The awful problems that have plagued the federal Obamacare website have obviously placed a huge roadblock in the way of enrollment on the exchanges, which is crucial to the program’s long term success. One reason for this: Insurance companies had to essentially suspend plans for a massive advertising campaign to draw in new customers, since many of them had no way of apprising themselves of coverage options available to them.
But here’s the flip side of this: If the federal website is mostly operational by the end of the month, it’s likely we’ll see a massive flood of advertising from insurance companies selling new plans over the exchanges. The advertising that was placed on hold may simply resume –and it may be heavily concentrated in December and the three months in 2014 leading up to the March 31st enrollment deadline.
This comes by way of Scott Roskowski, the senior vice president for marketing for TVB, the trade group for commercial broadcasters. As the Wall Street Journal reported back in August, TVB had estimated, based on expected insurance industry profits, that insurance providers were set to spend $1 billion on ads over the next two years to woo new customers shopping on the exchanges. This was seen as a boon to the law’s chances — enrollment is crucial to its success — but it was forgotten after the website crashed.
But Roskowski says TVB’s research suggests what really happened is that insurers simply moved their ad buying forward, rather than cancelling it — and that much of that shift was to the four month period from December 1st to March 31st.
“Instead of pulling the ad money, they shifted it,” Roskowski says, in a reference to insurance companies. “A lot was shifted to December and the first quarter of 2014. It’s safe to say there is going to be a concentration of ads leading up to the deadline of March 31st.”
Roskowski says TVB still predicts hundreds of millions in ads in 2014. “In 2014, based on Price Waterhouse consumer research, there is expected to be approximately $87 billion in revenue made through the ACA by providers. If they pour one percent of that into ad revenues, we’d see approximately $1 billion in ads. We’re still predicting up to half a billion in ads in 2014.”
Of course, none of this actually counts until the ad money is actually spent. As experts told the Journal, this is largely uncharted territory, and ad spending could taper off if enrollment is weak. The 2014 elections will clutter up the airwaves with political ads blasting Obamacare, which could dampen enrollment.
It’s also anyone’s guess whether the website will be close to fully operational by the end of the month. As Brian Beutler notes, there will very likely be continued problems, which will be excacerbated by media hype (egged on by Republicans).
But for all the talk about how the administration has angered insurance companies with its proposed “fix” to the law, which is certainly a very real factor, this is still all about money. If the administration can make the website more or less functional, expect insurers to resume their huge push to entice people to enroll. “This is big business — we’re going to see a strong pulse of advertising coming out of the exchanges in a short time,” Roskowski says. “But the website has to work, and people need to enroll.”