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Healthcare.gov's biggest problem has nothing to do with its software

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Healthcare.gov, the Obamacare website, has a big problem. But it's not the problem you might think.

It's not the crashes, freezes, faulty navigation and long waits, though there are still plenty of those.

It's not the huge security holes that let hackers steal private, personal information.

It's not even the lack of any back end to relay enrollment and subsidy information to insurance companies so that consumers can be billed and insurers be reimbursed.

The biggest problem, according to recently released government figures, is something called conversion rate.

A measure of actual sales

Conversion rate is a statistic that tells advertisers and marketers just how effective their advertising, website and/or social media campaign is as an actual sales tool. You calculate it by counting total leads – in the case of healthcare.gov, unique visits to the site and the state exchanges – and dividing that number into the total number of sales. The quotient, expressed as a percentage, tells you how well you're doing at converting curious prospects into paying customers – hence the name "conversion rate."

"According to government tallies," Forbes reports, "44.5 million people called or visited state and federal websites[,] they said, presumably indicating broad interest in the new benefit." Of those, 2.2 million are claimed to have signed up for Obamacare. Critics have voiced skepticism about this claim, noting that the 2.2 million may have selected a health insurance plan, but substantially fewer have actually bought coverage by paying their first premium. But let's put our skepticism aside and take that 2.2 million figure at face value.

Dividing it by 44.5 million total unique visits gives you a conversion rate of 4.9 percent. And that "rate of converting web traffic into customers," says Forbes, "would place the program on par with the click through rates enjoyed by Internet banner ads, and well below sales figures on other e-commerce sites."

That's a bit of a misstatement, since banner ad clickthrough rates measure leads, not sales. When you click a banner, you're taken to a website, from which you can buy if you want to. How many visitors actually do buy would be the basis for the conversion rate. If clickthroughs were equivalent to conversions, Obamacare conversions would be doing about five times as well as banner ads, whose clickthrough rate averages around 1 percent.

Comparing apples to apples

But comparing apples to apples, it becomes readily apparent that healthcare.gov's and the various state exchanges' conversion rates are fractions of those earned by other forms of e-commerce.

  • For your garden-variety e-commerce website, Forbes notes, "about 8% of visitors...will add a product to their basket." That's more than one-and-a-half times the Obamacare conversion rate.
  • Same for education sites, whose conversion rate also averages 8 percent.
  • Professional financial services websites enjoy an average 10 percent conversion rate – more than double Obamacare's.

And for private, out-and-out health insurance sites? Well, Jonathan Bush, CEO of Athena Health, which sells a specialized service to healthcare providers, "said that the conversion rate for Athena’s web site, for doctors who visit the site to evaluate Athena’s suite of services and then make a purchase, is 22%." That's more than quadruple Obamacare's conversion rate.

Putting the customer last

But for all its faults, the problem isn't the Obamacare website. It's the Obamacare product.

"This data [sic] strongly suggests that eligible consumers, who take the time to kick the tires on Obamacare, don’t like the products that they’re finding in the exchanges," Forbes explains. "They’re browsing, but not buying."

And the reason they're not buying, says Health Policy and Strategy Associates president Robert Laszewski, is that the product was designed with priorities exactly the opposite of what they should have been, putting last things first and vice versa.

If an entrepreneur had crafted Obamacare[,] he would’ve gone to a middle class family. A family of four [that] make[s] $54,000 a year has to pay $400 in premiums net of subsidy[,] and for that the standard silver plan has an average deductible around $2,500 and a narrow network. They’re going to pay almost $5,000 for that? So the entrepreneur would say I’ve got $5,000 in premium and all this deductible, what do they want for that? And they probably would’ve said we want office visits and lab tests because the kids need to go in occasionally and then we want catastrophic care. The problem with Obamacare is it’s product driven and not market driven. They didn’t ask the customer what they wanted. And I think that’s the fundamental problem with Obamacare.

Obamacare could be the greatest form of health insurance in the world, but that in itself wouldn't be enough to get more than 4.9 percent of the consumers who consider it to buy it. The scrapheaps of marketing are filled with superior products that too few people wanted to buy. (Did someone just say Betamax?) In order to succeed in the consumer marketplace, you have to make and sell what consumers themselves want to buy – and that's not necessarily what you may think is best for them.

There's only one way to find out what your potential customers want, and that's to ask them.

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