Medicare for All Will Turn Into Medicare for More: Web Broker CEO

The head of a health insurance web broker argues that the current version of Medicare is too popular for the government to do much to change it.

He says any successful Medicare for All proposals will turn into Medicare for More programs, and that those Medicare expansion programs will be good for Medicare plan agents and brokers.

Scott Flanders, the chief executive officer of eHealth Inc. — one of the pioneers in efforts to sell insurance online — talked about the Medicare for All movement Thursday, during a conference call with securities analysts.

(Related: Washington May Leave Health Policy Alone: Centene)

“We believe that the financial and political viability of radical changes to the structure of the Medicare market are untenable,” Flanders said during the call, which was streamed live on the web. “Our belief is that any expansion of Medicare would be built off the existing architecture of Medicare. It’s the one part of the health care ecosystem that has broad acceptance and a high customer satisfaction level.”

Flanders said the most likely scenario is that the government would gradually let more people under 65 buy into Medicare.

“So, there will not be some massive transition of eliminating group insurance and moving 300 million Americans, 280 million Americans, whatever it is, to Medicare,” Flanders said. “It’s just not realistic.”

If access to Medicare expands, the younger Medicare enrollees would probably be healthier and more comfortable with buying coverage online, and that should be good for web brokers, Flanders said.

Earnings

EHealth held the conference call to talk about its first-quarter earnings.

The Santa Clara, California-based company is reporting a net loss of $5.2 million for the first quarter on $69 million in revenue, compared with a net loss of $4.8 million on $43 million in revenue for the first quarter of 2018.

Although the company lost money, in part because of charges related to an acquisition, it raised $126 million through a stock offering in January, and it has about $135 million in cash on hand and no debt, Flanders said.

Here’s what happened to the number of customers with various types of coverage, compared with figures for the first quarter of 2018:

• Individual or Family Major Medical Coverage: 130,297 people, down from 182,655 people a year earlier.
• Medicare Advantage Plan Coverage: 280,763, up from 218,685
• Medicare Supplement Insurance:  76,875, up from 58,507
• Short-Term Health Insurance: 23,626, up from 15,467
• Small-Group Major Medical: 42,972, up from 35,545

Individual Major Medical

EHealth has decided to focus mainly on the Medicare plan market, in  part because of what it believes to be an unfavorable regulatory environment.

The company’s individual major medical application activity during the Affordable Care Act-compliant individual major medical market open enrollment period for 2019 was 51% lower than the activity level for the open enrollment period for 2018, Flanders said.

But commission revenue for the customers with individual and family major medical coverage actually increased 70%, in part because the people with those policies are holding on to their policies longer, Flanders said.

Medicare Plans

EHealth executives were thrilled with first-quarter Medicare business.

“First-quarter Medicare Advantage applications grew 79%,” Flanders said. “Medicare supplement applications grew 61%, and prescription drug plan applications grew 135%.”

Overall revenue from Medicare plan sales was up 78%.

One thing that helped was the start of a new Medicare Advantage plan switching period program in the first quarter, Flanders said.

Live Humans

EHealth has been using a combination of insurance agents in its own call centers and agents at call centers provided by outside vendors.

The company has decided to keep most of the annual enrollment period agents on staff year-round, because it has found that they can provide support and help with enrollments outside the main Medicare and individual major medical enrollment periods, and because experienced agents make more sales during the main enrollment periods, eHealth executives said.

Marketing

For eHealth, which perfers to sell coverage online, prospects who come in through online channels, such as paid search advertising, have a much higher propensity to convert online than other prospects do, Flanders said.

Resources

Links to documents related to eHealth’s first-quarter earnings are available here .

Information about eHealth earnings call recording is available here.

— Read We’re the Ones Actually Improving Health Care: UnitedHealth, on ThinkAdvisor.

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