Online Insurance Exchange Could Boost Enrollment
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Online Insurance Exchange Could Boost Enrollment

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The federal government has signed a landmark deal setting the stage for leading online insurance exchange to enroll potentially millions of people on new Obamacare marketplaces being operated by the government, it was revealed Wednesday in a filing with Securities and Exchange Commission.

That deal, experts have said, could dramatically boost enrollment in those marketplaces and help keep premium costs low—both key goals of the Affordable Care Act signed by President Obama in 2010—by drawing customers who land at's website through Google searches and other avenues.


The breakthrough after months of negotiations lays the groundwork for eHealthInsurance to soon begin enrolling people who qualify for government insurance subsidies on the 36 marketplaces that the federal government is either running for individual states or in partnership with states this year.

Those solely federal or mixed exchanges, which cover areas where nearly 60 percent of the U.S. population lives, open enrollment Oct. 1.


But for now, eHealthInsurance and other Web-based insurance markets remain effectively locked out doing the same kind of subsidized business with the remaining 15 exchanges being operated by individual states and by the District of Columbia this year.

Under the ACA, nearly all people who lack health insurance must obtain such coverage, or face a fine.

To provide affordable insurance—without any bar on people with pre-existing health conditions—the law authorized the creation of government insurance marketplaces or exchanges, where insurers can offer people plans at varying price points and benefit levels. Millions of people will be eligible to receive subsidies or tax credits that will offset some of the cost of those insurance plans.

"It's been a while coming, but I'm very pleased," eHealth CEO Gary Lauer told

He added, "I think it's a smart move" by the U.S. Centers for Medicare & Medicaid Services, which oversees the federal exchanges.


Under the deal, eHealth is being allowed access to the federal exchange data hub, which is necessary to allow would-be insurance buyers to have their eligibility for government subsidies verified. The deal was the first step toward giving eHealth permission to actually enroll subsidized customers in the exchanges' insurance plans, an approval that is now viewed as a "formality," according to a person close to eHealth.

"We now hope the 14 states and DC that are working hard to develop their own health insurance exchanges will follow the leadership of the federal government," said Lauer.

The deal could also earn eHealth a lot of money. The online insurance giant gets an average premium of about 7 percent for the plans it offers on its website, in the form of commissions paid by the insurance providers who sell the plans.

A March 2012 federal regulation gave Web-based insurance markets such as eHealth's the ability to enroll subsidy-qualified people in the new exchanges. But the regulation left it up to the governments running those exchanges to decide whether to let the online markets do so.


Since then, eHealth has lobbied long and hard to get the Obamacare exchanges to grant that permission, but until this week it had been thwarted in that goal.

Allowing eHealth to sign up people on its website may save the government money in enrollment costs, according to Lauer. And, he said, it will also broaden the pool of people in the plans, providing premium payments from younger, healthier people to balance the older and sick people who tend to generate benefit costs.

"Having us involved is going to expand the size of the pool, and all of that is going to help to mitigate risk, balance risk and hopefully keep prices and premiums stable," said Lauer. He noted that eHealth's website last year drew 20 million visitors, half of whom were between the ages of 18 and 34 years old.


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