Connecture Headquarters: Brookfield, Wisc. Founders: Dan Maynard and Eric Grossman Launched: August 1997 (as Riverwood)
Right after Obama's election in 2008, health insurance sales software maker Connecture's business stalled because its clients -- insurance companies -- stopped buying new products.
"Suddenly the whole model was in flux, and insurers didn't know what was going to happen," says president Dan Maynard. "We went flat in terms of growth and new sales."
The congressional vote in 2010 to pass health care reform was so close, the company didn't really know how to prepare. "We had to wait until the vote. When it passed, that first part of 2010 was like a hurricane hit," Maynard said. "Health insurance companies had a lot of questions about it, and realized there was a lot that had to be implemented by January 2011."
The Affordable Care Act limits the percentage of premium dollars that insurers can spend on salaries, overhead and marketing, and it sets tighter limits on rate increases. Insurers reacted by scrambling to cut expenses, Maynard says.
"The first thing you think of when cutting expenses is to automate," he says. "Our sales pipeline skyrocketed in 2010."
Connecture is also profiting from the complex technology states will need to run their new insurance exchanges, which are scheduled to be operational in all 50 states by the start of 2014. No one vendor can supply everything needed for an exchange; Connecture's software handles the consumer shopping process. States often have relationships with a particular systems integrator with whom they want to work, so Connecture teamed up with Maximus to get state exchange work in Minnesota and with Noridian to get Maryland's business.
"An exchange can cost anywhere from $50 million to $100 million to set up," Maynard says. "For each unique segment of the exchange, there are fewer vendors competing than you might think. There are very few companies like us providing the shopping technology."