Is lack of tech tool crimping Obamacare sign-ups?

In the summer of 2013, the federal government signed deals with Internet-based insurance brokers in the hopes they would put some proven marketing muscle behind Obamacare plans, which were set to soon go on sale.

Seventeen months later, as the second enrollment season nears its Feb. 15 close, those brokers are again signing up Obamcare customers in the same plans offered on HealthCare.gov, the federal insurance marketplace that serves 37 states.

But just like first enrollment season, brokers are doing their jobs without a technical feature that they want, and which they say that the government has repeatedly promised them.

HealthCare.gov website seen on Nov. 12, 2014.
Adam Jeffery | CNBC
HealthCare.gov website seen on Nov. 12, 2014.

Brokers say that if they had that feature, known as "direct enrollment," they could significantly boost the number of Obamacare sign-ups.

"We could probably double the enrollments that we're doing," said Chris Lunt, vice president of engineering for the Web broker GetInsured. He said that having true direct enrollment would speed up the process for customers, allowing brokers to handle even more enrollment traffic.

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Several months ago, Web brokers including GetInsured, eHealth, GoHealth and Towers Watson banded together to create a consortium called the Association of Web-based Health Insurance Brokers to encourage direct enrollment being implemented for the federal exchange.

So far, the group's efforts have not borne fruit.

"I just wish that people in the federal government would do more to embrace the people out there that are helping" with enrollment, said eHealth CEO Gary Lauer.

But a federal official has suggested that Internal Revenue Service regulations covering the sharing of income status of people with third parties is a primary reason that the brokers aren't getting the seamless, one-stop shopping experience that they want to give their customers. Income status determines whether people qualify for often valuable Obamacare subsidies.

Direct enrollment, as desired by the brokers, would allow customers who are already visiting their sites, shopping for plans and, ultimately enrolling in those plans, to also have their eligibility for Obamacare subsidies verified without seeming to leave the broker's own website.

Brokers said the current system, which at its best requires them to transfer the customer to HealthCare.gov to have subsidies verified and then be transferred back to the brokers' sites, is less efficient and slower than the direct enrollment feature they want.

Getting direct enrollment has been a priority, brokers say, because it would allow them to handle more business from the customers who are most likely to shop for plans sold on HealthCare.gov—people who qualify for financial assistance from the federal government.

More business translates into more commissions for brokers, among them eHealth, whose stock lost more than half its value in mid-January after after revealing that applications for insurance plans had fallen sharply, and that it was lowering revenue estimates.

Another possibly worrisome issue for Web brokers and insurance companies is a looming Supreme Court case that threatens to eliminate the subsidies given customers of the federal Obamacare exchange. Plaintiffs claim such subsidies can only give given customers of state-run exchanges.

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Most HealthCare.gov customers get subsidies by virtue of having low or moderate income. And subsidies are only available if customers purchase plans listed on HealthCare.gov—people who don't want or need subsidies can buy plans sold off that exchange.

Roadblocks

The Centers for Medicaid and Medicare Services agreed in July 2013 to allow the brokers to enroll subsidy-eligible customers in HealthCare.gov plans, in large part to leverage their existing market presence to increase enrollments.

Despite CMS' decision, none of the then-16 Obamacare exchanges being operated by individual states and the District of Columbia agreed to allow brokers to enroll subsidy-eligible customers in the plans on their marketplaces.

While brokers weren't happy with the states' stance, they said they were glad to be told they'd be able use direct enrollment for their customers buying HealthCare.gov plans.

And eHealth's stock dramatically jumped on news of the CMS deal, by as much as 30 percent on the day it was announced.

But the first roadblock came from the epic technological meltdown of HealthCare.gov when it launched in October 2013, preventing most people from enrolling on the federal exchange. The brokers' desires to start enrolling subsidy-qualified people in the exchange's plans were put on the back-burner for months as HealthCare.gov was repaired.

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Even after the repairs, the federal government did not make creating direct enrollment for brokers a priority. So instead, brokers ended using several workarounds through last season, which ended in April 14, and during this one.

The 'double redirect'

One involves customers arriving at a broker's site, filling out information and shopping for plans, and then being electronically handed over to HealthCare.gov by the broker, where they fill out a form for verifying their subsidy. The customer is then sent back to the broker's site to complete the transaction—a so-called "double redirect." Web-based brokers' agents sometimes have to get on the phone with customers to complete the transactions, further lengthening the effort.

Another way brokers are getting people eligible for subsidies enrolled is by shepherding their sign-ups through HealthCare.gov's "broker portal."

One customer who ended up going through one of those workarounds was Michael Falso, a 50-year-old New Jersey operator of a metals distribution business, who went to eHealth in December after running into difficulties with HealthCare.gov as he sought coverage for himself, his wife and three children.

Falso hadn't been aware before then that he could get the subsidies he qualified for from a nongovernment site.

"I can't tell you how helpful there were," said Falso, referring to how an eHealth customer-service person "spent quite a bit of time helping me answer questions to my application and she kind of walked me through."

Falso said eHealth's platform was easier to navigate than HealthCare.gov, adding the federal exchange's website was "reasonably clear, but it's not crystal clear."

And eHealth's Lauer said there's no question that brokers could enroll a lot more customers like Falso if direct enrollment were an option.

"The frustration for a lot of us is there's been multiple commitments about providing this capability, and we still don't have it," Lauer said.

No date set

Despite conversations brokers have had with CMS about the issue, there's been no date set for when it could happen, he said.

GetInsured's Lunt said that before this current open enrollment season, federal health officials "said they wanted to do it, and they were working on it."

"And as the date started to get closer to when they would actually have to give that to us, it got quieter and quieter, and finally they said, 'We're not doing it,'" Lunt recalled. "They didn't give us any reason other than saying it wasn't ready."

Federal officials have said they were heavily focused last summer and into the fall on making sure HealthCare.gov worked as planned when open enrollment resumed Nov. 15.

Lunt said the brokers' consortium broached the issue about direct enrollment in a recent meeting with officials who included Kevin Counihan, who was hired to be HealthCare.gov's CEO last summer after running Connecticut's successful exchange.

"We had a chance to meet with them to say this is really important to all of us, that we could really help Americans by driving enrollments," Lunt said. "We haven't seen any commitment."

Fear of tinkering?

Lunt said that creating a direct enrollment function is not necessarily a difficult technological task. But he suspects one issue holding things up on the government's side is a fear of again tinkering with HealthCare.gov after having taken so much effort to fix it.

"There's probably components in there that don't work great," Lunt said.

He is pessimistic about the chances for seeing direct enrollment in the near future.

"My assumption is that this isn't going to happen for the 2016 open enrollment period either," he said.

And Lunt thinks that means enrollment next year could be lower than it otherwise might have been.

"There's clearly been an opportunity to get more people enrolled that has been lost by the complicated process of what it takes to get enrolled with a subsidy," he said.

Asked about the complaints, a CMS spokesman said, "Americans seeking health coverage have a wide range of ways to sign up for coverage, whether through HealthCare.gov, Web brokers, direct enrollment [with insurance companies], agents or brokers, navigators or through the call centers. We will continue to work with Web brokers and issuers on identifying ways to improve the consumer experience."

A CMS official also said that IRS regulations prohibit third-party sites, which include brokers and insurance companies, from accessing federal tax information that is necessary to verify a customer's eligibility for subsidies.

"This restricts the ability to seamlessly integrate the eligibility application ... as part of the shopping experience on a partner website," that official said. "Consequently, a consumer trying to enroll in a [health plan] through a partner website would need to be transferred to [the federal exchange] to submit an eligibility application."