Editor’s note: In an issue brief for the Robert Wood Johnson Foundation’s State Health Reform Assistance Network, summarized below, Manatt Health examines how State-Based Marketplaces (SBMs) can benefit from the experience of Web brokers, who have been using the Internet to enroll consumers in health plans since 1997. The paper defines who Web brokers are, chronicles the evolution of the federal Web broker policy and offers two models for how SBMs and Web brokers can work together. Click here to download the full issue brief free.
The Affordable Care Act (ACA) is greatly expanding health insurance coverage, particularly among lower-income, uninsured individuals. Sustaining this expansion is neither easy nor inexpensive and requires ongoing public-private partnerships. One important partnership opportunity is with Web brokers—private distribution channels that, similar to the Marketplaces, offer a choice of health plans from multiple insurers, relying primarily on Web sites and call centers for customer service.
In March 2012, the U.S. Department of Health and Human Services (HHS) provided the opportunity for Marketplaces to capitalize on Web broker experience by authorizing them to partner with Web brokers in enrolling individuals (including those eligible for subsidies), as long as those Web brokers met certain consumer protection standards. The Federally-Facilitated Marketplace (FFM) embraced the Web broker policy in May 2012, and the Centers for Medicare and Medicaid Services (CMS) began signing contracts with Web brokers in July 2013. Since then, the agency has signed agreements with more than 30 brokers. Some leading Web brokers are seeking similar partnerships with states. States could benefit from leveraging the experience of Web brokers as they seek to craft sustainable models for reaching as many consumers as possible.
Who Are the Web Brokers?
Web brokers come in different flavors but share a common goal with the Marketplaces—using the Internet as a distribution channel that makes it easier, faster and cheaper to purchase health insurance in a consumer-oriented Marketplace. Partnerships between Web brokers and Marketplaces are mutually beneficial. Marketplaces have achieved considerable public awareness and may attract issuers that Web brokers hope to represent, while Web brokers can provide technology tools, consumer-friendly innovations and marketing and sales capacity that are of increasing value to Marketplaces looking to become self-sustaining.
Working in tandem, Marketplaces offer Web brokers access to subsidized coverage to sell, and Web brokers are organized to process many individual buyers efficiently. Public Marketplaces are projected to double the size of the individual market nationally, so Web brokers have a powerful incentive to tap into that growth.
The 30-plus Web brokers that have signed agreements with CMS reflect a broad diversity of business models. Many of them, in fact, may end up collaborating with other Web brokers rather than working independently with the Marketplaces. Five examples of leading Web brokers (profiled in detail in the issue brief) are:
- eHealth, Inc. Founded in 1997, eHealth (aka eHealthInsurance) offers more than 10,000 products from 180 insurance companies, has affinity relationships with almost 1,000 businesses and reports having enrolled 4 million individuals in health insurance as of last year. The company focuses on providing a self-executing online experience for web-savvy consumers.
- Getinsured. Founded in 2005, Getinsured’s national web-based platform supports more than 110 carriers and 6,748 health plans. Getinsured also has contracted as an information technology vendor with several states and offers “off-the-shelf” solutions for both the individual and small business Marketplaces.
- GoHealth. Since 2002, GoHealth has operated a “consumer health insurance exchange,” assisting individual purchasing online, via its agent network or directly, through a major health insurance company. GoHealth was an early partner of the FFM, using its combination of online and call center capabilities.
- OneExchange. Towers Watson’s exchange division includes ExtendHealth, the largest Medicare exchange, and Liazon Corporation, a leading private exchange for midsized employers. The company is particularly interested in part-time and other employee classes that may be best served by individual coverage.
- Quotit. Part of Word & Brown Companies, Quotit is an Internet application service provider that has relationships with over 300 insurance carriers representing more than 40,000 plan designs in the health, life, dental and visual insurance markets. Quotit’s software enables independent brokers and retail consumers to generate insurance quotes.
Evolution of Federal Policy Web Brokers
The federal government first established a Web broker policy for public Marketplaces—and then adopted an “open competition” version of that policy for the FFM and the 36 states that operated as FFM states in 2014. Under federal regulation, Web brokers can enroll consumers through their own Web sites only if they meet two criteria. First, they must be appropriate connections to the relevant state or federal Marketplace. Second, the Web broker must sign an agreement and abide by the following consumer protections:
- Registers with the Exchange and receives training in the range of Qualified Health Plan (QHP) options;
- Complies with the Exchange’s privacy and security standards;
- Complies with state laws, including laws related to confidentiality and conflicts of interest;
- Meets all standards for disclosure and display of QHP information;
- Provides consumers with the ability to view all QHPs offered through the Exchange and displays all QHP data provided by the Exchange;
- Provides consumers with the ability to withdraw from the process and use the Exchange website instead at any time; and
- Maintains electronic records for audit purposes for at least 10 years.
In July 2013, Web brokers began signing agreements with CMS. By late 2013, CMS had entered into agreements with 30 Web brokers. The “double redirect” technology used to connect the FFM with Web brokers and carriers for direct enrollment, however, proved difficult to use without assistance during the enrollment process. Because consumers were redirected from the Web broker’s site to the FFM for eligibility determination, then back to the Web broker’s site to shop and choose a QHP, there were many opportunities for delays and disruptions. Web brokers estimate that relatively little of this traffic succeeded in achieving electronic enrollment. Most Web brokers did not rely on the automated enrollment process, preferring to provide telephone assistance to customers.
CMS has considered a set of Web services that would be built on top of the double redirect process and provide a seamless enrollment experience for consumers enrolling through Web brokers. The new services, which are referred to as the Eligibility Verification as a Service (EVaS) application program interface (API), would be an enhancement to the direct enrollment capacities, improving consumers’ experiences and their ability to connect electronically to the FFM. The new services are targeted to be developed and tested in time for the 2017 enrollment process.
State Options for Working with Web Brokers
There are two potential models for how SBMs can work with Web brokers:
- Open competition. The Marketplace contracts with all web-based entities that meet basic consumer protection and operational performance standards.
- Managed contracting. The Marketplace contracts selectively and/or in special partnerships with one or more Web brokers to achieve specific goals.
The case for open competition started with optimizing consumer choice and maximizing enrollment. Consumer buying habits vary, so offering people as many ways as possible to shop for coverage options will make it easier for them to enroll. Public Marketplaces will have strong appeal to certain types of consumers, but private Web brokers will appeal to others. In addition, private Web brokers may be able to experiment with consumer shopping enhancements in ways that public agencies find more difficult. In essence, open competition boils down to giving those that qualify for subsidized coverage the same access to multiple distribution channels as all other consumers.
The case for managed competition started with the fact that SBMs offer a unique benefit—Advanced Premium Tax Credits (APTCs). Therefore, SBMs are in a position to select and partner with Web brokers who are most aligned with their objectives. Some SBMs may find that selective contracting offers more value than offering a “vanilla” contract to all Web brokers that meet minimum standards of consumer protections and interoperability.
Moreover, public Marketplaces and Web brokers “compete” for unsubsidized enrollees. The substantial value that public Marketplaces offer Web brokers suggests that they should bargain for significant marketing commitments. For example, an SBM might structure a bid process in which Web brokers propose marketing resources aimed at tough-to-reach segments.
Now that they have open enrollment experience, SBMs are in a better position to set longer-term objectives, perhaps using different goals to suggest different approaches to Web brokers:
- To learn from as many different Web brokers as possible to reach enrollees, attract as much enrollment as possible and avoid any suspicion of favoritism. This objective suggests the value of casting a wide net for Web brokers.
- To leverage tax credits, brand awareness and a wide range of participating issuers to make the Marketplace the primary destination for all individual payers, whether subsidized or not. This objective suggests favoring Web brokers that agree to place subsidized and non-subsidized individual business through the Marketplace.
- To target for special outreach efforts, particularly linguistic, professional or demographic groups (e.g., Hispanics, Native Americans, entrepreneurs). This objective suggests partnering with selected Web brokers—for example, matching the Web broker’s spend for targeted advertising and community events.
- To help bridge discontinuities and different rules between Medicaid and QHPs for the lower-income applicants who may turn out to be eligible for Medicaid. This objective suggests partnerships with brokers, web-based or otherwise, that have relationships with a state’s Medicaid program and that are committed to assisting low-income applicants.
- To provide customers with a truly objective choice of issuers and equally robust access to all QHPs in the Marketplace. This objective suggests favoring Web brokers who have appointments from all issuers or commit to promote equally those issuers that have not appointed the Web broker by including them in its decision-support tools.
- To minimize the Marketplace’s cost and time for establishing and managing relationships with Web brokers. Depending on the marginal cost of adding brokers, this objective may suggest the open competition model or, if marginal costs are high, it may suggest limiting the number of Web brokers with which the Marketplace contracts.
While Marketplaces may initially gravitate toward one strategy, both Marketplace needs and Web broker capabilities will evolve over time. Therefore, Marketplace strategies should evolve as well. For example, a Marketplace may initially want to learn from as many Web brokers as possible so may follow the open competition model. Over time the same Marketplace may find a better return from selectively partnering only with those Web brokers that make a major commitment to promoting the Marketplace and its priorities.