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Tuesday, December 17, 2013

Protecting Consumers When Health Insurance Marketplaces Allow Direct Enrollment through Web Brokers

Some health insurance marketplaces allow “web brokers” to conduct direct enrollment. This means privately run web broker sites can enroll consumers in marketplace coverage and financial assistance without the consumers ever having to visit an official marketplace website. Because web brokers receive commissions from health insurance companies for enrolling people in coverage, marketplaces that allow web broker participation should implement consumer protections.

Web broker sites allow consumers to view and enroll in health plans from multiple insurance companies. Federally facilitated marketplaces already have agreements with web brokers to perform direct enrollment, and state marketplaces may be considering these partnerships as well.

Direct enrollment through web brokers could potentially increase enrollment in marketplace coverage. However, that’s not because direct enrollment can somehow “fix” or avoid technical problems that the official marketplaces may be experiencing when it comes to determining consumers’ eligibility.  Even with direct enrollment, official marketplace systems must verify consumers’ identities and incomes. But supporters argue that web brokers could add increased public awareness of, and therefore enrollment in, marketplace coverage options, as web brokers do outreach and advertising to entice consumers to buy health insurance.

However, there are potential downsides to direct enrollment through web brokers. Because they receive compensation from insurance companies for enrolling people, those financial incentives could influence how web brokers present information to consumers. Here’s an example:


Fictional web broker GreatInsurance.com has a contract to sell coverage from two of the five health insurance companies that sell plans in a state’s marketplace. Of those two companies, Company A pays GreatInsurance.com twice as much for enrolling a consumer as Company B. As a result, GreatInsurance.com decides that, to maximize profits, it will:

  • show only names, but no benefit or cost-sharing information, for plans from the three companies in the marketplace with which it doesn’t have contracts (a practice that is allowed under federal rules, as long as the marketplace or those three insurers don’t directly give GreatInsurance.com plan details to post)
  • list all of Company A’s products before Company B’s products, since GreatInsurance.com gets paid twice as much for selling products from Company A
  • post “good quality” indicators next to Company A’s products to draw more attention to and greater enrollment in Company A’s plans

These practices could undoubtedly lead consumers to enroll in a health plan for reasons not in their best interests. That’s why it’s so important for marketplaces that allow web broker participation to implement consumer protections. Consumers need to be informed of web brokers’ financial incentives, web brokers must be required to provide consumers with complete and accurate health plan information, and advertising on web broker sites should be limited.

To help marketplaces understand the best ways to implement these protections, Families USA released a new brief, Consumer Protections for Web Brokers that Participate in the Health Insurance Marketplaces. In addition to addressing the problems outlined above, the piece also helps marketplaces understand how to ensure that the personal information web brokers collect is protected from misuse. Plus, it details how marketplaces can monitor web brokers to ensure they comply with required consumer protections.

Families USA supports using multiple channels to enroll consumers in marketplace coverage. Our goal is to make sure that everyone knows about and takes advantage of their options for affordable health insurance. However, it’s critical that enrollment channels are free from biased information so that all consumers, regardless of how they enroll, can select the health plan that best serves their needs.

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