Woman watching TV A recent studysuggests that concerns about insurers using TV advertisements to“cream skim,” or attract the most profitable customers, may bemisplaced. (Photo: Shutterstock)

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A new study suggests that health insurers may be wasting theirmoney on TV ads.

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The study was conducted by University of Chicago EconomicsProfessor Bradley T. Shapiro in Marketing Science, a journal byINFORMS, an international organization for operations, research andanalytics professionals.

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The research sought to examine the widely held assumption thatinsurers benefit from the gobs of money they spend on TVadvertising. Between 2004 and 2012, the study notes, annual TVadvertising for health insurers doubled, from $200 million to $400million. In the years since the Affordable Care Act took effect in late 2013,insurers have likely spent even more due to the increased number ofpeople enrolling in individual health plans.

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The study tried to measure the effect of advertising bycomparing the volume of an insurer's advertising with its enrollment in that TV market.

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The results of the study suggest that while TV ads can helpboost enrollment for an insurer, the gains may not be great enoughto offset the cost of the ad campaign. Shapiro argued that aninsurer might be better off trying to attract more customers byslightly lowering premiums.

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The study also suggested that concerns about insurers using TVadvertisements to “cream skim,” or attract the most profitablecustomers, may be misplaced. In fact, the data show that TVadvertisements have the greatest effect in enrollment in lesshealthy counties.

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Shapiro concedes that advertising could play an important rolein the insurance market even if each company's ad campaigns don'tappear to be having a big impact. The insurers could be advertisingsimply to blunt the effect of their competitors' marketing efforts.They don't want their competitors to be the only ones on theairwaves.

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Finally, the study did not find much evidence that advertisingis the reason that an increasing number of seniors are choosingMedicare Advantage plans over traditional Medicare. Shapiroestimates that eliminating all MA advertising would only reduce MAenrollment by 0.23 percent.

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