Online insurance brokers see windfall in Obamacare

WASHINGTON — Online insurance brokers see a potential windfall when the federal government doles out billions of dollars in subsidies to help Americans buy health insurance next year. And they want state regulators to help them capture it.

The online brokers want millions of new insurance customers to use those subsidies to buy health coverage through their websites, rather than shopping exclusively on government-run exchanges.

For that to happen, state regulators will have to agree to partner with these privately run firms. While a handful of states, including Illinois, Minnesota and Connecticut, are considering the option, none has yet adopted it.

Maryland, one of the states leading the way on establishing the government exchanges, recently requested public comment on whether online brokers should be allowed to accept the subsidized consumers as well, but hasn’t made a final decision.

These types of websites offer the “the potential advantage of having more outreach to get people insured,” said Josh Sharfstein, board chairman of the Maryland Health Benefits Exchange. “It’s a really important role for health reform and goal of the exchange.”

Online insurance brokers say they have the expertise to make the Affordable Care Act successful by increasing enrollment in health insurance plans.

“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,” said Gary Lauer, chief executive of eHealth, the country’s largest online insurance broker.

These groups have tapped into support from some lawmakers, including Rep. Emanuel Cleaver, D-Mo., chairman of the Congressional Black Caucus. Cleaver says that access to these sites would benefit lower-income Americans who will use tax subsidies to buy health insurance.

“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.”

But consumer advocates worry that these private sites could undermine the health law by steering consumers toward plans that pay the broker a large commission rather than to those that provide the best coverage.

Online insurance brokers often give a small set of health plans better billing on their websites, while making other options difficult to find, said Lynn Quincy, health policy analyst for Consumers Union. Quincy has warned multiple state regulators against allowing the online brokers into the market.

The Affordable Care Act directs all states to build online insurance marketplaces, known as exchanges, where consumers will be able to compare and buy coverage. Many experts describe these sites as an “Expedia” for health insurance, where shoppers can compare health plans rather than airline tickets.

The Department of Health and Human Services opened the door to the potential competition in March, when it issued regulations that allow — but don’t require — states to partner with online insurance brokers.

The regulations aim to ensure that all health insurance plans have a level playing field. The websites 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 toward a particular plan, according to the rules.

Still, Quincy worries that consumers will not get a clear view of the options available.

“There might be inappropriate steering toward 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 websites might comply with the letter of the law, but not the spirit of it,” Quincy said.

Lauer acknowledges that his company has financial motives. “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.”

But, he said, federal regulations are strong and will ensure that consumers get the same experience on the government-run exchanges and the private websites.