The 'conversion rate' on Healthcare.gov: This Obamacare number that nobody is talking about may be the most revealing

Reuters

President Barack Obama has lunch with five supporters of Obamacare at The Coupe restaurant in Washington, January 10, 2014.

Article Highlights

  • Data suggests that eligible consumers don’t like the products that they’re finding in the exchanges.

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  • [Obamacare] doesn't really meet the needs of health people and middle-class people.

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  • Despite skinny networks, Obamacare plans still leave consumers with big premiums and deductibles.

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When officials at the Department of Health and Human Services announced the most recent Obamacare enrollment figures earlier this week, they focused on one brag point amidst otherwise discouraging news about the program’s progress.

According to government tallies, 44.5 million people called or visited state and federal websites they said, presumably indicating broad interest in the new benefit.

But we also know that only 2.2 million people have signed up for Obamacare. Factoring in all of the professed web traffic, this would mean that the number of people who signed up (but didn’t necessarily pay) for an Obamacare health plan amounts to a conversion rate of less than 5% of the Obamacare web traffic.

And this is among consumers who had the patience to navigate the faulty Obamacare web portals.

This data strongly suggests that eligible consumers, who take the time to kick the tires on Obamacare, don’t like the products that they’re finding in the exchanges. They’re browsing, but not buying.

In the lexicon of the Internet, “conversion rate” amounts to the number of successful actions on a website (e.g. an e-commerce purchase) divided by the traffic to the site. Obamacare’s rate of converting web traffic into customers would place the program on par with the click through rates enjoyed by Internet banner ads, and well below sales figures on other e-commerce sites.

Considering the fact that most of the people who visited the exchange portals weren’t mere curiosity seekers (but are actually shopping for health insurance coverage) you get a sense how dismal these figures are.

E-commerce sites report that, on average; about 8% of visitors to a site will add a product to their basket.  For professional services sites that are selling specialized products or services, the rates can be much higher. Data shows that conversion rates for professional financial services run at 10%, for software sales 7%, and education is 8%.

The day the Obamacare data was released, I was coincidentally meeting with Jonathan Bush, the CEO of Athena Health. So I put the question of conversion rate to him, since he sells a specialized service into the healthcare space. He said that the conversion rate for Athena’s web site, for doctors who visit the site to evaluate Athena’s suite of services and then make a purchase, is 22%.

The problem is that the Obamcare plans aren’t attractive to consumers. They were designed in Washington to suit political prerogatives rather than being designed in the marketplace to meet the demands of consumers. They’re laden down with costly mandates that leave the products too expensive. The plans try and make up for these costs by using narrow networks of cheap doctors and closed drug formularies. Despite the skinny networks, the plans still leave consumers with big premiums and deductibles. Washington managed to simultaneously degrade the coverage, and make it more expensive.

This point was articulated well by insurance industry expert Robert Laszewski, the president of Health Policy and Strategy Associates: “If an entrepreneur had crafted Obamacare he would’ve gone to a middle class family. A family of four make(s) $54,000 a year has to pay $400 in premiums net of subsidy and for that the standard silver plan has an average deductible around $2,500 and a narrow network. They’re going to pay almost $5,000 for that? So the entrepreneur would say I’ve got $5,000 in premium and all this deductible, what do they want for that? And they probably would’ve said we want office visits and lab tests because the kids need to go in occasionally and then we want catastrophic care. The problem with Obamacare is it’s product driven and not market driven. They didn’t ask the customer what they wanted. And I think that’s the fundamental problem with Obamacare. It meets the needs of very poor people because you’re giving them health insurance for free. But it doesn’t really meet the needs of healthy people and middle-class people.”

You can follow Dr. Scott Gottlieb on Twitter <A HREF="https://twitter.com/ScottGottliebMD">@ScottGottliebMD</A>. For more from the AEI health policy team, follow <A HREF="https://twitter.com/AEIHealth">@AEIHealth</A>.

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Scott
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