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Yet another, $0.5 billion, flood of Obamacare advertising won't turn the tide

It won't help.
It won't help.ACHI

Just when you thought it was safe to watch television again, another flood of Obamacare advertising is about to hit the airwaves. Unlike last year's $1 billion flood, it will have only half the volume.

The Obama administration is readying what Advertising Age calls "a blitz of advertising that is expected to cost at least $12 million and could go much higher." Like other advertisers, they won't be blowing it all on three Super Bowl :30s. Instead, an unnamed government official told Ad Age, "Because normal prime time and other sports programming tends to take a ratings hit during the Olympics, [HHS] has decided to shift some paid media budget to the NBC Olympic inventory in our local target markets to capitalize on this increased viewership."

While last year's Super Bowl drew 108.4 million viewers all at one shot, the 2012 Winter Olympics averaged just 12.6 million viewers a day over 17 days.

Also unlike last year's, most of the spending will be coming from insurance companies, not government. TVB senior VP-marketing Scott Roskowski predicts that private health insurers will spend at least $500 million of their own, not taxpayers', money on advertising this year – an estimate Roskowski himself calls conservative.

Wellpoint, for example, plans to spend up to $100 million on television, social media and print ads. Industry-wide, a Kantar Media CMAG study showed that health-insurance company ad spending climbed to more than $40 million during the week of December 1.

But no matter how much is spent or who's spending it, like last year's Obamacare advertising, it's doomed to failure. Here's why.

A target-rich environment

Whether or not, as Roskowski says, the industry stands to gain $100 billion in new premium revenue from people now legally required to buy health insurance, there's no disputing there's a huge market out there.

There's also little disputing that Obamacare has created it.

As NBC News reports,

[M]illions of Americans are getting or are about to get cancellation letters for their health insurance under Obamacare, say experts, and the Obama administration has known that for at least three years.

Four sources deeply involved in the Affordable Care Act tell NBC News that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a “cancellation” letter or the equivalent over the next year because their existing policies don’t meet the standards mandated by the new health care law. One expert predicts that number could reach as high as 80 percent. And all say that many of those forced to buy pricier new policies will experience “sticker shock.”

But, according to the Washington Post, that's only the beginning.

When millions of health-insurance plans were canceled last fall, the Obama administration tried to be reassuring, saying the terminations affected only the small minority of Americans who bought individual policies.

But according to industry analysts, insurers and state regulators, the disruption will be far greater, potentially affecting millions of people who receive insurance through small employers by the end of 2014.

While some cancellation notices already have gone out, insurers say the bulk of the letters will be sent in October, shortly before the next open-enrollment period begins.

Missing the target

The crucial target audience here is healthy, 18-to-34-year old adults.

As ABC News reported, "[T]he ads will encourage uninsured people, particularly young adults, to enroll in Obamacare coverage before the March 31 deadline...Enrollment of young adults is seen as critical to the success of the law. Health industry experts say at least 40 percent of sign-ups need to be between the ages of 18 and 34 to keep premiums in check."

But signing up for Obamacare is something that consumers in general have resisted – and young adults have resisted more than their elders. As Forbes reports, under-35s are underrespresented compared to their share of the uninsured population:

Here are the key figures. 59 percent of non-elderly adults who selected an exchange plan were older than 45, compared to just 32 percent of the uninsured population: a skew of 27 percent. On the other hand, 25 percent of non-elderly adults who selected an exchange plan were younger than 35, compared to 47 percent of the uninsured: a skew of 22 percent, for a total skew of 49 percent (27 plus 22).

Outside the federal Obamacare exchange, says a Reuters dispatch,

Data from seven states and the District of Columbia, which are running their own marketplaces, show that of more than 200,000 enrollees, nearly 22 percent are 18 to 34 years old, according to a Reuters analysis.

The administration had hoped that over 38 percent, or 2.7 million, of all enrollees in 2014 would be 18 to 35 years old, based on a Congressional Budget Office estimate that 7 million people would sign up by the end of March.

“The whole insurance relationship is counting on them signing up,” said Dale Yamamoto, an independent healthcare actuarial consultant.

Firing blanks

Many of the insurance companies going after these young adults have never had to market to consumers before, Ad Age notes – and their advertising, by being vague and generic, shows it.

Wellpoint's campaign, for example, makes its entire message a statement that "health care" – not health insurance, by the way – is a good thing to have. It reveals its Blue Cross, Antherm and Empire brands only in the end super, along with an unbranded URL.

Cigna's first spot shows a closeup of one woman's face as she wears different occupational uniforms. It says that "You were born an original. There's a health company that can help you stay that way." That's the whole voice-over. Of course, if you happen to die of a preventable disease or denial of a specific procedure, you're still an original – not a heathly original, but an original nonetheless.

Interestingly, both spots are targeted exclusively to women. While it's true that in families, wives and mothers make most of the health-related decisions, the 18-34 cohort comprises lots of singles, about half of whom are men. So in their struggle to avoid adverse selection, both advertisers seem to have chosen to ignore a large segment of their target audience.

So if these campaigns typify what's coming – and if the absolutely critical, can't-afford-to-miss-it target is "a critical mass of young and healthy enrollees... necessary to offset the cost of covering older and sicker Americans, particularly those with pre-existing conditions" – insurance-company advertising isn't likely to hit it. Both strategically and executionally, it's the equivalent of firing blanks.

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