuals compare prices and benefits when the 2019 open enrollment period begins,” Thung said in a statement.

Gavin Southwell, president of Health Insurance Innovations, said his company has been investing its consumer portal and working to expand distribution in response to all of the changes.

“There is a huge addressable opportunity here,” Southwell said in a conference call with securities analysts.

The Short-Term Health Insurance Duration Fight

Trump administration officials have proposed canceling the current 90-day duration limit on short-term health insurance coverage.

(Related: What If They Roll Back the Short-Term Health Time Limit?)

The administration of former President Barack Obama said the limit protects consumers against buying policies that fail to meet Affordable Care Act requirements, and that the limit protects issuers of individual major coverage against competitors that hold prices down by watering down the benefits.

Short-term health insurance issuers have argued that the duration cap keeps consumers from buying coverage that might meet most or all of their needs at a much lower price than major medical coverage.

The Earnings

IHC is reporting $7 million in net income for the first quarter on $88 million in revenue, compared with $4.9 million in net income on $72 million in revenue for the first quarter of 2017.

The Stamford, Connecticut-based company sells group disability insurance as well as specialty health insurance products, such as hospital indemnity insurance, as well as short-term health insurance. The company notes that it recently addressed one major objection to short-term health insurance, that it does not cover preexisting conditions, by introducing Connect Plus, a policy that can provide up to $25,000 in coverage for preeexisting conditions.

The company has noted posted separate commission or sales figures, but it says the specialty health division experienced “significantly increased sales.

Health Insurance Innovations is reporting $6 million in net income for the first quarter on $60 million in revenue, compared with $8.5 million in net income on $56 million in revenue for the first quarter of 2017.

The company’s application activity for short-term health insurance and other potential alternatives to major medical coverage fell 21%, to 92,000 applications taken.

Activity for supplemental health products, such as dental insurance, fell 27%, to 64,700.

Executives said the activity drop was due mainly to the Centers for Medicare and Medicaid Services’ move to shorten the open enrollment period for major medical coverage. For the past few years, the open enrollment period lasted from Nov. 1 to Jan. 31. For 2018, the open enrollment period lasted from Nov. 1 to Dec. 15.

— Read Trump Administration Recognizes Important Contributions of Short-Term Medical on ThinkAdvisor.

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