GO
Loading...

Maryland Obamacare site eyes eHealth deal, Oregon next?

Maryland's troubled Obamacare marketplace is on the verge of becoming the first state-run exchange to partner with a Web-based insurance broker to sell subsidized insurance coverage, sources told CNBC.com Thursday.

Maryland's exchange intends to award online insurance giant eHealth the sole contract for a "pilot program," sources said. That program would allow eHealth's site to enroll single, individual customers in Obamacare plans who qualify for government tax credits to lower their insurance costs.

EHealth also is hoping to sign a similar or possibly more expansive deal soon with Oregon, whose own Obamacare exchange has been crippled by technical troubles that have left it unable to enroll a single person via its website. Spokesmen for Cover Oregon, that state's exchange, could not be reached for comment.

The deals could boost enrollment on both of the lagging exchanges by taking advantage of eHealth's marketing muscle, as CEO Gary Lauer has been urging for years.

(Read more: Maryland fires Obamacare contractor)

Maryland's Secretary of Health and Mental Hygiene Dr. Joshua Sharfstein would not confirm sources' claim that eHealth was the sole company to be awarded the pilot program, but said, "We hope we will have an announcement soon."

Gary Lauer, CEO eHealth
Source: eHealth
Gary Lauer, CEO eHealth

"I can't comment until we announce," said Sharstein, who confirmed that several Web brokers have applied for the pilot program with the Maryland Health Connection.

If consummated, the deals in Maryland and Oregon would represent a potentially dramatic change in the world of the 15 Obamacare exchanges run by individual states and the District of Columbia. To date, these exchanges have refused to partner with Web brokers to sell subsidized coverage.

The federal government, which operates the Obamacare site HealthCare.gov that sells insurance in the other 34 states, last year agreed to partner with eHealth, GetInsured, GoHealth and a number of other Web-based brokers to sell subsidized coverage under the Affordable Care Act. However, technical issues related to interfacing with the federal data hub have to date precluded the brokers from selling plans at the rate they had hoped to achieve this year.

(Read more: Oracle faces ouster from Oregon Obamacare website)

Brandon Cruz, co-founder of Web insurance broker GoHealth, said he had not heard that eHealth had been picked over his company for the pilot program, which Cruz's company had also applied for.

But Cruz said, "I think eHealth will represent the Web-based entities well."

And, Cruz added, "If they do a good job, it could be a big deal" and lead to other state-run Obamacare exchanges following suit with multiple Web brokers, including GoHealth, which have been asking for such deals.

A source familiar with the situation said, "things are so bad" in Maryland and Oregon "that they're open to new ideas."

"And people who were resistant to that have been fired," the source added.

Both Maryland and Oregon's original exchange directors resigned under fire for their marketplaces' botched rollouts. And both exchanges in the past two weeks have taken steps toward severing relationships with the primary IT contractors that built their sites.

This week, the Government Accountability Office announced it was auditing the problems at the Oregon, Maryland and other state-run exchanges.

Sharfstein disputed the idea that the pilot program with a Web broker was in reaction to Maryland's technical problems, saying "we were interested in this before our IT problems."

The company that ends up in Maryland's pilot program, Sharfstein said, will be allowed to sign up a relatively few number of enrollees, with the goal being to evaluate how the system works. Once the system is proven to work, he said, "there's no limits" on how many people the broker will be allowed to enroll.

But because of ongoing technical issues with Maryland's exchange as well as with HealthCare.gov, the web broker will not be able yet to do a true so-called direct enrollment, in which its customers shop for Obamacare insurance on the broker's Web site, have their eligibility for subsidies determined there and then enroll in the plan with a subsidized price.

(Read more: Non-Obamacare plans get 2-year grace period)

In the pilot program, customers will shop for plans on the broker's site, get a preliminary indication of what subsidies they are eligible for, and then will have their data and plan choices sent to the Maryland exchange, which will confirm subsidy eligibility and actually enroll the person, Sharstein said.

But the Web broker will "get credit for the enrollment," and any commission from the plans it sells, Sharfstein said.

Because calculating subsidy eligibility for single individuals is much simpler than doing so for families, Sharfstein said, the pilot program for now will be limited to single people. Under the ACA, individuals and families are eligible for tax credits to offset their cost of Obamacare plans sold on government-run exchanges if they earn between 100 percent and 400 percent of federal poverty levels.

EHealth and other Web brokers like GetInsured and GoHealth have been able since the Oct. 1 launch of the Obamacare exchanges to sell the same insurance plans that are available on the federally run and state-run exchanges, along with other insurance plans that comply with ACA standards, which are not eligible for subsidies.

Lauer, the eHealth chief, has long argued that the Obama administration and operators of the state-run exchanges should partner with Web brokers because those brokers have years of experience selling insurance online as well as a marketing and sales force that could effectively enroll uninsured people, who are the primary targets of Obamacare.

By CNBC's Dan Mangan. Follow him on Twitter @_DanMangan.

Contact Health Care

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More