Insurance companies are going to spend about $300 million more on TV advertising next year mainly because of the new health care exchanges. From Washington Post:
In all of 2012, health insurers spent $216 million advertising on local television stations. But that’s nothing compared to what they’re about to spend. According to trade association TVB, insurers will spend more than $500 million on local television ads in 2014. And that’s to say nothing of cable television ads and social media campaigns.
This is a reminder of how wasteful it is to expand coverage via private exchanges. Only about 5-10 million people are probably going to sign up for coverage on the new exchanges this year. So the insurers are going to spend about $50 per new costumer on advertising plus the hundreds of million the government is also spending on behalf of their outreach, exchange operation, and navigators. Money that would not be spent if we simply expanded public insurance to the uninsured
Ultimately this spending is the equivalent 1-2 percent of what will be spent on exchange premiums next year and the cost will be passed on to regular people. Alone that isn’t much but this is only a small cog in the giant theft machine which is our private health care system. Premiums need to be several percent higher to cover the profit margins at private insurers and their exorbitant salaries. They also need to be higher to pay for huge administrative costs of having hundreds of different payers negotiating millions of different payment rates with thousands of different providers. Once all the many pieces are added together we are left with the most absurdly expensive health care system on earth.
Photo by Hey Mr Glen under Creative Commons license