Online insurance brokers see a potential windfall when the federal government doles out billions in subsidies to buy help Americans buy health insurance. And they are asking state governments to help them score it.
The online brokers want millions of new insurance customers to be able to use those subsidies to buy health coverage through their Web sites, rather than shop exclusively on the new exchanges being set up by states and the federal government.
For that to happen, states will have to agree to partner with these privately-run firms. While a handful of states are considering the option, none has yet adopted it.
Online insurance brokers say that they have the expertise to make the Affordable Care Act more successful by increasing enrollment in health insurance plans.
“We have the expertise and already generate a tremendous amount of volume of sales,” says Gary Lauer, CEO of EHealth, the country’s largest online insurance broker. “The exchanges are spending a lot of money to enroll people, which is all fine, but we could do the same thing at no charge to the federal government.”
But consumer advocates worry that these private sites could undermine the health law by steering consumers towards plans that pay the broker a large commission rather than the ones that provide the best coverage.
Online insurance brokers often give a small set of health plans better billing on their Web sites, while making other options difficult to find, according to Consumers Union health policy analyst Lynn Quincy. She has presented her research to multiple state governments weighing whether to allow these arrangements.
Health and Human Services opened the door to these partnerships in March, when it issued regulations that allow—but don’t require—states to partner with online insurance brokers.
The federal government also set tight restrictions on the information that these private Web sites must display, to ensure that all health insurance plans have a level playing field.
The Web sites must “provide consumers with the ability to view all [health plans] offered through the exchange” and not give shoppers “financial incentives, such as rebates or giveaways” to steer them towards a particular plan.
Still, Quincy worries that private Web sites might give preferential treatment to health insurance plans that pay more lucrative commissions.
“There might be inappropriate steering towards certain plans,” she said. “Maybe the full choices are there, but some you have to click through to another tab. Or they might direct you to click and see the best-sellers.
“We worry that Web sites might comply with the letter of the law, but not the spirit of it.”
EHealth CEO Lauer does acknowledge that the site has financial motivations when it sells a health insurance plan. But he also contends that the federal regulations are strong enough to ensure that consumers get the same experience, no matter where they purchase coverage.
“We’re a profit-making company,” he said. “Our revenue source is the commission paid to brokers. It’s not an additional charge, it’s built into the premium, the same premium on the exchange. The only difference is the carrier will pay us a commission.”
States are still weighing whether to partner with these web-based insurance brokers. Quincy, who has tracked the issue, has seen it come up in Illinois, Minnesota and Connecticut.
The Maryland Health Benefit Exchange recently requested public comment on the issue. As one of the states farthest ahead on implementation, it could become an example that other states follow.
“Our goal is for health reform to be successful,” Maryland Health Benefits Exchange board chair Josh Sharfstein said. “If we think that collaboration with a third party may be helpful, we could move forward on that.”
Some legislators have also weighed in on the issue. Rep. Emanuel Cleaver (D-Mo.), who chairs the Congressional Black Caucus, wrote HHS Secretary Kathleen Sebelius, urging her to give states the flexibility to work with these websites.
“Low-income communities should have the same tools as the wealthy when it comes to finding health insurance, plain and simple,” Cleaver said in a statement, adding that he thinks such sites need to be “both transparent and consistent.”