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

September 4, 2018, Institute for Operations Research and the Management Sciences

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 advertising by 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 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 by 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, has continued to grow."

Explore further: Link between food advertising and child food consumption

More information: Bradley T. Shapiro, Advertising in Health Insurance Markets, Marketing Science (2018). DOI: 10.1287/mksc.2018.1086

Related Stories

Link between food advertising and child food consumption

January 25, 2016
New research by University of Liverpool health expert Dr Emma Boyland has confirmed that unhealthy food advertising does increase food intake in children.

Brand-specific television alcohol ads predict brand consumption among underage youth

July 29, 2014
Underage drinkers are three times more likely to drink alcohol brands that advertise on television programs they watch compared to other alcohol brands, providing new and compelling evidence of a strong association between ...

Alcohol ads linked to teen alcohol brand choices

October 20, 2015
Overall exposure to brand-specific alcohol advertising is a significant predictor of underage youth alcohol brand consumption, with youth ages 13 to 20 more than five times more likely to consume brands that advertise on ...

An updated analysis of direct-to-consumer television advertisements for prescription drugs

May 14, 2018
Although proponents suggest that direct-to-consumer prescription drug advertising is educational and motivating, a new analysis finds that the potential educational value of such advertising has declined.

Kids hit hard by junk food advertising: new research

April 17, 2018
Junk food ads are shown more frequently on TV at times when many children are watching, new Heart Foundation-funded research shows.

Recommended for you

One in four U.S. adults sits more than eight hours a day

November 20, 2018
(HealthDay)—Couch Potato Nation: Nearly half of Americans sit for far too many hours a day and don't get any exercise at all, a new study finds.

Low-protein high-carb diet shows promise for healthy brain aging

November 20, 2018
Low-protein high-carbohydrate diets may be the key to longevity, and healthy brain ageing in particular, according to a new mice study from the University of Sydney.

Sugar-sweetened beverages are harmful to health and may be addictive, researchers suggest

November 20, 2018
Just as we might have guessed, those tasty, sugar-sweetened beverages that increase risk of diabetes and other chronic diseases may actually be addictive. Youth between 13 and 18 years of age who were deprived of sugary drinks ...

Emotional abuse may be linked with menopause misery

November 19, 2018
Smoking, obesity and a sedentary lifestyle have long been linked to heightened symptoms of menopause. Now, a study headed by UC San Francisco has identified another factor that may add to menopause torment: an emotionally ...

How AI could help veterinarians code their notes

November 19, 2018
A team led by scientists at the School of Medicine has developed an algorithm that can read the typed-out notes from veterinarians and predict specific diseases that the animal may have.

Bullying and violence at work increases the risk of cardiovascular disease

November 19, 2018
People who are bullied at work or experience violence at work are at higher risk of heart and brain blood vessel problems, including heart attacks and stroke, according to the largest prospective study to investigate the ...

1 comment

Adjust slider to filter visible comments by rank

Display comments: newest first

not rated yet Sep 04, 2018
should we accept capitalism as we know it going forward? Definitely not.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.