Sales of Medicare plans, and sales of individual majormedical coverage to people who qualify for Affordable Care Act subsidies, have beenstrong.

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Sales of individual major medical coverage to people who do notqualify for ACA subsidies, and who must pay all of the premiums outof their own pockets, have been weak.

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A pioneer in efforts to sell health insurance through the web, eHealth Inc.,gave that assessment Tuesday, in a preview of the company'searnings for the fourth quarter of 2017.

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The Mountain View, California-based web broker warned that itexpects to report a net loss for the quarter of $22.5 million to$23.5 million, on revenue of $39 million to $40 million.

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The company also announced plans to pay $20 million in cash andstock to acquire Health, Wealth and Life Advisors L.L.C., which isknown as GoMedigap. GoMedigap connects consumers with agents whosell Medicare supplement insurance coverage.

Individual major medical

Because of concerns about claim costs and regulatoryuncertainty, some insurers dropped out of the individual majormedical market in 2018. Some of the insurers still in the marketincreased 2018 rates by an average of 25 percent or more.

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Before the individual major medical open enrollment periodstarted, analysts predicted that ACA premium tax credit subsidiescould hold down the amounts low-income people really pay out ofpocket for coverage, if low-income people shopped carefully forcoverage and chose their plans based mainly on their share of thepremium costs.

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One question was how aggressive lower-income people would be atminimizing their share of the premium bills.

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Another question was how big increases in the full cost ofcoverage would affect higher-income consumers, who would lackaccess to premium subsidies.

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A third question was how changes in the way the ACA publicexchange system works might affect coverage sales.

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This year, for the first time, ACA exchange program managers atthe Centers for Medicare and Medicaid Services let consumers applyfor ACA premium tax credit subsidies directly through commercialweb brokers' websites, without having to go to HealthCare.gov.

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In most states, the open enrollment period for individual majormedical coverage ran from Nov. 1 through Dec. 15.

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The number of applications for individual and family plancoverage filed through eHealth systems was 23 percent lowerin the fourth quarter of 2017 than in the fourth quarter of2016, eHealth said.

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Scott Flanders, eHealth's chief executive officer, said in astatement that the new, simpler shopping process helped sales atthe company's eHealthInsurance.com website: Applicationactivity for consumers who qualified for subsidies was up.

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"At the same time, we experienced a decline in non-subsidizedplan applications as a result of premium inflation and lack ofinventory across the market, among other factors," Flanderssaid.

Medicare plans

EHealth sells Medicare plans as well as individual major medicalcoverage.

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The annual enrollment period for Medicare Advantage and MedicarePart D prescription drug plans ran from Oct. 15 through Dec. 7.

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At eHealth, Medicare plan application volume was 16 percenthigher during the fourth quarter than it was in the year-earlierquarter, the company said.

GoMedigap deal

The $20 million that eHealth has agreed to pay for GoMedigapwould amount to about $770 for each of GoMedigap's 26,000customers.

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If eHealth completes the GoMedigap deal, and GoMedigap doeswell, the current owners of GoMedigap could get another $30 millionin cash and eHealth stock over the next two years, eHealthsaid.

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Flanders said eHealth believes the GoMedigap deal willcomplement eHealth's expanding presence in the Medigap market.

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Allison Bell

Allison Bell, ThinkAdvisor's insurance editor, previously was LifeHealthPro's health insurance editor. She has a bachelor's degree in economics from Washington University in St. Louis and a master's degree in journalism from the Medill School of Journalism at Northwestern University. She can be reached at [email protected] or on Twitter at @Think_Allison.