We've certainly come a long way in a little over a year's time, but open enrollment for the Affordable Care Act, which you probably know better as Obamacare, kicked off this past Saturday.
With the memory of glitches galore etched into the memories of consumers and Department of Health and Human Services officials from last year, there was a renewed vigor on the part of Accenture (NYSE:ACN), the contractor responsible for maintaining the architecture behind the federally run health exchange, Healthcare.gov, to not let those same mistake play out in 2015. The initial data would seem positive with Healthcare.gov holding up OK throughout the weekend with few reported issues.
People still don't like Obamacare
Of course, Obamacare's success is going to be dependent on more than just whether or not state and federally run websites are functioning properly (although I don't want to overshadow how important this process is). Obamacare is going to need to transcend an overwhelmingly negative opinion toward the health reform law in order to meet or exceed the HHS' goal of between 9 million and 9.9 million total enrollees via the exchanges by the end of open enrollment (Feb. 15, 2015).
According to the latest Kaiser Family Foundation's Health Tracking Poll, which measures respondents' views toward Obamacare on a fairly regular basis, 43% of people still have an "unfavorable" view of the law, while 36% offered a "favorable" view as of October. The unfavorable view was at its lowest level in about a year, though it still demonstrates the overwhelming dislike for the ACA as it stands now.
This dislike of Obamacare, which has been pretty consistent since it was first signed into law in 2010, is making life even tougher for insurers in the second go-around of open enrollment, and not only because the open enrollment period is only half as long this year as last year. Running with the assumption that many of the remaining uninsured are either financially incapable of getting health insurance or simply are among those 43% that dislike the law, persuading these individuals to sign up for health insurance is going to be a challenge in spite of the fact that the penalty for noncompliance with the individual mandate when up to the greater of $325 or 2% of an individuals' income.
This insurance service is back in the spotlight
This is why, I suspect, one insurance service is about to find its way back into the spotlight once again. Ladies and gentlemen, welcome back eHealth (NASDAQ:EHTH) to the stage.
eHealth also operates an online health exchange that's based on the same premise as Healthcare.gov and other state-run exchanges in that consumers can compare health plans in an apples-to-apples fashion and select the plan that's best-suited to their needs. However, eHealth holds two key advantages over the federal and state-run online marketplaces.
First, eHealth has put more than $100 million into building up its online health platform and promoting its presence over the past decade. In fact, eHealth has been running its private online health exchange since 1999, meaning it has 14 years of experience above and beyond what the state and federal exchanges can offer. While Healthcare.gov and other state exchanges such as Oregon and Nevada dealt with a number of issues last year, eHealth's platform was operating without issues.
The other key point here is that even though eHealth can sell Obamacare plans through its online platform to residents of the 36 states currently under Healthcare.gov, it's not tied to the federal government in any way, allowing consumers who want to avoid Healthcare.gov an avenue to purchase health insurance. In other words, eHealth could be where a majority of people who dislike Obamacare eventually wind up purchasing their health plan.
From the standpoint of an investor eHealth stands out as it benefits from charging insurers a commission for each new policy it winds up brokering. Clearly, insurers would prefer their policies sell like hotcakes on Healthcare.gov or state-run exchanges because they don't have to pay a commission there, but it's been hard to argue against both eHealth's membership growth over the years (eHealth ended the third quarter with 1.16 million members) , or the solution that its platform provides to consumers who want to avoid Healthcare.gov at all costs.
The HHS' significantly reduced enrollment expectations announced about a week ago could also be an indication that it anticipates more consumers will opt for private exchange purchases in the second year of enrollment and beyond.
I, for one, will be looking for another double-digit improvement in total revenue from eHealth as a direct result of strong enrollment expectations through its private exchange in 2015, and would encourage those looking to profit off of the healthcare reform law in its second year to dig deeper into eHealth as you might like what you see.