Online health insurance broker eHealth Inc. won permission from the U.S. government to sign up customers for subsidized plans offered under the federal health care law. The shares gained the most in seven years.
EHealth said it will be able to tap into a government computer system that will allow the company to determine whether people shopping for plans at its website are eligible for tax subsidies for their health insurance. The information will allow eHealth to offer customers subsidized plans available in their state.
The Mountain View, California-based company has been lobbying the federal government for the agreement, as well as 14 states that are building their own marketplaces called exchanges to sell insurance to people who don’t get it at work. The exchanges open Oct. 1.
“This will simply result in more enrollments, which is crucial to the Affordable Care Act’s success, and at the same time save the government taxpayer money,” eHealth Chief Executive Officer Gary Lauer said in a statement. EHealth shares gained 29 percent to $30.97 at 9:31 a.m. in New York trading, the biggest intraday gain since Oct. 13, 2006.
Lauer has publicly complained that the governments involved have dragged their feet in reaching an accord with his company. He hasn’t yet reached a similar agreement with any of the states, the company said in its statement. “I’m critical right now of the administration and the states because they should be doing even more to embrace someone like us so we can get the enrollment that’s needed,” Lauer said in a July 12 interview.
The Obama administration has said it hopes to enroll about 7 million people next year through the federal and state exchanges, and needs at least 2.6 million of them to be relatively healthy for the insurance system to be viable.
It won’t cost the government or customers anything extra when people enroll through eHealth, Lauer said in a May 14 conference call with reporters. The company will instead collect a commission from insurance companies such as UnitedHealth Group Inc. when it enrolls people in their plans.
The company has to sign an additional agreement “encompassing the federal requirements for agents and brokers” with the agency managing the Affordable Care Act, the U.S. Centers for Medicare and Medicaid Services, before it can begin enrolling people in subsidized plans.
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