And while Lauer downplays competition with the federally-run marketplaces, he's confident that his Silicon Valley-based company has some advantages over the governmental players.
“This is new for government. Government's going into the e-commerce business, it's as simple as that.” Lauer said. “But e-commerce is not simple. It's very complex, it's very fast-moving. Consumers are very aware, and they're very demanding.”
Still, e-brokers have at least one competitive disadvantage: Insurance companies pay a commission on every policy brokers sell for them. They'll pay no commission on policies sold in the new online government marketplaces.
The federally-run marketplaces will assess a 3.5 percent fee on every policy they sell, but policies sold in private marketplaces have to pay that, too, in addition to whatever sales commission they negotiate.
Insurers Covering Their Bases
So why would insurance companies continue pay commissions to e-brokers, if they can get listed on the federally-run online marketplaces essentially for free?
“The answer is, insurance companies view eHealth as an effective vehicle for distribution,” said Steven Halper, a health care technology market analyst at Lazard Capital Markets in New York.
He says eHealth has invested over $100 million building its web presence over more than a decade. It has a track record of finding customers online and successfully shepherding them all the way from window shopping to sale.
“That's why they're willing to pay the commission,” Halper said. “Nobody really knows if the federal exchange on its own will be as effective as eHealth.”
eHealth also works hard to keep its site at the top of internet search engine results, so people hunting for coverage that meets the ACA's requirements may well end up at eHealthInsurance.com instead of the online marketplace the federal government is running in their home state.
Halper won't speculate on whether government or privately-run online marketplaces will win more customers. He thinks a substantial number of Americans will blow off the health law's requirement that everyone have insurance and choose to pay a tax penalty instead.
But how people respond to the health law’s new provisions next year is contingent on a complicated mix of politics, technology and market behavior – and it is very much an open question.
“I'm not betting on anybody,” Halper said. “The problem with trying to forecast the outcome, is that you really don't know how many people are actually going to buy insurance in 2014.”
This story is part of a reporting partnership that includes NPR and Kaiser Health News.
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communications organization not affiliated with Kaiser Permanente.
Sun, Sep 15 2013