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.
Old Man Shadow
Can’t help but think the bombardment of consumers with so many choices is designed to paralyze them with too much information so they lock into a sub-par plan.
That would also be by design. The insurance companies only care about profit and money, not people. Which is why it is absurd that we leave health care to the “free market”.
sab
That is really interesting.
Another Scott
Interesting, and it agrees with my biases. Presumably private companies would increase their advertising if they were after more enrollees, and we wouldn’t have seen things like 45+M uninsured in the USA before the ACA, and around 29M now.
But what policy recommendations should follow these findings? Increasing subsidies that at least partially go to the private insurance companies (to make it more worthwhile for them to sign people up)? It seems unlikely to me that subsidies could ever be large enough to make that happen in a meaningful way (why would they want to take, say, $250 more a month if that uninsured person has an expensive chronic illness?). It makes sense to me to therefore make the public side bigger, but how can one get that through Congress? :-/
Thanks.
Cheers,
Scott.
Brachiator
This is interesting. Since the passage of ACA, I had only seen ads for healtcare.gov or Covered California, never any other insurer who may be participating in ACA.
But my mother annually gets tons of advertising for Medicare plans. What’s the difference?
Lobo
We shouldn’t be surprised by this outcome. Too often we want to be comforted by the illusion that big companies have this paternal/maternal attitude towards consumers, when they are amoral profit machines. I don’t mean that as a criticism, but as reality. It’s too bad money has to be spent on studies to prove it in order to move policy. For-profit companies work well in certain segments, but not in others. That is what the conversation should be about: What kind of organization is best equipped to deliver a certain service or good, non-profit, government, private sector or combinations?
David Anderson
@Another Scott: That is next week’s post :)
Cermet
In a similar vein, the issue of selecting the best or optimized Medicare plan is also rather confusing; what are the best online sources – the SS site is too massive and confusing, at least to me. Any ideas on that or is that outside your wheel house?
Betty
@Cermet: It would be great to get better information on this.
Another Scott
@David Anderson:?
Cheers,
Scott.
Cermet
Hope I didn’t break David with that question!