The second-biggest health insurance exchange in the U.S. is...

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Almost from the (extremely rocky) inception of the ACA marketplace in fall 2013, CMS encouraged the development of commercial Direct Enrollment (DE) platforms. These were websites hosted by commercial brokers and health insurers themselves that could collect income and other eligibility data and send it to the federal exchange, HealthCare.gov, which would determine subsidy eligibility and then send the application back to the private platform for completion of the enrollment process.  During Open Enrollment for 2019, CMS began approving brokers for Enhanced Direct Enrollment, EDE, which enabled commercial brokers to complete the whole transaction. At present there are 43 approved EDE platforms interfacing with HealthCare.gov, mostly hosted by health insurers.

The Trump administration encouraged DEs and EDEs, in keeping with its general enthusiasm for commercial brokers and hostility toward the federally established nonprofit Navigator program, for which it gutted funding -- not to say the government-run exchanges.  EDE promotion also dovetailed with the Trump CMS's development of a parallel ACA-noncompliant market of medically underwritten, lightly regulated "short-term limited development" (STLD) plans (which the administration rendered neither short-term nor of limited duration unless state governments make them so). Brokers that deploy DEs or EDEs can sell and promote STLD plans, though not on the DE/EDE platform per se. Development of the DE/EDE program had begun in the Obama administration, however.

Tara Straw of the Center for Budget and Policy Priorities has spotlighted ill effects that can flow from the DE/EDE program. In brief, in contrast to government-run ACA exchanges (HealthCare.gov and 15 state exchanges), various entities that deploy DE/EDEs (their own or licensed from a platform provider) 

• do not have to show all plans available in a given market. Most EDEs are in fact insurers, and so show only their own plans.
• Can and do promote STLD plans. While these plans can't be displayed alongside ACA-compliant plans, broker sites can steer patients toward STLD or other ACA-noncompliant products from the home page, or via live chat or broker contact.
• Can divert Medicaid-eligible shoppers from recognizing their eligibility or their children's eligibility for Medicaid or CHIP.

In the Biden administration, CMS has apparently not lost its enthusiasm for DE/EDEs. As Sabrina Corlette of Georgetown University's Center for Health Insurance Research (CHIR) notes, the agency's justification of its FY 2022 budget touts the program:

The successful full-scale implementation of Enhanced Direct Enrollment (EDE) over the past two and a half years has yielded outstanding results for the FFM. During the 2021 OEP, the EDE pathway more than doubled the number of plan selections from the prior OEP through these pathways—increasing from 521,000 to 1,130,000 plan selections. Direct Enrollment (DE) pathways as a whole, (including both Classic DE and EDE) saw dramatically greater utilization during the 2021 OEP, increasing from 29 percent of active 2020 plan selections to 37 percent for 2021 (p. 200). 

The figures cited here were first published in a January 2021 CCIO data brief that casts DEs and EDEs as a revitalizing force in the marketplace. In 2021, almost half of new enrollments in the 36 HealthCare.gov states  (46%) were via DE channels, and new enrollments via EDE increased by 87%. Active renewals via EDE also shot up, increasing by 142% over 2020.  

DEs and EDEs work with the federal exchange only, which serves 36 states and accounts for slightly more than two thirds of all on-exchange enrollment in ACA-compliant plans. Enrollment on the federal exchange as of the end of Open Enrollment in December was 8.25 million. Enrollment via commercial platforms using DE or EDE, at 37% of all enrollment on HealthCare.gov, presumably totaled slightly more than 3 million.

The abuses sometimes abetted by direct enrollment spotlighted in the CBPP brief are real, and documented in the brief's analysis of offerings on platforms eHealth, ValuePenguin, and GetInsured.  At the same time, the ACA created a commercial marketplace, for better or worse, and as such relies heavily on brokers -- and would do so even if the nonprofit navigator program, which is aimed largely at immigrant and other hard-to-reach populations, were adequately funded.  Some brokers act with integrity and in a kind of de facto fiduciary relationship with the clients; others don't. Incentives are mis-aligned, and the Trump administration made them worse by pumping up the STLD market, which is not subject to the ACA requirement that insurers spend at least 80% of premium revenue on medical care, and which pays much higher commissions than does the ACA-compliant market (though commissions in the latter are improving as insurers re-enter the marketplace). For brokers who do their jobs right (and okay, for those who don't), DE and EDE are valuable tools, and may be facilitating new enrollment and active re-enrollment, as CMS asserts. 

When assessing DE/EDE impact, it should be noted that DE/EDE is dominated by one platform -- used by hundreds of thousands of individual enrollees, thousands of insurance agencies, tens of thousands of agents, and some insurance carriers. That dominant provider is HealthSherpa.

HealthSherpa's share of enrollment in HealthCare.gov states is outsized. The day after Open Enrollment for 2021 ended in HealthCare.gov states, the CEO tweeted:

FFM final tally: 1.9 million people enrolled in ACA plans through @healthsherpas this #OpenEnrollment, and over 5 million since our founding in 2014!

— George Kalogeropoulos (@GeorgeK_HS) December 16, 2020

That is, HealthSherpa accounted for 61% of all DE/EDE enrollment as of the end of OE for 2021 (1.9 million out of 3.05 million). As for the 1.1 million EDE enrollments this year, HealthSherpa claims to have originated 90% of them. Its total enrollments exceed those of the largest state exchange, Covered California (1.6 million in OE 2021). That makes HealthSherpa the nation's second-largest enrollment platform for the individual market. 

So what is this stealth gorilla in the ACA marketplace?

HealthSherpa is in the first place a broker in its own right. In its consumer-facing site, HealthSherpa is the fastest and most user-friendly enrollment platform in the ACA marketplace -- and probably in any U.S. insurance marketplace. The home page is dominated by a box asking for your zip code. Fill that in, and you're prompted to answer a handful of questions (requiring no personally identifying information) that determine your likely subsidy size and what you'll pay for each plan on offer. A solo person with no complications can get to the menu of all plans available and their prices (net of subsidy) in less than 30 seconds. All ACA-compliant plans for which subsidies are available, i.e. those shown on HealthCare.gov, are shown.  An algorithm puts forward one plan as likely to be lowest in total costs, given your assessment of your likely medical usage, but it's easy to skip get past that to see all plans, ranked by premium by default. Other filters on the left margin (e.g., carrier, metal level, deductible) are easy to use. The application process in turn is streamlined: unlike on HealthCare.gov, the information entered for this initial preview is carried into the application process, and HealthSherpa has eliminated other redundancies in the HealthCare.gov application.

The majority of enrollments processed via HealthSherpa, however, are executed by insurance brokers. The HealthSherpa website claims that 3,500 agencies and 24,000 brokers use the site, and those numbers are out of date (as total enrollments are cited in this context at 1.2 million rather than  the 1.9 million logged in OE 2021).  

HealthSherpa enables agents to privately brand its technology -- that is, embed HealthSherpa capability at their own URL, under their own name. HealthSherpa can do this, according to the HealthSherpa site, because the company makes money via broker referrals. The referrals work like this:  If a broker's client uses the broker site to enroll with an insurer to which the broker is not "assigned," i.e. not registered to receive commissions,  the broker can elect to "refer" that client (and all clients selecting that insurer) to HealthSherpa. HealthSherpa then collects the insurer's commission and pays the broker a referral fee, typically $100-120 during Open Enrollment and $50 outside that period (e.g., now).

Via this licensing of HealthSherpa's platform, the problems with DE/EDE identified by CBPP can creep in. Brokers posting a private-label HealthSherpa site may ask for contact information prior to the "plan preview" process (the parent HealthSherpa site does not). The broker might then try to divert clients to short-term plans or other products for which insurers pay larger commissions than for ACA-compliant plans. The broker could also presumably embed HealthSherpa functionality on a site that initially steers clients toward other products such as STLD plans.  

As a "web-broker," that is, a provider of DE/EDE technology and also a broker in its own right, HealthSherpa on its home site is legally required to show all plans available to a given user on HealthCare.gov on an equal basis. That requirement does not apply to insurers who deploy DE/EDE, however. It also does not apply to brokers who brand their own sites using HealthSherpa technology (or another web-broker's technology). 

A broker who uses HealthSherpa, Jennifer Chumbley Hogue of KG Health Insurance, tells me that  if she is not assigned to a given insurer (e.g., a local one outside her normal service area), that insurer's offerings do not appear by default on her agency's HealthSherpa platform. That insurer does have a ghost presence, though. One of the filters offered in the left margin of HealthSherpa's plan offerings is "Carriers" (i.e., insurers).  In the carrier list, any carrier with which the broker was not registered would be listed, but the box beside its name would be unchecked by default (see Ambetter in the screen shot below), and its plans would not appear in the menu of available choices.  Add a check manually, and the carrier's offerings will be added to the menu of available plans. But how many online shoppers find their way to such filters?  

HealthSherpa confirms: "Agents can choose to pre-select carriers they’re appointed with / are referring, but all plans are on the platform and they can be filtered back in at any time - you just check the unselected boxes on the left."

If, via HealthSherpa's referral program, a broker elects to refer prospective clients of insurers to which the broker is not assigned to HealthSherpa, those insurers' offerings will appear by default.  In fact, HealthSherpa's page for agents outlining the referral program states, "Many of our agents focus on selling other products, but turn to this Referrals Account when a client needs an ACA plan." 

The DE/EDE program also allows insurers to sell ACA-compliant plans directly. In fact almost three quarters of the Entities approved by CMS to use EDE (31 out of 43) are insurers.  Here too HealthSherpa is a strong and likely dominant presence. The company's Wikipedia entry, citing CEO George Kalogeropoulos, reports, "As of 2019, 10 of 11 issuers approved for EDE used HealthSherpa's platform." And again, HealthSherpa executes 90% of all EDE enrollments. 

Is enabling insurers to credit subsidies via direct enrollment good practice? For unsubsidized enrollees, direct enrollment has often been the easiest route: why go through a lengthy government-hosted application when the insurer will enroll you in much shorter space? The enhanced subsidies enacted in the American Rescue Plan, however, made the vast majority of enrollees subsidy-eligible -- potentially increasing the salience of EDE on insurer websites. Current regulations don't insure that insurers clearly state on their enrollment sites that an array of options are available on the government-run exchanges. See, for example, the information provided by Anthem Blue Cross (try zip code 90012 in Los Angeles).

Tara Straw of CBPP considers HealthSherpa a good actor, creator of a quality platform. She warns, however, that CMS should not "get lulled, and assume that everyone else is operating the same way." Regulation of the EDE program, she says, should be crafted to serve clear goals: make sure that those who seek insurance online get a clear view of all their choices -- and that "they aren't diverted to plans that don't serve them." 

To the extent it operates through brokers, HealthSherpa can be only as good as the thousands of brokers that deploy it. In the individual market for health insurance, brokers are subject to perverse incentives. Many are excellent; a number are unscrupulous. An insurance shopper who finds her way to HealthSherpa proper will be well-served. Many who google health insurance -- including some who arrive at sites that host HealthSherpa -- will not be.

Thanks to Aleka Gürel at HealthSherpa for helping me to understand the company's arrangements with brokers.

UPDATE: Some feedback from HealthSherpa, worth relaying:

1. "Acknowledging our bias here, we believe and have seen that EDE/DE have made it much less likely that agents steer consumers to short term, because they make ACA enrollments far more efficient - a critically important point when you have 6 weeks to make the bulk of your income. This is especially true as ACA commissions have gone back up."

This is plausible -- brokers have told me that enrollment through HealthSherpa is easier than through HealthCare.gov. I can vouch (as noted above) that HealthSherpa's preview tool, deployed prior to starting an application, is the most user-friendly in the business, though such tools on HealthCare.gov and most state exchanges are also quite usable.

2. "There are very strict display requirements around ensuring folks are appropriately screened for QHPs + Medicaid in any pre-application quoting flows. If you submit an application through an EDE, you’re automatically assessed for Medicaid as well - there’s no way for an EDE entity or one of their upstreams to opt out of this. DE/EDE sites are subject to frequent auditing to ensure they’re meeting these guidelines."

As noted in the post, these requirements apply to HealthSherpa as a "web-broker" that "develops and hosts" DE/EDE capability -- but not entirely to the thousands of agents and brokers that private-label HealthSherpa technology. And while it's true that a visitor who uses HealthSherpa technology on a broker site will be assessed for Medicaid,  broker sites focused on selling other products can divert visitors before they explore QHPs (ACA-compliant plans, that is) via the HealthSherpa app.

With respect to diversion,  HealthSherpa points out: "the 'other' product in question that they're screening for isn't necessarily short term - it's often life insurance, Medicare, or other products that aren't a "replacement" for ACA coverage in the same way." Doubtless true in many cases. It also wouldn't surprise me if brokers that use HealthSherpa tend to be better actors. 

3. "Re the Anthem example [cited above -- of an insurer using DE/EDE without clarifying that the exchange offers alternatives], try quoting in 30075 (an FFM state, GA, which CMS regulates.) You’ll note the disclaimer at the bottom changes to advise that more plans are available on HC.gov.

True! File under "buried disclaimers":

Photo by Christina Morillo from Pexels

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