Thursday, March 6, 2014

Obamacare: The Uninsured Are Not Signing Up Because the Dogs Don't Like It

Here's my version of a classic corporate marketing story from the 1980s:
A big dog food company decided to come out with the latest and greatest new dog food. They hired the smartest consultants from the big universities in Boston to advise them. They had their scientists, who know far more about nutrition than any consumers or the dogs, come up with the most nutritious formula they were convinced was good for them. The engineers designed a new and cost effective manufacturing process that capped their overhead. The marketing department allocated enormous amounts of money to the various state sales offices and put together a very expensive and colorful national ad campaign led by a charismatic spokesman. The company trained a newly recruited sales force and signed up the biggest supermarkets for the best shelf space.

It did not sell.
So, the President gathered his senior team in the boardroom and asked each department head, "Why isn't our dog food selling?" The Boston consultants said, "Don't worry the customers just don't understand yet how good this is for them and they will." The scientists were mystified, marketing was completely stumped, the state sales offices said, "It isn't our fault." No one had a clue about what was wrong.
Finally, after a long pause, a new college intern (not from Boston) sitting in the back of the room finally got up enough courage to tell the President, "The dogs don't like it!"
The Washington Post is reporting, "The new health insurance marketplaces appear to be making little headway so far in signing up Americans who lack health insurance, the Affordable Care Act's central goal."

The article cites a February McKinsey & Company survey that found only 27% of people who had bought coverage by early February had been previously uninsured. That is better than McKinsey's last survey which indicated only 11% of of those who enrolled a month earlier were uninsured––likely because the later enrollments don't include so many previously insured people who had their coverage cancelled on January 1.

The article also reports that about half of uninsured adults have looked for information on the online health insurance exchanges.

Last month, the Obama administration reported the following activity both online and through the health insurance exchange call centers:

By their own count, there were 64 million visits to the state and federal health insurance exchanges through January. There were also almost 16 million calls to the state and federal call centers.

While I expect these are not all unique visitors, it is hard to argue that the "dogs have not tried the dog food."

But by February 1, only 3.3 million people hit the "enroll in a plan" button.

As I have reported on this blog before, about 20% of these 3.3 million people never paid their bill and were cancelled so the enrollment is even smaller than this.

The administration now says 4 million people have hit the "enroll in a plan" button.

As I reported on this blog yesterday, starting with the administration's more recent enrollment total of 4 million, less than 15% of the 17.2 million people the Kaiser Family Foundation has estimated are eligible for subsidies have signed-up and paid for coverage––and many of these people who were eligible for subsidies were also previously insured.

The uninsured just aren't buying Obamacare.

I believe they are not buying it because the premium––even net of the subsidies––is too much for plans that have deductibles that are too high. Consulting firm Avalere has put the average Silver Plan deductible at $2,567 and the average Bronze Plan deductible at $4,545. People are often being asked to pay hundreds of dollars per month in premium, net of subsidies, and they don't see the value.

There are three weeks left in the open enrollment that has already afforded people the months of December, January, February, and soon to be all of March, to take a good look at Obamacare and decide whether it is a good buy for them or not.

Starting in April, when the final numbers are in, I hope we can have a meaningful conversation over how to fix the new health insurance reform law that is clearly not working.


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