High hurdles for HHS

The success of the president's healthcare overhaul may depend on an unlikely feat: With little time, and limited resources, the Obama administration and its allies must find and entice millions of Americans who are eligible for new healthcare coverage and might not want to pay for it.

The challenges HHS faces came to the forefront last week as the department launched a highly anticipated public outreach campaign to educate Americans about their opportunities and obligations for health insurance under the Patient Protection and Affordable Care Act.

While comparisons have been made to previous administrations' major healthcare rollouts—namely Medicare's prescription drug benefit and the Children's Health Insurance Program—HHS finds itself in uncharted waters today, as it must attract new populations, rather than beneficiaries already enrolled in federal health programs.

And there are other considerable obstacles. A divided Congress this year refused the administration's request for funding to implement the marketplaces. Republicans hostile to the law are pushing the Government Accountability Office and HHS' inspector general to investigate the administration's efforts to enlist money and help from corporations and not-for-profit organizations. And Americans with unfavorable views of the law still outnumber those with favorable ones, according to a June Kaiser Family Foundation tracking poll.

Despite these hurdles, experts suggest the administration could succeed if it employs the effective messaging and so-called micro-targeting tactics that the Obama presidential campaign tested in 2008 and perfected in 2012. And the administration—which introduced a revamped HealthCare.gov website and toll-free number to launch the campaign—is not working alone, but rather is relying heavily on help from grass-roots organizations, as well as healthcare providers and insurers.

Testifying before the House Energy and Commerce Health Subcommittee in April, HHS Secretary Kathleen Sebelius said the nonpartisan Congressional Budget Office estimated when the health reform law passed that about $10 billion would be required to implement the law, but added that only $1 billion has been appropriated.

According to HHS, the department has used $235 million from the original $1 billion implementation fund, and leveraged a little more than $1 billion in existing resources—including about $453 million from the law's prevention and public health fund—to implement the law and establish the marketplaces.

Although the administration would not provide a comprehensive list of all marketing spending on the exchanges to date, several contracts have been publically confirmed. For instance, HHS has signed at least two contracts for exchange marketing with Weber Shandwick—a $3.1 million deal in October 2012 and an $8 million deal in April of this year, according to published reports.

At the heart of any successful marketing campaign is a compelling message that solves a problem for consumers, according to Judy Unger Franks, a lecturer in integrated marketing communications at Northwestern University's Medill School of Journalism, Media, Integrated Marketing Communications. The idea, she said, is first to create a culturally resonant message. Then it's important to equip individuals with persuasive powers and make them evangelists so that certain constituencies hear the message from trusted sources. She added that the Obama campaign staff “brilliantly” knew how to use all of the media platforms that were available to them in the 2008 and 2012 presidential campaigns.

“You can't do mass media without micromedia,” said Unger Franks, author of the book Media: From Chaos to Clarity. “It's harnessing the word of mouth and realizing that word of mouth is word of network.”

Meanwhile, a considerable challenge for the outreach and enrollment effort is the many ways it differs from previous efforts to entice people into other healthcare initiatives.

For instance, some observers have compared the health reform rollout with the launch of the Medicare prescription drug benefit in 2006. But the two initiatives differ in many important ways, said Dr. Mark McClellan, who led the CMS during that initiative. A primary one is the target population of each.

“A lot of the stability of these markets depends on the participation of the young and healthy,” McClellan said in an interview.

The importance of enrolling healthy adults who do not use many healthcare services was a critical point emphasized by the administration in its outreach announcements.

“We're hopeful that 7 million is a realistic target and that we're going to be driving our efforts toward that kind of enrollment effort,” HHS Kathleen Sebelius said last week, referring to the CBO's earlier estimate of the number of people who would get coverage in the exchanges in their the first year. “And it's both about numbers and also hopefully getting a balanced risk pool,” she continued. “So a lot of our efforts will be using creative ways to outreach to the young, healthy population who is eligible but may not get up every morning thinking about health insurance.”

Young healthy adults, also known as “invincibles,” make up a disproportionately large share of the uninsured. A 2012 PricewaterhouseCoopers analysis of federal healthcare databases concluded that the roughly 30 million uninsured expected to be eligible for new coverage under the law are “relatively young, single and in good shape.”

Health insurance analysts have cited the enrollment of this population, with its low healthcare utilization and costs, as a key both to maintaining the financial integrity of exchange plans and to keeping their costs from spiraling. The Obama administration has echoed this priority with plans to include 2.7 million young adults among the 7 million it plans to enroll in the health insurance exchanges in 2014.

Sebelius said the administration plans to enlist the help of the nation's moms to nudge those young adults into buying health plans.

“Young, healthy males are often referenced as being able to subsidize the older and less healthy,” said Anne Hance, a partner at the law firm McDermott Will & Emery. But, she added, “Does a young healthy male who views himself as invincible want to purchase health insurance coverage if he does the math and sees the penalty is less than what it would be to buy coverage?”

Penalties for lacking qualifying insurance coverage will rise in subsequent years but in 2014 they start at $95 for each adult. In 2014, the penalty will be no more than $285 per family, or 1% of income, whichever is greater, according to the Kaiser Family Foundation. McClellan pointed out that the penalty for Medicare beneficiaries who did not enroll in Part D as soon as they became eligible was relatively higher—a percentage of the “national base beneficiary premium” multiplied by the number of months they went without qualifying coverage is added to all future monthly premiums.

Another critical difference from previous healthcare enrollment drives, such as Medicaid, is that the campaign might need to address a sharp rise in costs for young invincibles.

Similar to the Part D benefit, exchange enrollees will owe monthly premiums, deductibles and copayments for their health insurance coverage. Several studies have found that Medicare beneficiaries' out-of-pocket costs decreased, on average, after enrollment in Part D. In contrast, a June 19 analysis of exchange plan filings in seven states by HealthPocket, an online tool that compares health plans, found the cheapest options may cost enrollees more in deductibles, copays, and coinsurance than existing individual market plans. The uninsured—as long as they remain healthy—pay even less.

Heather Howard, director of the State Health Reform Assistance Network, said health insurance exchanges are addressing cost issues by promoting both the “value and affordability” of the coverage to young, healthy uninsured people. The cost of it is expected to drop for about half of such young adults through the eligibility for income-based subsidies.

Other efforts to reach this population are expected to mimic promotional campaigns used under the precursor Massachusetts health insurance reform. State officials there used the Boston Red Sox as part of their promotional advertising. Sebelius said HHS is in “active discussions with a variety of sports affiliates” for either paid advertising or partnership deals.

In Massachusetts, the promotional effort was given partial credit for the state's ability to drop its uninsured rate.

That effort is already being challenged by Republican senators led by Minority Leader Mitch McConnell (R-Ky.), who last week warned the heads of six professional sports leagues not to cooperate with Obamacare or risk ruining their reputations.

The continuing challenge of reaching the young invincibles—even with significant outreach—was apparent in a March study by the Blue Cross and Blue Shield Foundation of Massachusetts, which found the remaining uninsured in the state are disproportionately young men.

“It's a significant challenge in reaching out to certain populations—identifying them and enrolling them,” said Tim Gens, executive vice president of the Massachusetts Hospital Association. “And it really takes a collaborative and concerted effort not only for the initial enrollment—but to maintain enrollment.”

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