The most recent financial operating results reported by health insurance industry leader E-health were startling to me as the owner of the much smaller Freedom Benefits. Submitted applications for individual and family plan products decreased 78% in the second quarter of 2014 compared to the prior year.
We consider Ehealth to be our most direct and significant competitor. Over the past four years. until the second quarter of 2014, both firms have moved in sync to the same major market forces like the economic recession and the impact of the Affordable Care Act. Both Web-based companies operate nationally offering primary and supplemental health insurance online, supplemented by telephone agents. But that’s where the similarity ends.
Ehealth is thousands of times larger but apparently shrinking rapidly since implementation of the Affordable Care Act. Meanwhile, Freedom Benefits operating performance have slowly but steadily increased since the implementation of the Affordable Care Act. Both firms’ operating results are subject to seasonal variations but the trends for Freedom Benefits are clearly opposite those indicated by Ehealth, especially for the new second quarter 2014 financial results just announced.
Of course we can’t be sure why the difference in trends. I can only suspect that the ability to engage individuals in niche markets is easier for a small firm. Additionally, there is likely some negative “kill the messenger” mentality over Affordable Care Act that hurts Ehealth more than it hurts us. One of the metrics I follow – not reported in financial results of public companies – is the social media “following”. I’ve noticed, for example, that Ehealth following on Facebook has been flat since the open enrollment began under the Affordable Care Act. Freedom Benefits does not target Facebook users so I can’t make a direct comparison but I do know that social media direct person-to-person engagement has grown over the same period. Overall seasonally adjusted Web traffic logs reported by third-party firms confirm the trends indicated. Ehealth is decreasing Freedom Benefits is increasing.
There may be a difference in core values of the two companies as shown by this example:
Ehealth indicated that they spent $4.5 million to acquire the domain name “www.Medicare.com”. This was not a smart strategy – at least not in terms of the values used to grow Freedom Benefits. Consumers demand clear and honest communications about the distinction between government and private businesses in the health insurance field. A private firm using the web domain Medicare.com is likely to draw some negative reaction and distrust. Some might consider this strategy to be nothing more that what we commonly see used by other “web squatters” who tag onto the coattails of someone else’s brand name. I noticed the web site has a tiny text line of disclosure (barely visible in light blue color even with my eyeglasses) saying “A non-government site operated by Ehealth”. Frankly, I find it surprising that a large public company would take this approach and I presume that eventually some consumer-protection agency will have something to say about this. In the end, any short-term benefit gained by fooling web-surfing consumers will be negated by negative permanent consumer backlash against the company that is marketing through less than transparent methods.
In contrast, consider the approach taken by Freedom Benefits’ web site www.onlinenavigator.org that provides free public advice about health care reform. OnlineNavigator uses a similar marketing strategy of using a word commonly used with government insurance – “navigator”. But Freedom Benefits insists on disclosing in bold capital letters that this is an independent service not associated with the government or it’s use of the term. Additionally, Freedom Benefits went through the extra effort to obtain a trademark on the term “OnlineNavigator” to further differentiate this service though the resources available through the federal government. Clearly Ehealth could not do that with the term “Medicare”.
Earlier this year I communicated by email with an Ehealth executive about the possibility of his firm acquiring Freedom Benefits, but Ehealth declined interest in acquisition after an initial review. I suspect that if Freedom Benefits continues to grow and Ehealth is not able to correct its decline, there still might be interest in the future. We still have a long way to go.
For now I have to focus on identifying the factors that are contributing to our growth in spite of industry trends and how to best use this positive momentum moving forward.