Wednesday, April 10, 2013

Fwd: qotd: Online brokers want a cut of the action

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-------- Original Message --------
Subject: qotd: Online brokers want a cut of the action
Date: Wed, 10 Apr 2013 07:31:55 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

The Washington Post
April 8, 2013
In Obamacare, online insurance brokers see potential windfall
By Sarah Kliff

Online insurance brokers see a potential windfall when the federal
government doles out billions in subsidies to buy help Americans buy
health insurance. And they are asking state governments to help them
score it.

The online brokers want millions of new insurance customers to be able
to use those subsidies to buy health coverage through their Web sites,
rather than shop exclusively on the new exchanges being set up by states
and the federal government.

"We have the expertise and already generate a tremendous amount of
volume of sales," says Gary Lauer, CEO of EHealth, the country's largest
online insurance broker. "The exchanges are spending a lot of money to
enroll people, which is all fine, but we could do the same thing at no
charge to the federal government."

EHealth CEO Lauer does acknowledge that the site has financial
motivations when it sells a health insurance plan. But he also contends
that the federal regulations are strong enough to ensure that consumers
get the same experience, no matter where they purchase coverage.

"We're a profit-making company," he said. "Our revenue source is the
commission paid to brokers. It's not an additional charge, it's built
into the premium, the same premium on the exchange. The only difference
is the carrier will pay us a commission."

Comment: As Gary Lauer, CEO of EHealth states, "We're a profit-making
company." Yes, they are a company that draws dollars (over 150 million
of them in 2012) away from our heath care funds, and yet provides
absolutely no services or products directly related to actual health care.

It is particularly irritating when he states that his firm can provide
health insurance brokerage services for the exchanges being established
under the Affordable Care Act "at no charge to the federal government,"
because the charges are "built into the premium."

Who pays those charges? The insurance companies certainly do not deduct
these expenses directly from their profits. They weren't born yesterday.
As Lauer states, the charges are built into the premiums. Thus they are
paid jointly by plan enrollees and by the federal government in the form
of premium subsidies.

The expenses of these brokerages or of the state insurance exchanges
wouldn't even exist if we had one universal program instead of a
multitude of private insurers, which in themselves generate tremendous
administrative waste while imposing greater administrative burdens and
costs on the actual providers of health care.

By insurance industry standards, maybe Gary Lauer's compensation is
modest ($1.67 million in 2012), but if he is providing us nothing of
value, then any amount is too much.

Haven't we had enough? Isn't it time for an improved Medicare that
covers everyone? Then Gary Lauer would have to get a real job.

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