I’ve always considered the concept behind eHealthInsurance.com to be a good one — i.e., provide a web site that consumers can use to get insurance quotes, compare competing health plans, and apply online. But I have to admit that an online brokerage for individual and small group insurance isn’t the best business given the likelihood healthcare reform will create exchanges that do pretty much the same thing.
Shares in the company are still up 7% to $14.27 for the year through Dec. 7, but are just a bit higher than the company’s 2006 IPO price of $14. According to Deutsche Bank analyst Gregg Genova — who initiated coverage on eHealth yesterday with a “hold” rating — investors are worried that “many provisions in the health reform bills could significantly disrupt the company’s core individual and small group market.”
Health plans may be forced to cut broker commissions or scale back their presence in the individual and small group market, he says. Commissions from health plans account for 90% of eHealth’s revenues — with three top plans (Aetna, United and WellPoint) accounting for 46%. On the bright side, eHealth “could see a revenue lift from powering new state-based exchanges under certain scenarios.”
Who was it who said in every crisis there is opportunity?
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