Plan Would Restrict HMO’s Ad Spending to 10 Percent of Revenue
BOSTON–A legislative proposal to limit the amount of money health maintenance organizations in Massachusetts allot to advertising has many agencies and clients up in arms.
The bill would limit an HMO’s total administrative costs, including advertising and marketing expenditures, to 10 percent of the company’s total revenue. The rest of its profits would go directly to healthcare.
Not surprisingly, many agency executives scoffed at the proposal, claiming it restricts the freedom of HMOs to promote themselves and strikes a blow to startup entities that need to get their name out to consumers during their first few months.
“It’s ridiculous,” said Emily Haggman, senior vice president of Haggman in Manchester, Mass., whose client roster includes Beth Israel Deaconess Medical Center. “I don’t think we should be putting restraints on advertising. The more [HMOs] promote themselves, the more informed consumers will be.”
Blue Cross & Blue Shield of Massachusetts took a moderate position on the issue. “I think there needs to be some flexibility built into administrative rates,” said Susan Leahy, director of media relations for Blue Cross.”If you have unexpected costs, you have to be able to increase administrative spending to meet unexpected but vitally important business costs.”
Bob Curry, co-chairman and creative director of Boston-based Wallwork Curry, said his shop’s research shows that states are not providing Medicaid consumers with the information they need to make informed healthcare choices.
“It’s such a competitive marketplace with so many different product options that without getting the complete message out to the consumer, how’s the consumer going to know what’s right?” Curry asked. “How’s an HMO going to survive without being able to get its message out?” Wallwork Curry’s client roster includes Neighborhood Health Plan of Massachusetts.
According to Alan Sager, a professor at Boston University’s School of Public Health and a supporter of the bill, the answer is fewer, more informative ads.
“More information is always nice, but very few ads [for HMO’s] provide evidence or information that can help consumers make judgments,” Sager said. “There’s a lot of name recognition but nothing that functions as information. If you wanted information, you’d probably want to know about price and coverage services and quality of care. Virtually no advertising addresses that.”
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