It's safe to say that the rollout of the Affordable Care Act was not pretty. Plagued by technical problems on Healthcare.gov, and stymied by a lack of political support in around half of the 50 states, the federal healthcare exchange set up by the ACA—commonly nicknamed "Obamacare"—enjoyed a decidedly lackluster launch. Despite there being 35 million uninsured people in the United States, only 8 million signed up for insurance on the exchange.
True, another 5 million people signed up on their own for policies that qualified for the ACA. However, at least one analysis found that of all of those who signed up, only about a quarter of them were truly uninsured. The rest were newly eligible Medicaid recipients (created by increases in income eligibility thresholds under the ACA), were switching policies, or had actually been dropped by their employers when the ACA was passed. What that means is that despite the enormous costs—both financial and political—of setting up these exchanges, fewer than 10 percent of uninsured people in the US have so far been insured as a result.
“This is not like Field of Dreams, where if you build it they will come.”
That doesn't mean Obamacare couldn't still succeed, says John Quelch, the Charles Edward Wilson Professor of Business Administration at Harvard Business School and a professor of health policy and management at Harvard School of Public Health. The sheer scope of the act, passed after more than a decade without any major healthcare legislation in the US ensured that it would be complex and tough to sell to the public, Quelch says. But that was just the problem: Congress and the Obama Administration didn't sell it.
"Fundamentally, it's a marketing issue," he says. "First you have to make sure the right people are aware of the new opportunities, and then you've got to motivate and enable them to find an insurance solution that makes sense for them."
After all, no one wakes up in the morning excited to buy insurance. "It's a grudge purchase," says Quelch. "It's a very complex product, and people don't like buying or paying for it. Therefore it takes skillful marketing to attract the attention of people and motivate the desired purchase behavior you are looking for."
Amidst the generally dismal track record of the exchanges, however, there were bright spots where officials did just that, says Quelch. After legislation was passed, 14 states exercised the option to set up their own health insurance exchanges, as opposed to the other 36, which defaulted to the federal exchange. Of those 14, says Quelch, five of them bungled the roll-out as badly as the Feds. But several of the others tallied up levels of enrollment far above the national average.
How did they do it? Quelch looked at one of those success stories—Connecticut—for clues. In a new Harvard Business School case co-written with researcher Michael Norris, Access Health CT: Marketing Affordable Care, Quelch unpacks Connecticut's winning strategy, which led to a sign-up rate of about 65 percent of uninsured in the state. Key to the effort, he says, was that the quasi-state agency Access Health CT (AHCT) put marketing at the forefront early—including hiring Kevin Counihan, the chief marketing officer of Massachusetts' successful health connector (which predated Obamacare) to run it.
"When you have a CEO who is an ex-CMO, that is going to put the marketing tool kit front and center," says Quelch, who also notes that AHCT hired a marketing consultancy, Pappas MacDonnell, which came with Harvard MBA Philip Stevens as a member of the project team. Together, they realized early on that the state pool of 345,000 uninsured Connecticut residents was hardly a homogenous group—within it were young people who didn't want insurance, poor people who couldn't afford insurance, people between jobs who'd lost their insurance, and older people who didn't know they were eligible for Medicare. Consumers also had differing levels of enthusiasm about signing up for insurance, ranging from excited to cynical to just too busy to care.
AHCT used public data and Pappas MacDonnell's market research to segment consumers into four different groups: Confident Rejecters, Cautious Optimists, Stoic Skeptics, and Stressed and Strained. The agency then created different messages for each one—for example, emphasizing affordability for the "stressed and strained" group. Furthermore, it used a variety of ways to reach each group, including billboards, print advertisements, radio, TV, online, and social media, tailoring the message to the medium. For the "cautious optimist" group, which included a number of Latinos, AHCT produced Spanish-language advertisements for Latino newspapers.
"While the segmentation helped shape AccessHealth's initial thinking, affordability of health care insurance proved to be the major driver of consumer thinking across all four segments and later became the consistent core of AccessHealth's message strategy," Quelch notes.
All of these communications helped raise awareness of the exchange—an important first step. But AHCT's executives also knew if they were going to really be effective, they'd have to make it as easy as possible to sign up. The federal law allowed for commissions for brokers who signed up new healthcare subscribers, but the amounts were too small to interest many professional insurance brokers—leaving the sign-up work to recently recruited navigators who were inexperienced non-profit health and social workers and community activists. AHCT realized that, to make it worth the while for experienced brokers to participate, the agency would have to bring the customers to them.
At unique storefront "Enrollment Centers" and through a series of "Enrollment Fairs," AHCT publicized the opportunity for consumers to talk to professional brokers who could help them choose the best plan from a complex array of options. "They'd organized a group of insurance brokers on a Saturday morning at the local Holiday Inn and bring the prospects to them," Quelch explains.
Despite the low commissions on sign-ups, the volume of applicants made it worth the brokers' while. "AHCT said we'll bring a flow of leads that will make the commissions actually pay for the amount of work you are doing," says Quelch. "It was a win-win." Hundreds of brokers participated, and they were responsible for enrolling 30 percent of all enrollees.
Using techniques like these, AHCT signed up more than 200,000 subscribers by the end of its first open enrollment period between October 2013 and April 2014—more than twice the national goal set for the state. AHCT is currently gearing up for another marketing campaign for the 2014-15 enrollment period, retooling its messages to reach the more difficult populations—those who didn't sign up the first time.
As the federal government and other states gear up for the next annual open enrollments campaign, they could learn from Connecticut's example. By the very fact that everyone is equal under the law, policymakers tend to build one-size-fits-all solutions that ignore the complexity of the market. "This is not like Field of Dreams, where if you build it they will come," Quelch says. "There are distinct categories of consumers, each of which needs to be addressed in a different way."
By using a marketing-based approach, he says, government officials can ensure that the laws they spend so much time and energy crafting are utilized by the people who need them most.