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Advertising by Insurers Favors Medicare Advantage over Stand-Alone Drug Plans
SeniorJournal.Com
September 16, 2008
Kaiser analysis finds insurers spent more than twice as much for Medicare Advantage than for stand-alone drug plan ads
As the marketing period for 2009 Medicare plans nears, a new Kaiser Family Foundation study finds that insurers last year placed three times more advertisements to promote Medicare Advantage plans than they did to promote stand-alone Medicare drug plans. The Centers for Medicare & Medicaid Services also issued new regulations today the add new restrictions to insurance company marketing of Medicare Advantage and drug plans. (See sidebar)
The new analysis of advertising by private plans during the enrollment period leading up to 2008 comes amid heightened Congressional attention to Medicare plan marketing practices. Insurers are permitted to advertise their 2009 plan options beginning Oct. 1.
The content and frequency of television, print and radio advertisement for Medicare plans was analyzed from Oct. 1 through Dec. 31, 2007, the period when insurers were permitted to market their 2008 plan offerings and when beneficiaries were expected to revisit their Medicare drug plan and Medicare Advantage plan choices for the coming year.
The study looked at ads placed nationally or in one of three local media markets (Miami/Fort Lauderdale, Fla.; Phoenix, Ariz.; and Greensboro, N.C). All ads were identified by VMS, a media monitoring service.
Insurers spent more than twice as much for Medicare Advantage (which provide all Medicare benefits and often additional benefits) than for stand-alone drug plan ads (an estimated $30.1 million and $13.7 million, respectively) placed nationally and in the three markets. Estimated expenditures are based on the standard cost of ads and do not include other marketing and promotional expenses, such as direct mail and broker fees.
“Since ads for Medicare plans tend to be skimpy on basic, descriptive information, beneficiaries and their families really need to do their homework before they choose a plan or decide whether to switch plans during open enrollment,” Kaiser CEO and President Drew Altman said. The 2009 enrollment season runs from Nov. 15 though Dec. 31, 2008 for Medicare drug plans, and through March for Medicare Advantage plans.
Extra benefits were the dominant message in ads for Medicare Advantage plans, reflected in 71 percent of all occurrences, and most frequently emphasizing vision, preventive care and hearing benefits. Most Medicare Advantage ads (56 percent) also emphasized either no or low premiums for their plan.
The majority of Medicare Advantage ad occurrences (79 percent) explicitly identified whether they were promoting a Medicare HMO, PPO, private fee-for-service or other specific type of plan. The one in five that did not specify a type of Medicare Advantage plan could leave people on Medicare and their families unaware of the plan’s potential restrictions on choice of physicians and other providers. The Medicare Improvements for Patients and Providers Act of 2008 includes a provision to address this concern, requiring insurers to include the type of plan by Jan. 1, 2010.
In Medicare Advantage print ads, two thirds (67%) of all occurrences included a general statement indicating restrictions and limitations may apply – but always in the fine print. None of the HMO print ads included language describing provider network restrictions, as suggested in the Centers for Medicare & Medicaid Services’ marketing guidelines.
Other key findings from the study include:
● Only 3 percent of ad occurrences included images of younger people with disabilities – despite the fact that 16 percent of all Medicare beneficiaries are under age 65 living with permanent disabilities. Less than 1 percent of all ad occurrences mentioned the disabled population on Medicare explicitly.
● Images of seniors with apparent medical needs or frailties were not commonly featured in ads, despite the fact that 38 percent of Medicare beneficiaries have three or more chronic conditions. Even with the relatively new Medicare drug benefit, only 14 percent of all ad occurrences (and just 22 percent of stand-alone drug plan ad occurrences) portrayed an individual taking medications or an image of medications.
● Nearly 10 percent of all ad occurrences featured people engaged in physically demanding activities, such as dancing, running, playing baseball and swimming. The choice of images may appeal to beneficiaries’ aspirations for a healthy, active lifestyle, but could deter those with more serious health conditions from enrolling.
The report, Pitching Private Medicare Plans: An Analysis of Medicare Advantage and Prescription Drug Plan Advertising, is available online. Its authors are Xiaomei Cai, Gary Kreps, Jim McAuley, and Xiaoquan Zhao, of George Mason University, and Michelle Kitchman Strollo, Tricia Neuman, and Kim Boortz, of the Kaiser Family Foundation.
In addition, the Foundation released a new policy brief that explains the legal authority of the Centers for Medicare & Medicaid Services to regulate advertising and other information issued by the private companies that contract with the government to provide Medicare benefits, including an analysis of relevant statutory, regulatory and case law.
The brief also suggests additional steps the agency could take to enhance consumer protections with respect to advertising and marketing practices under its current authority. Policy Brief on the Federal Government's Authority to Regulate Advertising in Medicare was prepared by Vicki Gottlich at the Center for Medicare Advocacy and is available online.
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