The Department of Health and Human Services announced Thursday that it is cutting the advertising budget for the upcoming open enrollment period for individual insurance policies by a stunning 90%, to $10 million from last year's $100 million. The HHS also is cutting funds for nonprofit groups that employ "navigators," those who help people in the individual market understand their options and sign up, by roughly 40%, to $36.8 million from $62.5 million.
The budget is for advertising and outreach only in the 39 states relying on the federal marketplace, healthcare.gov, for ACA enrollment. State-based marketplaces have their own budgets. California, where the ACA has been an unqualified success, is planning to spend $111.5 million for the 2017-18 open enrollment period, an increase of $5.3 million.
That's eleven times the entire federal marketing budget, for just one state. With about 1.6 million enrollees, California accounts for about one-eighth of ACA exchange enrollment nationwide.
HHS officials maintained in a conference call with reporters Thursday that the 2016-17 open enrollment period, which ran from Nov. 1 through Jan. 31 for 2017 coverage, showed that advertising was producing "diminishing returns." Enrollment actually declined in 2017 compared with the previous year, despite a doubling of the advertising budget by the Obama administration. The HHS officials said that after four years of marketplace exchange operation, Americans already were sufficiently aware of the ACA and didn't need to be reminded at the same level as before.
They're wrong on both counts. Spectacularly, cynically wrong.
First, the entire shortfall in 2017 enrollments compared with 2016 occurred in the last days of the enrollment period at the end of January. That's when the incoming Trump administration abruptly canceled the customary last-minute advertising blitz. The surge in enrollments with the approach of the Jan. 31 deadline, which had been seen in every previous year, vanished.
Through mid-January, enrollments had been running neck and neck with 2016, or even slightly ahead; ultimately, enrollments fell more than 5% behind 2016. Among the 12 state-based marketplaces (including the District of Columbia), enrollments increased by an average of 1.8%.
By the estimate of Obamacare-tracker Charles Gaba, "if the Trump administration hadn't yanked advertising and issued 'Obamacare is dead' pronouncements in the middle of the critical final week, HealthCare.Gov enrollment would likely have been at least 500,000-600,000 people higher."
In other words, the experience of 2017 open enrollment vividly demonstrated the importance of continued advertising and outreach, not its "diminishing returns."
The HHS argument that Americans know so much about the ACA that advertising is unnecessary is especially fatuous. As a businessman, Trump must know as well as anybody how quickly consumers can desert an unadvertised brand. That's why Coca-Cola, which may be the most ubiquitous consumer brand in the world, is still supported by more than $3 billion in ad spending per year.
Advertising may be especially crucial for the ACA this year because the public may be more confused about the law and the terms of open enrollment than at any time since its inception. The rhetoric from Trump and the Republican establishment about the ACA's purported failure may be leading many potential enrollees to doubt that the program even exists anymore.
Moreover, this year, the administration slashed the length of open enrollment in half, from three months to six weeks. The period during which people can sign up will run only from Nov. 1 through Dec. 15. Without a vigorous advertising campaign, many potential enrollees may miss the deadline, thinking they have until the end of January to sign up. That could make the ACA marketplace enrollment pool generally older and sicker because younger and healthier people typically are those who wait the longest to enroll — often until the very last minute. The result could be higher premiums for everyone.
"This November' open enrollment period is gonna be one hell of a mess," says Gaba, "that's for sure."
HHS says it will concentrate its meager ad spending on "digital media, email and text messages," which it says "have proven the most effective in reaching existing and new enrollees." That's a dubious claim. In fact, the evidence suggests that television advertising, which will be cut back to almost nothing, has been a highly effective means of outreach. A study published earlier this year found a direct relationship between the volume of TV ads and the reduction of uninsured populations, with government-sponsored advertising particularly effective.
Trump often has asserted that Democrats will get the blame for the ACA's collapse. His latest step will help ensure that won't be so. If ACA enrollment falls for 2018, no one will miss whose fingerprints are on the assault weapon.