A key part of online strategy for President Obama's health care law is faltering as insurance brokers who were supposed to act as middlemen in signing Americans up for policies — particularly the young, healthy enrollees key to the law's success — say they are being thwarted by the clunky system.
The brokers still have to send customers to HealthCare.gov, the once-glitchy federal website, to verify whether they can get taxpayer subsidies to help buy insurance. But brokers have realized it's easier just to handle applicants who aren't eligible for assistance.
"The whole redirect process is so Byzantine," eHealth, Inc. CEO Gary Lauer said, noting that Internet sales giant Amazon doesn't send users to another website between browsing and checking out. "It just doesn't work."
With just five weeks left to enroll for Obamacare's insurance exchanges in 2014, the brokers have given up hope of being fully up and running this year. Instead, they now hope they can work out a solution with the government by Nov. 15, when enrollment for the 2015 cycle opens.
The brokers say the government should open up "direct enrollment" in a way that is similar to what states with their own exchanges have set up, allowing consumers to go through all the steps on a single website.
Private-sector brokers had years of experience in running online health markets securely, and their customers tend to be web-savvy young adults — a key demographic to making the economics of the health care law work. That's why they were key to the administration's hopes for signing up millions of Americans under Mr. Obama's overhaul during the open enrollment period from Oct. 1 to March 31, according to analysts.
"The expectation was that [the Department of Health and Human Services] would want to have as many avenues as possible to get into the enrollment process," said Matthew Eyles, executive vice president at Avalere Health, a Washington-based consultancy.
Robert Laszewski, a health care consultant, said that when HealthCare.gov failed in the early days of its October launch, the private sector should have been the back-up plan.
"This would have been a really good workaround," he said.
Web brokers have a financial incentive to be part of the health overhaul, because they earn commissions by closing sales. The direct-enrollment program has raised questions about whether consumers will see every plan available to them, although rules are in place to keep brokers from steering customers to plans that pay out higher commissions.
The clunky web broker system shouldn't have been a surprise. The Centers for Medicare and Medicaid Services issued guidance last spring that advised consumers to begin and end their shopping experience on the broker's site, but with a stopover on the federal portal in between.
The agency has signed agreements with about 30 web brokers so far, and says it's working with them to make the system better.
"We are in ongoing conversations with web brokers and issuers on how to continue to improve the consumer experience for the next open-enrollment period, and will provide more guidance as we finalize any new options," a CMS official said.
Analysts said that under the redirection system, customers might not go back to the broker's website once they have their subsidy verification in hand from HealthCare.gov, meaning the broker might not get credit — or the commission — for the transaction. The commissions vary, but eHealth reported the average fee for nonsubsidy enrollees is 7 percent of the cost of a monthly premium.
It is unclear what a simplified process would look like exactly, because all eligibility verifications must go through the federal data hub to cross-check things such as income and immigration status.
Analysts also said the administration could be forgiven if they are reluctant to extend to private entities the kind of hub access that government entities enjoy on their exchanges, even if the brokers have demonstrated their reliability and security.
"I don't doubt that direct enrollment could be managed more efficiently, but simply turning the whole process over to private entities would create too great opportunities for fraud and abuse," said Timothy Jost, a health care policy expert at Washington and Lee University School of Law.
Streamlining the system could take some time.
"There's so much focus on the first year. You really have to look at the long-game here," said Larry Levitt, senior vice president of the Kaiser Family Foundation, a nonpartisan health-policy organization. "It's not like admitting defeat to look forward to 2015 and 2016."
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