Amid the Trump administration’s dramatic funding cuts for Affordable Care Act (ACA) exchanges’ marketing and enrollment outreach, at least one major insurer is stymied in its efforts: As of mid-September, Molina Healthcare, Inc. hasn’t completed marketing plans for an open-enrollment season set to begin Nov. 1. “We don’t release our marketing/advertising budget or strategy information and there’s still so much uncertainty surrounding the ACA that we don’t have finalized plans,” Molina spokesperson Sunny Yu told AIS Health on Sept. 13.
Yet Blue Shield of California stresses its heightened focus on marketing this fall, especially given the need to push past bad publicity about plan exits and an unstable marketplace. “Our marketing efforts this year include increased television, radio and billboards. We’re also doing more videos on Facebook and other social media channels,” Clinton McGue, a spokesperson for the Blues insurer, told AIS Health on Sept. 13.
Industry consultants warn that it all adds up to a season of difficult marketing challenges that may require creative strategies to overcome. CMS said Aug. 31 that it intends to slash ACA exchange advertising by 90%: from the $100 million spent a year ago by the Obama administration for 2017 open enrollment to about $10 million this fall. CMS also said it will pare down grants to navigator programs, used to provide in-person enrollment assistance, by about 40%: to just shy of $37 million, down from nearly $63 million a year ago.
Marketing Is ‘Crucial Investment’
“It’s shaping up to be a tough year [for 2018 exchange marketing], and the combination of the loss of the CMS advertising, the noise around the ACA, continued lackluster enforcement of the mandate — none of that is good for exchange enrollment,” says Michael Adelberg, a principal with Faegre Baker Daniels Consulting in Washington, D.C.
Adelberg also cites “premium increases tied to CSR uncertainty, a shorter open enrollment season [from Nov. 1 to Dec. 15 for federally facilitated marketplaces, no longer Jan. 31], insurers giving lower commissions to agents and brokers — and a lot of state-based marketplaces have tight budgets and limited outreach resources.”
“Except for the uncertainty surrounding CSR, health plans generally know where they need to be on rates and benefits,” adds Adelberg, a former senior official in CMS’s Center for Consumer Information and Insurance Oversight (CCIIO).
The Trump administration’s recently announced intention to slash funding for the 2018 ACA marketplace is being met with resistance by some exchanges. Covered California released a 98-page report on Sept. 13 describing marketing and outreach as “crucial investments” to promote enrollment in the individual market.
Covered CA Boosts Its Ad Budget
In August, Covered California’s board approved a roughly $5 million year-over-year boost to the state-based exchange’s marketing and outreach budget for 2018, now totaling $111 million.
The additional funding is being used to increase the number of television and radio ads around key dates throughout its upcoming open-enrollment period from Nov. 1 through Jan. 31. And the exchange will conduct what it describes as a “more robust regional marketing direct-mail campaign” for consumers to be affected by the exchange’s CSR surcharge to silver tier plans (HPW 8/7/17, p. 6) — unless Congress acts to extend CSR payments by Sept. 30.
“California’s experience shows that a stable individual insurance market does not just happen on its own — investments in marketing and outreach attract a healthier risk pool, lower premiums and encourage health insurance companies to participate in the market with more certainty and potential returns,” the exchange says.
According to Covered California, the federal government is “on a path to dramatically underspend on marketing and outreach — with the investment plans for 2018 being one-tenth of Covered California’s spend.” The report notes the purpose of the federal government’s health plan assessment of 3.5% of premiums paid on the federally facilitated exchange is to cover marketing and outreach to promote viable marketplaces and operations.
CMS estimates the federal government will collect $1.2 billion in plan assessments for calendar year 2018, Covered California’s report says, which means that the planned 2018 federal spending of $47 million to promote marketing and outreach for 39 states “is one-tenth of the $480 million it would be spending if it spent the same percentage of premium on marketing as does Covered California.” If the federally facilitated marketplace made this investment over three years, the report says, “it would likely pay off with more than two million more Americans getting insurance, premiums that are 3% lower and higher participation of health plans, all with over a 400% return on investment.”
On the other hand, if the federal government goes ahead with its planned reduction in national marketing and outreach spending, Covered California estimates there will likely be “one million fewer Americans getting insurance, [and] a less healthy risk pool in premiums that will be over 2.5% higher in 2019 (representing a premium increase for those remaining insured of $1.3 billion).”
The notion of investing adequately in 2018 exchange marketing and outreach is echoed by Blue Shield of California. It is one of Covered California’s participating plans, with a total exchange enrollment of 352,948, including individual policyholders and small business.
“Blue Shield of California is committed to Covered California and its goal of keeping California’s market stable for individual and family plan members,” its spokesman McGue says. “To reinforce our commitment to the strong and viable California exchange market, Blue Shield is increasing its marketing efforts during this year’s open enrollment period. Our increased marketing is also intended to minimize any confusion caused by Anthem Blue Cross pulling out of a large part of the state.”
Insurers ‘Have to Get Creative’
Industry consultant Rosemarie Day, founder and president of Day Health Strategies LLC, notes that the Trump administration is not only decreasing ACA exchange navigators’ funding — but as of Sept. 12 apparently hadn’t completed contracts for organizations still being funded.
“I don’t know that insurers can make up the difference, but there are things they can do,” says Day, who was founding deputy director and chief operating officer of the Massachusetts Health Connector, a state-based model for ACA exchanges.
The “low-hanging fruit” for plans is retaining current enrollees, because there is significant turnover in the individual market, Day says.
Also important is plans’ outreach to the newly uninsured, “and this is where insurers have to get creative,” Day says. “It’s hard for me to know the ROI [return on investment] on this, but insurers could do blanket advertising for open enrollment with a message that might capture folks who don’t need to go to the exchange,” thus leveraging spending in other areas of their business.
Day explains that the idea is for the plan to build on what it is doing for related markets to send out messaging more broadly and disseminate information cost effectively. This might involve combining messaging to individuals and small businesses — or perhaps the individual market and Medicare.
Moreover, she says, plans ought to consider teaming up with pro-ACA groups like Indivisible that are trying to get the word out on exchange enrollment through social media — or at least be aware of what such groups are doing. She says insurers also might try to get local media coverage on their efforts, thus perhaps getting out the message free of charge about exchange enrollment.
If plans opt to stay in exchanges for 2018 amid exits, Day says, “From the insurers’ perspective, they should play it to the hilt: ‘We’re here for you.’ Very positive.”
“I don’t want to suggest this will make up for the loss of [marketing and outreach] funding at the federal level” or lost navigator money, Day says, adding that insurers with Medicaid experience likely have more expertise and ability to make up for some of the navigators’ shortfall.
Broadly speaking, “[I]nsurers have to think about every marketing channel they’ve got and think about leveraging them,” she says. Also, given the shorter open enrollment period for federally facilitated exchanges this fall, plans should be “making it clear, getting rid of the noise about the [marketplace] uncertainty and creating urgency around the earlier deadline,” she says.
Down the road, absent sufficient federal money for marketing and outreach, plans may have to build in some advertising money into their rates, she says. “We may be recalibrating here for a ‘new normal.'”
As for this fall, Day says, “I think it’s tough right now because we don’t know what’s happening with CSRs and what will happen with insurers’ rates. But that shouldn’t hold up advertising.”
Read Covered California’s marketing report at http://tinyurl.com/ydg8l9dv.