Is Covered California’s Massive Marketing Budget Justified?

Marketing Budget

California is hell-bent on persuading its residents to enroll for the Affordable Care Act (otherwise known as Obamacare). California's Obamacare exchange, Covered California, will spend over $110 million on marketing in the 2017-2018 financial year. A massive chunk of the budget—$45 million—will go into ads, $18 million will be spent on TV commercials, $8 million for radio ads, etc.
However, it’s the contrast between Covered Califonia’s advertising budget and that of the federal health insurance exchange—anemic $10 million—that is raising eyebrows. The fact that the federal health insurance exchange's marketing budget will cater to the marketing needs of 39 states ignites more debate around Covered California's budget. California is among the 11 U.S states and the District of Columbia operating their exchanges.
Heath care experts are divided on opinion about Covered California’s budget. Sally Pipes, the president and CEO of Pacific Research Institute in San Francisco, is convinced that the amount that the state has set aside for marketing will not translate into more enrollees. According to her, the budget does not reflect prudent management of resources. She opines that California should minimize its spending; a move which might result in the state lowering the taxes. Ed Haislmaier, a fellow at the conservative Heritage Foundation, echoes Pipes’ sentiments. Haislmaier believes that the feds marketing budget is relatively smaller than that of Covered California because ACA is an already established and not new product in the market. Covered California seems to be treating ACA as a new product that requires a lot of awareness.
The body that runs the federal exchange, U.S. Department of Health and Human Services (HHS), explained that advertising does not attract new enrollments. 2017’s data indicate that few people enrolled despite a spirited marketing campaign. HHS plans on using its $10 million budget to finance promotions on Youtube videos, search engines, emailing, and making phone calls to consumers to encourage them to register before the December 15 deadline. On the other hand, Californians have until the end of next month to enroll for ACA.
Speaking for Covered California, Executive Director Peter Lee affirmed that the spending is justified. He explained that advertising would encourage both healthy and diseased people to register and hence a more balanced risk pool is created. If more healthy people sign up for the ACA, premiums will be drastically lowered, according to Lee. Lee and his team are crisscrossing California encouraging people to sign up as life can change in an instant.

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