On bypassing HealthCare.gov and, in future, state-based exchanges
More or less simultaneously with CMS’s announcement that 15.3 million people had enrolled in health plans via HealthCare.gov through December 15, HealthSherpa announced that 6.1 million of those enrollments were effected through its platform.
I’d like to revisit what that market share tells us about how people are getting coverage through the ACA marketplace today. For background, a couple of points from a recent post:
According to a CMS presentation to brokers, in HealthCare.gov states in 2023, 71% of active enrollees (new enrollees and active renewers) were assisted by brokers. 74% of new enrollees — 2.2 million out of 3.0 million — were broker-assisted. HealthCare.gov states accounted for 75% of total enrollment. In total, brokers enrolled 6.8 million of the 9.6 million who actively enrolled. (Of the 2.5 million who were passively re-enrolled, I don’t know how many were broker-assisted, initially, or in plan year 2023.) As of January 12, CMS informs me, 83,000 brokers and agents were registered with the federal exchange, HealthCare.gov, up from 49,100 in Plan Year 2018, according to this July 2018 CMS bulletin [Updated 1/19/24].
In HealthCare.gov states, brokers rely heavily on commercial Direct Enrollment (DE) or Enhanced Direct Enrollment (EDE) platforms, which can process enrollments with subsidies (EDE directly; DE via a redirect to hc.gov for the application processing and then a return to the DE platform for plan selection). 81% of active broker-assistance enrollments are via DE or EDE, according to the CMS presentation. In 2023, more than half of enrollments on HealthCare.gov, excluding auto re-enrollments, were via DE/EDE (5.5 million). By my count of 62 EDE entities, thirteen are web brokers, the rest are insurers. The dominant EDE is HealthSherpa, which just announced that it has already processed 2 million enrollments for 2024. In 2023, HealthSherpa claimed to have accounted for 35% of HealthCare.gov state enrollments; the company seems on track to exceed that share this year.
HealthSherpa’s preferred metric for its market share in states using HealthCare.gov (the federal platform, used by 32 states) is its percentage of active enrollments -- that is, new enrollees and re-enrollees who update their accounts and make a deliberate choice of plan. Those who are passively auto re-enrolled are not credited to the platform that initially enrolled them. If OEP 2024’s auto re-enrollment percentage matches that of 2023, (21%), the 15.3 million enrollment total includes 3.2 million auto re-enrollees. That leaves HealthSherpa with just about a 50% share of active enrollment in HealthCare.gov states through December 15.
Next question: what is HealthSherpa’s share of enrollment on all DE/EDE platforms? EDE has been rapidly replacing the older DE, which visibly re-directs enrollees to HealthCare.gov to process the application, but DE still exists. HealthSherpa was the first EDE platform approved by CMS, and claimed a 90% share of EDE enrollments in 2021, but there are currently more than a dozen web-brokers on CMS’s list of approved EDE providers (along with about 50 insurers, most of which license HealthSherpa’s platform).
In February 2023, HealthSherpa claimed 35% of HealthCare.gov enrollment during OEP 2023, which comes to about 4.3 million (the 5.1 million in the topline of the post includes enrollments outside of OEP). To the extent that estimate is accurate, it comes to 78% of DE/EDE enrollment (5.5 million, per above) in 2023. If the company’s share held in 2024, that suggests about 7.5 million enrollments via DE/EDE through December 15, or 49% of total HealthCare.gov enrollment, and about 62% of active enrollment on the platform.
Prepping EDE in state-based exchanges
Through OEP 2024, DE/EDE has not been enabled in any of the state exchanges, which in 2023 accounted for 25% of enrollment nationally. That is about to change, and much of CMS’s Notice of Benefit and Payment Parameters Proposed Rule for 2025 (NBPP) is devoted to establishing rules for state authorization and supervision of DE/EDE entities — in expectation that “current and future State Exchanges may seek to implement DE programs similar to the FFEs and SBE-FPs” (p. 157). (The NBPP also includes constant references to “an increasing number of consumers utilizing the DE pathways to enroll in coverage through the Exchanges” (p. 156)). The 2025 NBPP estimates that five states will opt to operate a web-broker program — i.e., enable DE/EDE platforms (p. 317).
In particular, Georgia, which has been granted conditional approval to launch a state exchange in 2025, after being denied approval to quick-start one in 2024, has expressed intent to allow certified web brokers “to offer consumer shopping, plan selection and enrollment” (Sect. 2.10).
As Georgia had submitted a waiver proposal in the Trump years (rejected by the Biden administration) to do away with government-run exchanges altogether, Georgia’s stated readiness on this front may have something to do with CMS elaborating requirements that state-based exchanges essentially mirror CMS’s regulation and oversight of EDE — e.g., requirements that e-brokers provide complete and accurate information comparable to what is provided on the state exchange, update displays to include new information added by the exchanges, establish and prove operational integrity, and adhere to codes of conduct established for EDEs authorized to process HealthCare.gov applications. In sum:
The NBPP proposes requiring state exchanges that authorize DE/EDE to “meet the same or, at a minimum, similar standards as are required in the FFEs and SBE-FPs to protect consumers. These safeguards focus on mitigating the potential for confusion between QHPs and non-QHPs (including the eligibility for APTC and/or CSR as it relates to QHPs versus non-QHPs) and as to which products are available through the Exchange and what products are not, ensuring proper eligibility determinations, protecting against security breaches or incidents through implementation of operational readiness reviews (as websites that have not been tested to see if they are operationally ready may provide improper eligibility determinations or may have security flaws that could make a breach involving consumer PII more likely) and through the other minimum Federal standards in § 155.221 that we propose to extend to State Exchanges and their DE entities” (p. 158).
The NBPP devotes a good deal of attention to ensuring that DE/EDE platforms are not used for deceptive marketing than to ensuring operational integrity:
As proposed to be applied in State Exchanges, web-brokers would be required to provide consumers with correct information, without omission of material fact, regarding the applicable State Exchange, QHPs offered through the applicable State Exchange, and insurance affordability programs. In addition, web-brokers who assist with or facilitate enrollment of qualified individuals, qualified employers, or qualified employees, in coverage in a manner that constitutes enrollment through a State Exchange, or assist individuals in applying for APTCs and CSRs for QHPs sold through a State Exchange, would also be required to refrain from marketing or conduct that is misleading (including by having a website that the State Exchange determines could mislead a consumer into believing they are visiting the State Exchange’s website), coercive, or discriminates based on race, color, national origin, disability, age, or sex (pp. 144-145).
CMS supported the development of commercial ACA enrollment platforms from the get-go. In fact, the web-brokers-to-be provided something of a lifeline, at least informationally, while HealthCare.gov and the state exchange were malfunctioning in the first months of the marketplace’s existence in late 2013. During the Trump years CMS encouraged DE/EDE development enthusiastically, along with promotion of flesh-and-blood brokers, and the Biden administration has provided continuity in this regard.
The market, in the form of participating insurers, also has supported brokerage in years following the nadir of insurer participation in 2018. Broker commissions, which according to a KFF tracker averaged $12.79 per member per month for new accounts in 2014, bottomed out at $9.73 per month in 2018. inched up a few cents PMPM in 2019, then jumped to $12.93 PMPM in 2020 and $15.16 in 2021, the last year tracked by KFF. Current tracking by Agility Insurance Services for 2024 shows rates in the $20-30 PMPM range (based on eyeballing, not any posted average). UPDATE, 5/28/24: As documented in this post, the averages reported by KFF are somewhat misleading:
The KFF/Farrah data confirms brokers’ contention that commissions have not doubled on a per member/per month basis since 2018. The PMPM averages cited by KFF divide all enrollment by total commissions paid in a given market — including enrollments that were not broker-assisted, as Cynthia Cox of KFF explained to me (TBH, the data note in the KFF tracker says as much, but I assumed that the total enrollments referred to there were broker-assisted enrollments.) The percentage of enrollment assisted by agents and brokers in states using HealthCare.gov has risen from 41.8% in 2018 to 78.4% in 2024,, according to CMS. That near-doubling could account for most of the apparent near-doubling in average commissions.
In sum, CMS recognizes that ACA marketplace enrollment is predominantly broker-assisted and that EDE is an important tool for brokers. In fact the unavailability of EDE in state-based exchanges to date may be a factor in their lagging enrollment growth during the pandemic years, though that is speculative. As more states launch their own exchanges — we’ve gone from 12 SBEs in 2018 to 19 this year — EDE enablement may prove to be a core functionality.
Photo by Karolina Grabowska