Nav: Home

Is TV advertising for health insurance worth the expense? A new study says, 'maybe not'

September 04, 2018

Key Takeaways:
  • Television advertising generally has a small effect on health insurance enrollments.
  • Advertising is not more effective in healthier populations.
CATONSVILLE, MD, September 4, 2018 - A new study to be published in the INFORMS journal Marketing Science has revealed that health insurance has a small effect on brand enrollments, raising the question of whether health insurance television advertising is worth the expense.

The study to be published in the September edition of the INFORMS journal Marketing Science is titled "Advertising in Health Insurance Markets," and is authored by Bradley T. Shapiro of the University of Chicago.

Shapiro's research has indicated that industry regulators have long been concerned that the effect of television advertising by health insurers would serve to "cream skim," or attract an advantageous risk pool, and to use certain deceptive claims to take advantage of the elderly. But what his research found was that since television advertising does not have a significant impact on brand enrollments, those concerns may not be as valid.

Shapiro found that there is no statistically meaningful relationship between advertising effectiveness and the average health risk. However, advertising was found to be more effective on populations with lower average income, and those populations often have worse health in ways that are difficult to capture with health risk scores. These two pieces of evidence combined suggest that the regulator fear of advertising-induced cream-skimming is not supported by data.

He added that his research also focused on whether it is imperative for health insurers to advertise just to compete, focusing on the effects on one health insurance firm when it decided to unilaterally cease television advertising.

"The estimates suggest that no material loss of brand share occurred," said Shapiro. "This provides evidence against the assumption that health insurers must advertise to preserve or gain market share.

Shapiro found that while television advertising may not be the most effective way for health insurers to generate increase enrollments, it may serve more general societal, informative benefits, such as letting consumers know of open enrollment deadlines, and helping consumers choose plans that better reflect their own preferences.

"Television advertising by health insurance plans is large and growing," said Shapiro. "Spending has risen from about $200 million in 2004 to $400 million in 2012. With the implementation of the Affordable Care Act (ACA) marketplaces and a more broad-based shift toward health plan choice, television advertising has continued to grow."
-end-
The full study is available at https://pubsonline.informs.org/stoken/default+domain/MKSC-09-2018/full/10.1287/mksc.2018.1086.

About INFORMS and Marketing Science

Marketing Science is a premier peer-reviewed scholarly marketing journal focused on research using quantitative approaches to study all aspects of the interface between consumers and firms. It is published by INFORMS, the leading international association for operations research and analytics professionals. More information is available at http://www.informs.org or @informs.

Institute for Operations Research and the Management Sciences

Related Health Insurance Articles:

Examining health insurance nondiscrimination policies with mental health among gender minority individuals
A large private health insurance database was used to examine the association between between health insurance nondiscrimination policies and mental health outcomes for gender minority individuals.
How common for cancer survivors to stay at jobs for health insurance?
This survey study looked at how often cancer survivors in the United States and their spouses or partners stay in their jobs because of concerns about losing their health insurance.
New health insurance insights
MIT economists analyze how patients and health care providers value Medicaid.
New health insurance benefit at U-M led to increased rates of IVF
In a new research letter appearing in JAMA detailing a first-of-its-kind study, a University of Michigan team compared the use of IVF among university employees before and after the addition of an insurance coverage benefit, finding a marked increase in the rate of use.
Financial hardship in cancer: The role of health insurance literacy
A new American Cancer Society study links health insurance literacy with medical financial hardship as well as non-medical financial sacrifices among adult cancer survivors in the United States.
Health insurance rule could help millions spend less for the care they need
Millions of Americans with chronic conditions could save money on the drugs and medical services they need the most, if their health insurance plans decide to take advantage of a new federal rule issued today.
Health insurance idea born at U-M could help millions of Americans spend less
New federal rule could reduce out-of-pocket costs for key drugs and services for people with chronic conditions in high-deductible health plans with health savings accounts.
Health insurance is not assurance of healthcare
Because of high out-of-pocket expenses, Ohioans who purchase subsidized health-exchange insurance often can't afford the care they need when they need it.
Study details poverty, lack of health insurance among female health care workers
A study carried out by researchers at Massachusetts General Hospital and the Perelman School of Medicine at the University of Pennsylvania finds that low wages and poor benefits leave many female health care workers living below the poverty line.
Is TV advertising for health insurance worth the expense? A new study says, 'maybe not'
A new study to be published in the INFORMS journal Marketing Science has revealed that health insurance has a small effect on brand enrollments, raising the question of whether health insurance television advertising is worth the expense.
More Health Insurance News and Health Insurance Current Events

Trending Science News

Current Coronavirus (COVID-19) News

Top Science Podcasts

We have hand picked the top science podcasts of 2020.
Now Playing: TED Radio Hour

Listen Again: IRL Online
Original broadcast date: March 20, 2020. Our online lives are now entirely interwoven with our real lives. But the laws that govern real life don't apply online. This hour, TED speakers explore rules to navigate this vast virtual space.
Now Playing: Science for the People

#573 Penis. That's It. That's the title.
This episode is about penises. That was your content warning. Penises. Where they came from. Why they're useful. And the many, many wild things that animals do with them. Come for the world's oldest penis, stay for the creature that ejaculates 80 percent of its bodyweight. Host Bethany Brookshire talks with Emily Willingham about her new book, "Phallacy: Life Lessons from the Animal Penis".
Now Playing: Radiolab

Falling
There are so many ways to fall–in love, asleep, even flat on your face. This hour, Radiolab dives into stories of great falls.  We jump into a black hole, take a trip over Niagara Falls, upend some myths about falling cats, and plunge into our favorite songs about falling. Support Radiolab by becoming a member today at Radiolab.org/donate.