On November 1, the Affordable Care Act’s (ACA) insurance marketplaces will launch their sixth enrollment season.1 This year, the challenges they face may be greater than last year, with the loss of the individual mandate penalty as an enrollment incentive and the emergence of a parallel, unregulated market that could siphon away healthy enrollees. Yet the Trump administration has dramatically cut back federal investments in marketplace advertising and consumer assistance for the second year in a row. While these cuts likely mean a missed opportunity to reach and cover new people — and could dampen enrollment — in many federally run marketplaces, those operated by states are continuing to invest heavily in such activities, and see benefits.
The Evidence Is Clear: Marketplace Advertising and Consumer Assistance Works
A critical component of market stability — and the affordability of premiums — is a large pool of enrollees that includes a mix of healthy and less-healthy people. The individual market presents a challenge because each year millions of its enrollees transition to other forms of coverage such as an employer plan, Medicare, or Medicaid. To maintain stability, the ACA’s marketplaces must attract a steady influx of new customers. There are two key mechanisms for doing so: marketing to build awareness, and the ACA’s navigator program, which provides direct, personalized assistance to help people enroll.
The evidence from the past six years is clear: marketplace advertising and assistance are key to maintaining and increasing enrollment. Studies have found that people living in areas with high rates of marketplace advertising are more likely to enroll than those living in areas with low rates. California’s marketplace attributes its high coverage take-up rates (25% higher than the federally facilitated marketplaces) and low average risk score (an enrollee risk pool 20% healthier than the national average) to its robust spending on outreach.
Direct consumer assistance is also critical, with studies showing it has helped to increase enrollment among lower-income and Black and Latino communities, as well as for people who don’t qualify for ACA premium subsidies. Indeed, surveys show that someone who receives assistance from an in-person assister is significantly more likely to successfully enroll as someone who does not.
States Are Leaning In While the Federal Government Cuts Back
Despite this evidence, the Trump administration has announced it will spend just $10 million on advertising for the 34 federally facilitated marketplaces this year (the same as last year but an 85% cut from 2016) and $10 million on the navigator program. The administration argues that big investments in these programs are unnecessary, noting that enrollment stayed steady in 2018, despite last year’s advertising and navigator cuts. However, in 2017 many state-based marketplaces that outspent the federal government on their outreach programs showed that investment can boost marketplace enrollment, rather than just keep it afloat. Indeed, their efforts reaped rewards, with slower premium increases, fewer insurer exits, and lower overall risk scores than the federally facilitated marketplaces.
This year, the state-based marketplaces continue to make significantly higher investments in both marketing and consumer assistance. We conducted a survey of the 12 state-based marketplaces and the five state marketplaces using the federal platform HealthCare.gov about their navigator and advertising budgets for the fiscal year that includes the 2019 enrollment period (see exhibit below).
While the federal government is spending just $0.51/uninsured person on advertising and $0.51/uninsured person on navigator grants, the 10 responding state-based marketplaces have budgeted, on average, $13.23/uninsured person on advertising and $13.37/uninsured person on their navigator program. The five state marketplaces using the federal platform HealthCare.gov are budgeting less than the state-operated marketplaces but more than the federal ones, averaging $6.46/uninsured person on advertising and $8.21/uninsured person on their navigator programs.
States Pursue Innovative Strategies to Boost Enrollment and Encourage Market Stability
The state-operated marketplaces also are focusing on enrolling hard-to-reach groups and the healthy uninsured. Many marketplaces report they will engage in outreach to ethnic and racial minority groups, including Latinos, who still experience disparities in health insurance coverage. Young adults are also a target. Despite making the greatest coverage gains under the ACA, young people still tend to have disproportionately low marketplace enrollment. Other groups targeted include rural residents, immigrants and refugees, and the LGBTQ community.
Federal policy changes also are driving changes in communications strategy in state-based marketplaces. Three states mentioned new consumer education and outreach efforts designed to respond to the removal of the federal individual mandate penalty, including Massachusetts, which launched a campaign this year to remind consumers about the state’s coverage requirement that predates the ACA. Nevada will target self-employed individuals, a group of people that also could be sought after by new, expanded association health plans offering cheaper, non-ACA-compliant plans. Maryland will educate consumers about the limitations of short-term plans offering skimpier benefits, and highlight the protections offered by marketplace coverage, including comprehensive health benefits and coverage of preexisting conditions.
State-based marketplaces are also testing some fresh marketing strategies. Rhode Island will advertise on pizza boxes, while Washington will run ads on platforms such as Hulu, Netflix, and Spotify. Massachusetts hopes to reach frequently uninsured young, single men (particularly Latinos) by hosting visibility events in places such as night clubs.
This year, the accessibility of information about ACA coverage options and personalized help with enrollment will depend on where you live. State-based marketplaces are increasing their support for public outreach and assistance while the federal government is cutting back. The Trump administration has pointed to relatively stable enrollment in the federally run marketplaces as a reason why continued investment is unneeded. The state-based marketplaces have the opposite view, betting that continued investment in consumer education and support will help them build on their success. Time will tell whether those bets pay off, but the evidence suggests we will see growing disparities in enrollment and rates of uninsurance between the state- and federally run marketplaces.