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California shows its Obamacare support by outspending U.S. 4-to-1 on ads

California shows its Obamacare support by outspending U.S. 4-to-1 on ads
Covered California commissioned this Sacramento mural as part of its marketing and outreach efforts to promote the current open enrollment period. (Ana B. Ibarra/California Healthline)

The marketing blitz is on.

Californians are getting barraged with online pop-up ads, radio spots and television commercials, all aimed at persuading them to sign up for Affordable Care Act health plans during this year’s open-enrollment season.

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Covered California, the state’s Obamacare exchange, is wielding a monster marketing budget that devotes $45 million to ads, including $18 million for TV and $8 million for radio. The agency is so flush with marketing dollars that it also spent $100,000 for a dozen freshly painted murals across the state, most of which have nothing directly to do with health insurance enrollment.

Covered California’s marketing riches contrast starkly with the advertising budget for the federal health insurance exchange, healthcare.gov. The feds have slashed ad dollars to $10 million, down from $100 million last year.

The huge discrepancy reflects conflicting attitudes toward the ACA, commonly known as Obamacare, said Gerald Kominski, director at the UCLA Center for Health Policy Research.

“A $10-million advertising budget for healthcare.gov, which supports exchanges in 30-something states, is … in keeping with the goal of this administration to destroy the ACA,” Kominski said. “California’s budget reflects a different approach to the ACA, which is that it is an important source of insurance.”

Other healthcare experts say marketing is not the best use of money now that the exchanges are a known commodity, especially in California. They suggest the dollars could be better used for things such as reducing premiums.

“It’s a waste of taxpayer money,” said Sally Pipes, the president and CEO of the Pacific Research Institute in San Francisco, which advocates for free-market policies.

“All of this money being used on murals and bus tours and TV ads, etc., it’s not going to change the number of enrollees that much. It would be better to save money and reduce taxes so that people have lower tax burden.”

California is one of 11 states, plus the District of Columbia, that operate their own health insurance exchanges. The remaining 39 states use the federal healthcare.gov site.

In addition to cutting its ad budget, the federal government reduced grants for “navigators,” individuals and organizations that help people enroll, to $37 million, down from $63 million last year. Covered California will devote $6.5 million to navigators. It’s not a perfect measure, but judging purely by population, these investments in navigators do not seem significantly different.

Altogether, Covered California plans to spend $111.5 million on marketing in 2017-18, which includes navigators, ads, staff salaries and more.

Covered California leaders and consumer health advocates say the agency’s sizable marketing budget is necessary because of recent federal moves to undercut the Affordable Care Act. The Trump administration shortened the enrollment period to 45 days in most states and stopped paying insurers to provide a subsidy that helps many low-income consumers with their out-of-pocket medical costs.

“It sounds like a lot … but it’s a very legitimate expenditure,” said Betsy Imholz, director of special projects for Consumers Union.

The federal government’s $10-million investment in advertising is “ridiculously inadequate” by comparison, she said. Covered California will spend that amount on online ads alone.

There have been so many policy flip-flops in Washington, and so much misinformation, that some people may be confused about whether the law is even in place anymore, she said.

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Their confusion is magnified by the fact that consumers nationwide may be served by different Obamacare exchanges with different rules.

For instance, Californians who purchase their individual insurance through Covered California or on the open market will have three months, until Jan. 31, 2018, to enroll in plans for next year. People who purchase their plans through healthcare.gov have until Dec. 15.

Ed Haislmaier, a senior research fellow at the conservative Heritage Foundation, said the feds’ advertising cuts simply reflect the needed transition from promoting the exchange as a new option to maintaining it as an established program.

“Growing awareness is not going to magically get desired people to enroll,” he said.

The U.S. Department of Health and Human Services, which runs the federal exchange, explained that it cut advertising in part because it did not seem to be working to boost first-time enrollment. For 2017 plans, first-time enrollment declined 42% and total enrollment fell by 500,000 people to 12.2 million. Covered California has about 1.4 million enrollees.

HHS plans to use its smaller budget on digital media promotion such as YouTube videos and targeted ads on search engines, called search advertising. It will also focus on emailing and calling healthcare.gov consumers directly to remind them of the Dec. 15 deadline.

So far, neither the confusion nor the smaller advertising investment seems to have stopped people from signing up. About 1.5 million people had selected healthcare.gov plans as of Nov. 11, which represents a stronger start than last year, when about 1 million people picked plans during the first 12 days.

In California, 48,000 new consumers had signed up for exchange plans as of Nov. 14, slightly ahead of the same period last year, when 39,000 consumers picked plans. These figures don’t include existing enrollees who renewed their plans.

Last year, Covered California spent $99 million on marketing, and $122 million the year before that.

Peter Lee, Covered California’s executive director, said he believes that spreading the word about open enrollment creates a risk pool that includes both healthy and sick people.

“Yes, marketing costs money, but marketing means more people sign up, and the people that sign up are healthier and help lower premiums,” he said.

Advertising probably helped lower premiums 6% to 8% in 2015 and 2016 because it helped create a more balanced risk pool, according to a recent marketing report produced by Covered California.

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This story was produced for Kaiser Health News, an editorially independent publication of the Kaiser Family Foundation. Kaiser Health News senior correspondent Anna Gorman contributed to this report.

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