OLYMPIA, Oct. 31.—Washington officials say a pair of private health-insurance websites that ape the state’s new health-insurance exchange appear a blatant attempt to mislead customers, but the brokers behind them say the state is leaning a bit hard — and it is a strange tale that points up some rather puzzling problems on the state’s end as well.
The two websites, so similar to the state’s own website in look, function and name that unsophisticated customers might have trouble telling the difference, capitalize on the upheaval in the insurance business that has come with the launch of Obamacare. Operated by small-scale insurance brokerages in Seattle and Tumwater, the two sites have raised the ire of state Insurance Commissioner Mike Kreidler. His office has demanded changes; whether further action is forthcoming is a story that will play out in coming weeks.
But it is not the simple consumer-protection tale you might think. It is not as if the two brokerage firms are the only ones offering health insurance quotes online — it’s just that they are using names that seem awfully close to the state’s own health-exchange website. And what makes this story so odd is that it has exposed weaknesses in the state’s own operation. Right after the brave new world of health insurance began Oct. 1, the private brokers who operate the two sites say they caught a whopping tax-credit miscalculation on the state website. They say they tried to flag the state’s attention to the problem but got no response. It wasn’t until the state had sold 4,600 subsidized policies with the wrong premiums that red-faced exchange officials last week acknowledged their mistake.
Now consider this. Even though the Washington Health Benefits Exchange spent some $700,000 last year on an elaborate process that eventually settled on a brand name – Washington Healthplanfinder – it somehow neglected to spend $12.99 to buy up the matching Internet domain name.
And this might be the kicker. At least one of the lookalike sites may be easier to use than the state’s own website.
“My website gives people an easier way to find out what tax credit their family will qualify for,” says Vernon Bonfield, the Tumwater broker who launched a site he calls the Washington Health Insurance Exchange. Washington State Wire gave it a test drive. No complicated registration process is required, and unlike the state website it lists all individual health-insurance policies available in Washington. Customers can compare pricing on exchange policies with those that are not offered on the state exchange. Tax credits are available through Bonfield’s site just as they are through the official state site, but users can tweak data to see whether they are worth the trouble. Bonfield’s claim may well be true: For all the money the state spent to launch its operation, he says he managed to build a better site.
Business Goes to the Bold
Bonfield calls it a case of heavy-handed regulation by the state insurance commissioner’s office. To be sure, neither he nor broker Jeff Lindstrom of Seattle, partner in a firm calling itself Health Insurance Team, was shy about adopting official-sounding names to drive traffic to their firms. Bonfield launched his brokerage in 2009 as the Washington Health Insurance Agency. At the same time he registered the business monicker Washington Health Insurance Exchange – not to mention AAA Health Insurance, just to make sure he was listed first in the phone book.
There was nothing sneaky about it, he says. The business itself is nothing unusual — there are numerous firms, big and small, that offer health-insurance quotes over the Web. As for the name, he points out that in 2009 health-care reform was still a matter of debate. He obtained his business license a full six months before the Affordable Care Act passed Congress, and two years before Washington lawmakers gave the nod to the official Washington-state health exchange. At that point President Obama was using the terms ‘exchange’ and ‘marketplace’ interchangeably, and exchange certainly is a generic term that has been in use for hundreds of years. Bonfield says it just seemed a good bet — and adopting a name bound to show up in an Internet search engine is normal business practice.
In Lindstrom’s case, late last year, after the state had adopted its Washington Healthplanfinder brand, he says he was eating breakfast with his two daughters when on a whim he opened his laptop and checked to see if the state had bought all the possible Internet domains associated with the name. To his astonishment, he learned on the Go Daddy website that state officials had failed to purchase WashingtonHealthplanfinder.org. It may have been the best $12.95 he ever spent. It took him all of five minutes to enter his credit-card information. “I did it over a bowl of Cheerios,” he says. Ask Lindstrom if he chose a name intended to confuse customers, and he argues that everyone in the biz chooses domain names to drive traffic – he owns 40 or 50 Internet domain names himself.
Now both have launched websites with call-center operations that can sign up customers for individual health-insurance policies, just like the state’s own health-insurance enterprise. The biggest difference between the two sites is that Bonfield’s agency is authorized to offer both exchange and off-exchange policies, calculating tax-credit discounts for customers who qualify. When customers earn too much to qualify for tax credits, Bonfield says it may make more financial sense for them to shop for policies that aren’t offered on the exchange. His site allows customers to check price differences. Lindstrom’s agency doesn’t display information about exchange policies — but he says agents at the call center direct customers to the state website when they qualify for tax credits.
It doesn’t mean customers pay more. The brokers earn commissions when they sell policies, of course, but premiums are regulated and capped. And lest one think oversight is any lighter for the private health-insurance brokers, both of them note that they are subject to more regulatory safeguards than the state’s own operation. So far neither site offers real competition for the state; Bonfield says his site so far has sold only about 100 exchange policies. But the fact that both operate under names very similar to the official state exchange is raising some serious hackles in the vicinity of the Dome.
State Takes Dim View
When the two sites launched late last month, the state health exchange was quick to complain to the Office of the Insurance Commissioner. Spokeswoman Stephanie Marquis says the office believes the sites are misleading. “If you were an average consumer and you didn’t know anything, and you clicked on them, wouldn’t you think you were at the exchange? Honestly?”
Kreidler’s office demanded changes in both sites. It sent a letter to Lindstrom Sept. 20 alleging that his site made a number of false, deceptive or misleading representations. Among them was a banner at the top of the page stating “Welcome to the Exchange!” – certainly his site isn’t the capital-E Exchange. And the office challenged a statement on the site touting the idea that it could find customers the highest subsidies available – at that point his firm wasn’t permitted to enroll customers in subsidized insurance programs, nor was any other broker. Lindstrom quickly made changes to the site.
On Bonfield’s site, the office demanded a disclaimer stating that it had no connection with the official state site. Bonfield posted one – first in the form of a page that took several clicks to reach on his site; then, after further complaint, in the form of small type at the bottom of the page. Says Bonfield, “I just got a call yesterday from the lead attorney in the OIC’s office and he said, ‘we still don’t think that your website has a big enough disclaimer on it; we want you to make you to make these additional alterations.’ And I said, look, you guys have told me already twice now that everything I did was fine. Now you’re changing it again. And then he started throwing his weight around, and he said, ‘I don’t want this to go the hard way; I don’t want to have to put out a cease and desist order or send this to the AG’s office,’ and so now they are talking about my livelihood and my staff’s livelihood. I don’t want to fight a battle that I am going to lose here, but at the same time I think as a small-business owner I have certain rights and I should not have to put up with the government bullying me around.”
Bonfield says the Insurance Commissioner’s office also is objecting to his use of blue and green in his website logo, too close to the colors of the official state website logo. Those are Seahawks colors, he says, and he doesn’t think the state can trademark a color. There ought to be room for the private sector in the new health-insurance scheme, he says – private brokers can offer advice and options the state cannot. But he says he worries the state will try to make an example of him.
Raises Curious Points
Now here’s where the story takes a twist. Because the two websites are monitoring and mirroring the state’s activities, they offer a bit of a check and balance – and the two brokers say they were among the first to notice the whopping mistake the state made on its own website. Last week the official health exchange owned up to a rather big goof: Everyone who purchased a subsidized health insurance policy from the state website was awarded a too-large tax credit and a too-large premium reduction. Exchange officials say the mistake may have been as high as $200 a month; the brokers say it may have been even larger. The mistake affected not just those who purchased policies but also those who were just window-shopping; the state exchange is now notifying purchasers that they may want to reconsider their purchases before the first premiums come due Dec. 23.
Bonfield said he noticed the problem right off the bat because the calculator on his site was getting different numbers than the state. “I went to them the first week and said you guys have a huge problem.” They didn’t believe him. The error persisted until Oct. 23.
Another strange element of the tale – why didn’t the state buy the domain name? The Exchange adopted its brand name a year ago after paying a consulting firm some $700,000 to study marketing issues. A sole-source contract awarded to the consulting firm GMMB was a matter of political controversy during last year’s campaign season because of the firm’s strong ties on the Democratic side of the aisle. Without question GMMB engaged in an elaborate and costly process involving surveys and focus groups across the state. Yet no one apparently thought to pay $12.99 to register the domain. Ordinarily one would expect a consultant to do so as a precaution before making a pitch, Lindstrom says. “That would be standard procedure in the private world,” he marvels. Because Lindstrom purchased the domain name, the state has been forced to use the slightly-different Wahealthplanfinder.org.
Asked why the state Exchange failed to purchase the domain name last year when it could have been had cheaply, communications director Michael Marchand responds in an email that the question has been answered in previous news stories. Apparently he was referring to comments he made to the Puget Sound Business Journal earlier this month that the Exchange purchased numerous domain names – yet apparently not the most obvious one. For his part, rather coyly, Lindstrom says he never offered to sell the domain name back to the state – though after Exchange officials inquired about his plans last spring, he did notify it via email that he was building a website and “wanted to know your level of interest in these domain names before we get too far into the process.” Lindstrom says the Exchange never answered.