Hooray! Trump Admin didn't waste ALL the ACA marketing/navigator money on hookers & blow after all!

Three years ago, I posted what seemed to be a fairly naive question:

All of this brings me to my question:

  • Last summer the Trump administration announced that they were slashing their advertising budget by 90%, from $100 million to just $10 million.
  • They also announced that they were slashing $23 million out of the navigator/outreach program for open enrollment.
  • That means they cut HealthCare.Gov's total budget by $113 million.

So my question is this: Where exactly did that money go?

For that matter, assuming HC.gov is set to bring in $300 million more this year, but doesn't plan on reinstating that $113 million for advertising/outreach, doesn't that mean they should be profiting by over $400 million? Again, if so, where is that money going?

The federal ACA exchange, HealthCare.Gov, receives most of its funding via the ACA "User Fee" paid for by the insurance carriers which utilize the platform. The User Fee is a percent-of-premium surcharge; until recently it was 3.5% of premiums for most states and 3.0% for a handful of states which technically operate their own exchanges but which piggyback on HC.gov's technology platform.

In the meantime, however, full-priced individual market premiums have increased dramatically over the years, from around $256/month in 2013 to around $580/month this year...around a 125% average increase. As a result, user fee revenue has increased dramatically...yet the Trump Administration decided to cancel TV ad spending during the final critical "surge week" of the 2017 Open Enrollment Period and later to slash spending by 90% on HC.gov's marketing/outreach budget and navigator/assister programs starting in the fall of 2017.

In other words, revenue had increased dramatically at the same time spending dropped dramatically...so what the hell were they actually doing with all that extra cash instead?

Well, some of it was apparently used in a jaw-droppingly putrid propaganda campaign designed to attack the ACA:

Team Trump Used Obamacare Money to Run PR Effort Against It

The Trump administration has spent taxpayer money meant to encourage enrollment in the Affordable Care Act on a public relations campaign aimed at methodically strangling it.

The effort, which involves a multi-pronged social media push as well as video testimonials designed at damaging public opinion of President Obama’s health care law, is far more robust and sustained than has been publicly revealed or realized.

...Under Secretary Tom Price’s stewardship, HHS has filmed and produced a series of testimonial videos featuring individuals claiming to have been harmed by Obamacare.

...Funding for those videos would come from the Department’s “consumer information and outreach” budget, which was previously used for the purposes of advertising the ACA and encouraging enrollment. The Trump administration has requested $574 million for this specific budget item, though HHS declined to detail how much it has devoted to specific line items. Two sources familiar with the videos say that HHS continues to draw money from the outreach fund, even though its objective has switched from promoting the ACA to highlighting the law’s critics and its shortcomings.

As awful as this was, it still didn't account for all of the "extra" money, and in my blog post from 2018 I was scratching my head trying to figure out where the heck the rest of it went.

The amount of revenue actually levelled off the past couple of years after CMS Administrator Seema Verma slashed the User Fee rates from 3.5% / 3.0% down to 3.0% / 2.25% respectively; I actually approved of that at the time for this very reason, although I'm strongly opposed to slashing those fees any further...which Verma tried to do starting next year on her way out the door.

At the time, I assumed that Trump, Price, Verma and other members of the Trump circle were grifting all this money away into offshore bank accounts and the like, and I still wouldn't be even the tiniest bit surprised if that turns out being what happened to some of it.

However, a new study by the Kaiser Family Foundation reveals that a decent chunk of the money is, well...just sitting there, not being used for anything at all:

In addition, this brief reviews information about federal marketplace resources and spending priorities contained in Trump Administration budget documents. Federal marketplace spending on consumer assistance, marketing, and other consumer assistance activities has declined during the Trump administration, even while revenue from user fees – which finance most of federal marketplace expenses – has held steady. It appears that more than $1 billion in unspent federal user fee revenue has accumulated and could be used to invest in changes that would make it easier for consumers to enroll in health coverage.

Holy smokes.

In fact, the actual amount appears to be substantially higher: A net surplus of $1.27 billion as of Fiscal Year 2020, according to the KFF table.

In short, according to KFF:

  • In 2018, HC.gov brought in $1.70 billion but only spent $1.27 billion
  • In 2019, HC.gov brought in $1.79 billion but only spent $1.30 billion
  • In 2020, HC.gov brought in $1.70 billion but only spent $1.27 billion

This may sound like a good thing ("look at all that waste, fraud & abuse they rooted out!"), but the reality is that they accomplished this savings by massively underspending on the very programs the ACA is supposed to be supporting. As noted above, marketing/outreach was slashsed from $100 million/year down to around $11 - $12 million and the navigator/assister program was slashed from $100 million down to between $13 - $21 million. And as I noted a few days ago, this sort of stinginess makes a huge difference in the number of people who DON'T end up getting enrolled in healthcare coverage...the entire purpose of the exchanges in the first place.

Having said all this, if accurate, the Kaiser study is actually good news, as it at least means that the Biden Administration's HHS Dept. should have ample funds to kick off the pending COVID-19 Enrollment Period expected to be announced this Thursday.

The Kaiser story also lists numerous recommendations for how to utilize those funds, including the obvious:

  • Investing substantially in publicizing a COVID re-opening of marketplace enrollment
  • Targeted outreach strategies to reach some consumers, including those who do not speak English, non-citizens, and those who have been uninsured for a longer period of time
  • Additional resources to provide consumer assistance during a COVID enrollment period
  • Addressing problems that arose during the 2021 open enrollment period

There's also one interesting point raised by Kaiser which I hadn't really thought about:

As part of any marketing efforts, federal Navigators advised against describing the reopening of marketplace enrollment as a COVID-19 special enrollment period or SEP, and instead recommended it be characterized as a new open enrollment period. They noted that the term SEP can be confusing to for consumers, who may not realize the “special” enrollment opportunity applies to them, or who may have had difficulty applying for SEPs in the past. Navigators also pointed out that while the Trump Administration revised rules during the pandemic, giving consumers more time to apply for a SEP following coverage loss, consumers still had to provide documentation of that coverage loss before they could enroll using the COVID-SEP.

Technically speaking, the official "2021 Open Enrollment Period" only referred to November 1st - December 15th, since that was the OEP time period defined by the HHS Dept. last year. Every state-based exchange which offered an deadline later than 12/15 technically did so using a "Special Enrollment Period" tacked onto the end of OEP...but they wisely don't call it that to avoid confusion.

This makes sense pragmatically as well, since these particular "special" periods are exactly the same as open enrollment, in that anyone who was eligible during the "official" OEP can still enroll without having to provide documentation of having lost coverage within the past 60 days and so forth.

Therefore, yes, it makes sense for the Biden Administration to simply say "We're re-opening enrollment due to the pandemic!" and leave it at that instead of branding it as being a "special" enrollment period.

And now, thanks to this budget revelation by Kaiser, it sounds like they should have plenty of marketing dollars to get the word out about it!