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eHealth stock performance after pivoting to Medicare Advantage



One of the most successful stocks on the market is eHealth, a company that helps connect people — especially seniors — with health insurance plans.

As of September 10, eHealth was up 162% over the past 12 months, the 2nd biggest gain among all the stocks in the S&P 1500 index, which includes most of the US stock market. The stock trades at $72.14.

Driving the growth over the last few years has been CEO Scott Flanders’ decision to focus the company on the booming market for private health insurance plans for seniors, known as Medicare Advantage, after stumbles selling individual health insurance plans to younger people. EHealth makes a commission over the lifetime of $983 for a Medicare Advantage member the company signs up through its platform as of the second quarter of 2019. That’s roughly six times the $167 the company makes over the lifetime of selling a individual health plan to a member.

“They saw the opportunity there, and they started focusing more on Medicare Advantage,” Credit Suisse analyst Jailendra Singh told Business Insider. Singh has an outperform rating on eHealth.

The company’s been growing its revenue quickly. This year, eHealth expects its total revenue to be between $365 million and $385 million. That’s up 50% at the midway point from the $251 million in revenue the company made in 2018. The company has plans to hit $1 billion in revenues by 2023, as the US population ages and more seniors sign up for private Medicare Advantage plans.

eHealth CEO Scott Flanders
Courtesy eHealth

A changing online insurance business

The company got its start more than two decades ago in 1997, founded by a Stanford graduate with the idea of bringing health insurance online.

The business had been chugging along, getting a sizeable chunk of the individual market. eHealth went public in 2006, and at its peak in 2014 had about 800,000 members signed on, Flanders said.

But in 2010, the Affordable Care Act threw a wrench in eHealth plans. The health law created new federal and state-run markets for health insurance plans, taking away much of eHealth’s business. Health insurance sales under the ACA began in 2013.

Just 29,698 people used eHealth to buy individual health insurance plans by the end of 2018.

In 2016, eHealth’s board hired on Scott Flanders to start turning things around. Flanders had served as a board member since 2008, and prior to joining eHealth, he had been CEO of Playboy Enterprises, the media and lifestyle group that publishes Playboy magazine. He previously led a media company, and worked in the music and video distribution business.

Stepping into the job, Flanders faced a big challenges: he had to get a grasp on the healthcare industry, months before the 2016 presidential election.

“I never remember being less certain on my feet than having stepped into this,” Flanders said. Getting an understanding of how all the pieces are connected and what each group’s agenda was a challenge, he said.

Stepping into the role, Flanders doubled down on a growing area for the company, the Medicare Advantage market.

That strategy is paying off. Since Flanders was announced as CEO on May 31, 2016, eHealth’s stock is up 422%, and the company now has a market value of $1.8 billion. The S&P 1500 index has gained 41.3% over the same time period.

The market for Medicare Advantage plans is competitive. About a third of people on Medicare are enrolled in private Medicare Advantage health plans.

People can typically choose to enroll in Traditional Medicare or Medicare Advantage plans when they turn 65. Either way, their health needs are largely funded by the US government.

As of last year, more than 20 million Americans were enrolled in Medicare Advantage plans. It’s a growing market that insurers from startups like Oscar Health, Clover Health, Devoted Health, and Bright Health are interested in getting a piece of, alongside entrenched rivals like Humana, UnitedHealth Group, and CVS Health are in.

How eHealth has picked up a piece of the growing Medicare Advantage market

As the competition among insurers to sign on more Medicare Advantage members heats up, insurers turn to brokers including organizations like eHealth to get their plans in front of more people.

“We help reach seniors that the carriers aren’t reaching with their own traditional marketing efforts,” Flanders said. Humana and UnitedHealthcare make up a combined 40% of eHealth’s revenue as of 2018, while Aetna made up 14%, according to eHealth’s annual report.

So far, Flanders said, eHealth has its hand on about 1% of the Medicare Advantage brokering market. Roughly 80% of the deals today happen via phone, with the remaining 20% picking plans through eHealth’s website. eHealth had signed up 521,000 Medicare Advantage members as of June 2019.

The stock has turned down over the past month, amid worries that support is growing among Democrats for a national health-insurance plan known as ‘Medicare for All,’ according to analysts at Evercore ISI. They also said that CMS is working on updates to its “Medicare Plan Finder” tool that could take some business from eHealth.

For eHealth, the hope is to keep growing as more Americans turn 65 and opt for the private part of Medicare Advantage. As such, eHealth has plans to get to a $1 billion in revenue by 2023, nearly four times what the company made in revenue in 2018.

Singh said that so far, the past few years’ results suggest eHealth could get there.

“Their results have shown they’re headed in the right direction,” Singh said.

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Here’s why Iran would target Saudi oil fields, risking US response



Two major oil facilities in Saudi Arabia were hit in an attack on Saturday that’s disrupted 5% of the world’s daily oil supply.

Iran-backed Houthi rebels claimed responsibility for the attack, but US officials and Saudi Arabia have doubts about this.

Secretary of State Mike Pompeo over the weekend explicitly blamed Iran, and Saudi Arabia on Monday said preliminary evidence shows Iranian weapons were used in the attack and that it did not originate in Yemen.

On Tuesday, CNN reported that Saudi and US investigators have determined “with very high probability” that the attack was launched from an Iranian base in Iran close to the border with Iraq.

But neither the US nor Saudi Arabia have presented evidence to back up their finger-pointing at Iran, and both House Speaker Nancy Pelosi and the French foreign minister have pressed for more information before jumping to conclusions. Iran has also denied any involvement.

But if Iran was responsible for the attack it would fall in line with a cycle of events that in recent months as Tehran seeks relief from crippling US sanctions under what the Trump administration’s “maximum pressure” campaign.

Iran has been battling Saudi Arabia for regional supremacy and has reacted to the US sanctions by planting mines on tankers and seizing them at sea, efforts that have largely failed to compel the Trump administration to ease them. The Saudi attack, by contrast, sent shockwaves through global energy markets.

An expert said Iran may be simply trying to spike oil prices to raise pressure on the US to ease the sanctions and to punish the Saudis for supporting the US’s campaign against Iran.

‘Iran is trying to raise the costs for the US and its partners for the economic pressure it’s facing.’

“Assessments are still in the works, and it’s important not to rush to judgment without international scrutiny. At this point, however, it does appear that Iran is implicated in the attack. If this is the case, it would certainly fit a pattern we’ve seen over the summer where Iran is trying to raise the costs for the US and its partners for the economic pressure it’s facing, particularly the US sanctions that are significantly curtailing its oil exports,” Dalia Dassa Kaye, a top Middle East expert at the RAND Corporation, told Insider.

According to some reports, drones and more than 20 cruise missiles struck the Saudi oil facilities with precision — the kind of attack few insurgencies are likely to be able to mount.

“All signs point to Iranian responsibility,” Michael Singh, a former senior director for Middle East affairs on the National Security Council under former President George W. Bush who’s now at The Washington Institute.

“This is not merely because US officials seem to have intelligence indicating that this is so. The scale and precision of the attack suggests that a state, rather than one of the Middle East’s many non-state militias, is behind it,” Singh said. “And few states if any beside Iran would have both the capability and motivation to mount an attack on Saudi oil production.”

Singh said Iran’s denial of responsibility “tells us little” and characterized it as par for the course from a country that “wants to inflict pain but avoid a broader conflict.”

Iran wants leverage

The incident in Saudi Arabia occurs in the broader context of an impasse between the US and Iran over crippling economic sanctions that Tehran is desperate to find relief from. Since President Donald Trump withdrew the US from the 2015 Iran nuclear agreement — designed to keep them from building nuclear weapons — and reimposed sanctions, US-Iran relations have deteriorated and reached a boiling point this summer.

The US has sought to hit Iran where it hurts with sanctions designed to choke of the oil revenue that is its primary source of income; they went into full effect in May. Some countries, including China, have still taken oil from Iranian tankers and risked economic penalties from the US.

Read more: Iran could take advantage of Trump’s wishy-washy response to the Saudi oil field attacks

There’s also another piece to this: Saudi Arabia and Iran have been at odds for decades, and are currently engaged in a proxy war in Yemen. Iran is backing the Houthi rebels in the war, who are fighting against the Saudi-led coalition.

In this context, there are many reasons for Iran to target the Saudi oil industry, given the kingdom is one of their top adversaries and a close partner of the US. Not to mention, Iran has already been blamed for oil tanker attacks in the region and has also been involved in the seizure of oil tankers in recent months — including on Monday.

Singh told Insider there are at least four reasons why Iran would want to conduct an attack like this:

  1. “First, and quite simply, to raise oil prices, which is not an insignificant consideration given the sharp reduction in the volume of Iran’s oil exports.”
  2. “Second, to punish Saudi Arabia for its participation in the US ‘maximum pressure’ campaign.”
  3. “Third, to expose and widen a gap between the US and its regional allies by demonstrating American reluctance to act to defend its partners.”
  4. “And fourth, to generate pressure on the United States to relax its sanctions against Iran by stoking a sense of crisis.”

“Iran’s months-long campaign of regional escalation — attacks on tankers, pipelines, and now the Abqaiq facility — is linked to its nuclear escalation, in that it sees both areas as points of leverage against the US and our allies, and believes we will be hard-pressed to respond,” Singh added.

‘If Iran is in the mindset it has nothing to lose, we can expect more provocations.’

An attack on major oil facilities impacting the global oil supply is a much bigger deal than tanker attacks and seizures, and could signal that more attacks of this magnitude are on the horizon as Iran seeks leverage in the stalemate with the US and other Western powers over sanctions and the 2015 nuclear deal.

Iran has taken steps away from the deal over the past few months, raising anxiety among European countries scrambling to save the landmark agreement.

“This attack is particularly brazen, especially if it was launched directly from Iran rather than through regional proxies,” Kaye said. “But it’s not terribly surprising given the escalation cycle we’ve seen since the US withdrawal from the nuclear agreement and the maximum pressure campaign.”

“If Iran is in the mindset it has nothing to lose, we can expect more provocations, unfortunately,” Kaye added. “Presumably, Iranian leaders believe these types of activities can gain them leverage in the future, but it’s a risky gambit when their actions are threatening global stability.”

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Bank of America says fund managers’ worries about a global recession are at its highest level since 2009



Associated Press

  • Bank of America surveyed 235 fund managers, asking them a variety of questions including how likely a recession in the next year is, and whether interest rates were to rise. 
  • Few in the survey said interest rates would rise within the next 12 months, while the number who said a recession would hit in the next year was the highest since 2009. 
  • Most also said that a resolution to the trade war doesn’t look likely before the 2020 election. 
  • The other takeaway, BoA says: “It’s time for fiscal stimulus.”
  • View Markets Insider’s homepage for more stories.  

Global fund managers have increasingly become more worried about the state of the economy, and according to Bank of America’s global fund manager survey, the risk of recession is at its highest since 2009. 

The survey, released on Tuesday, surveyed 235 fund managers who manage a combined total of $683 billion, showed that 38% of fund managers expect a recession within the next year — the highest net percentage to say so since the depths of the financial crash in 2009. 

The survey also showed that fund managers aren’t expecting great things from the economy, ahead of what’s expected to be a Federal Reserve rate cut this week. Just 21% of the fund managers expect a rise in short term rates in the next 12 months. 


BoA said that this was a complete reversal of this time last year, when 87% of those surveyed said they expected higher short term rates. 

Most blame the trade war for the increased risk of recession

More than a third said that the US-China trade war is the “new normal,” and 70% felt that no resolution between the two superpowers would be achieved prior to the election next year. 

The survey was taken between September 12 and 16, meaning that this week’s spike in oil prices and potential geopolitical conflict has not been factored into this survey.

Bank of America highlighted that the key takeaway from the survey was that fiscal stimulus was “essential” to boosting allocations to stocks — an important point given Trump has been focusing on monetary policy to try and stimulate the economy in the form of rate cuts. 

“Infrastructure spending (fiscal policy) is also the area of US economic policy where Fund Manager Survey investors think there is the most bipartisan support,” the report said, adding: “Whatever the outcome of the 2020 US Presidential election, we expect government spending to rise.”

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Elizabeth Warren drew crowd of thousands for 2020 campaign stop in NYC



NEW YORK — Democratic presidential candidate Sen. Elizabeth Warren delivered a forceful speech in a campaign stop in New York City on Monday evening, presenting a vision of systemic change driven from the inside while also vowing to tackle political corruption if she were elected as the nation’s next president.

The campaign estimated over 20,000 people turned out to hear the senator from Massachusetts make her case for the White House, which would make it the biggest rally of her presidential run so far.

Her address focused on corruption in American politics, and she also spoke about the 1911 Triangle Shirtwaist Factory fire, which killed 146 garment workers — most of them women — and spurred substantial workplace safety reforms.

Insider was on the scene as Warren delivered a defining speech of her candidacy. Here’s what we saw.

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