Choosing health insurance is challenging in the best of circumstances. The ACA individual health insurance markets are complex and confusing circumstances. Choices vary by income, they vary by county, they vary by age and household size. Some counties will have a half dozen choices. Some counties will have over two hundred choices. This is a challenging choice environment with the possibility of expensive mistakes being made.
People seek information to help make choices. There are numerous information channels. My frequent co-authors and I have looked at the television advertising channel. We found that insurers are not particulary nimble in their responses to changes in competition and that the evidence strongly suggests that privately sponsored advertising is mostly about re-arranging the pie instead of expanding the pie.
Dr. Rebecca Myerson of the University of Wisconsin and her colleagues have examined the navigator information and assistance channel. The ACA requires the funding of non-profit navigators to help people figure out what they want to choose for health insurance. In states that are served by Healthcare.gov, the federal marketplace gives out grants. The Myerson team leveraged the changing levels of navigator funding between the Obama and Trump administrations to casually estimate the impact of navigators. Navigators are really good at getting marginalized populations enrolled.
We connected over the summer and have a new working paper that uses Dr. Myerson’s right hand side from her previous paper to estimate the impact of changes in navigator funding on television advertising. We were curious — did insurers change their advertising when there was a drop in funding for another information channel? More simply, did advertising increase in counties where navigator funding dropped the most?
Right now, we’re finding strong, consistent null results no matter what we do to the data. We did event studies — nada. We did difference in difference with 2015 as the start of the run — nada. We did difference in difference with 2016 as the start of the run — nada. We dropped each state from the analysis one by one to see if there was a single state warping everything — and we got nothing.
This is, to me, an interesting null result. Private insurers aren’t compensating for the loss of publicly funded information and assistance with at least one, very visible, privately funded information supports. The policy point, if this null holds up, is that private insurers are operating on different objective functions than publicly funded programs and private insurers are motivated to seek out only profitable members while navigators are good at finding marginalized individuals who may or may not be as profitable.