The leader of California’s Obamacare exchange is urging the Trump administration to increase funding for advertising and marketing for the healthcare program during the next open enrollment, after the state’s own effort to increase enrollment fell flat.
California spent $110 million on marketing for its Obamacare exchange in the last open enrollment, called Covered California, and its enrollment fell by 2.3 percent. The funds paid for ads that ran in several languages and that were shot through a first-person perspective from actors who found themselves in unexpected health circumstances, such as an accident or an unplanned pregnancy.
The funds also went toward radio ads, print ads, billboards, buses and convenience store posters, as well as a bus tour that made several stops across the state. During the tour, participants painted murals and brought attention to places where Californians could sign up for coverage.
James Scullary, Covered California spokesman, said in an email that the state overall finished open enrollment with 1.5 million customers, roughly the same as where it ended up in 2017.
The amount California spent was higher than what the federal government spent to market healthcare.gov under the Trump administration during its last open enrollment. The federal site is used by 39 other states, but the remaining states, such as California, operate their own exchanges.
The Trump administration budgeted $10 million for outreach and $36 million for navigators, who help people sign up for the program. Enrollment in healthcare.gov dropped by roughly 5 percent, from 9.2 million to 8.7 million. In announcing the results on Twitter, Centers for Medicare and Medicaid Services Administrator Seema Verma called open enrollment the “most cost effective and successful experience for HealthCare.gov consumers to date.”
By comparison, the Obama administration spent $100 million on advertising in 2016, when California spent $99 million. The Trump administration pulled ads during the final weeks of that open enrollment, which critics said was responsible for a lower-than-expected enrollment that year.
“Enrolling new consumers every year is critical to maintaining a healthy consumer pool and keeping premiums low,” Peter Lee, executive director of Covered California, said in a statement. “The drop in new enrollees at the federal level is deeply concerning and can be tied directly to recent policy decisions to not spend resources available to promote enrollment — leading to increased premiums for millions of Americans who do not get federal subsidies.”
Lee’s letter, to Verma and to Health and Human Services Secretary Alex Azar, included an analysis conducted by his agency that suggested $400 million in outreach efforts would lower premiums by 2.3 percent in 2019 and result in saving $1.6 billion in government and consumer spending. Over time, such increases could reduce premiums by 3.2 percent from 2019 to 2021 and result in $6.6 billion in savings, according to the Covered California analysis.
“This report highlights the decline in federal enrollment, driven by a nearly 40 percent drop in new enrollees, and why that is of concern,” Scullary said. “In contrast, the enrollment of state-based marketplaces — including Covered California — has remained stable during the past two years.”
Lee said in a statement that “insurance needs to be sold, and it does not make any sense to let that money go unused when millions of Americans are at risk of higher premiums. The administration needs to act like a business and recognize that now is not the time to continue its policy of cutting back on marketing, which will directly result in higher premiums for millions of middle-class Americans.”
Covered California supports other measures to reduce premiums, including the implementation of a reinsurance program, which would fund medical costs for the sickest enrollees, as well as allowing more people to receive government funding to help pay for premiums. Both of these measures would require actions by Congress, but the marketing funding is up to the discretion of the administration.
Despite a reduction in overall enrollment in the state, California officials have said they saw the open enrollment period in their state as successful because more new enrollees had entered since the first open enrollment in 2013.
They have said they believe re-enrollment had dropped because more people chose to purchase coverage outside of the exchange due to the way the state had structured its subsidies.
The Trump administration ended payments to insurers known as cost-sharing reduction subsidies, and as a result officials in a large number of states shifted federal subsidies so that people wouldn’t feel rises in premiums as strongly, or could even purchase coverage with a subsidy at no cost to them. In some cases, buying coverage off the exchange was less expensive to certain customers.
HHS and CMS officials did not immediately respond to a request for comment on the Covered California analysis or Lee’s letter.
• This article has been updated with comment from Covered California.
