Obamacare: no internet sensation

by Paul Mirengoff in Obamacare

The Obama administration is boasting that 44.5 million people have called or visited state and federal websites to explore their Obamacare options. That sounds impressive, if true.
But how many of them were sufficiently impressed by what they saw to actually purchase the product? Not many, it turns out. So far, according to Scott Gottlieb, only 2.2 million people have signed up for Obamacare.
This means 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. In other words, as Gottlieb puts it, “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.”
For perspective, Gottlieb says that this conversion rate places Obamacare “on par with the click through rates enjoyed by Internet banner ads, and well below sales figures on other e-commerce sites.”

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%.

In the health care industry, the normal conversion rate can be considerably higher. Jonathan Bush, the CEO of Athena Health, told Gottlieb that the conversion rate for Athena’s web site for doctors who visit the site to evaluate Athena’s suite of services is 22%.
That Obamcare plans aren’t attractive to consumers should come as no surprise. They were, as Gottlieb says, designed in Washington to suit political prerogatives rather than being designed in the marketplace to meet the demands of consumers.
It should also come as no surprise that the vast majority of those who do purchase Obamacare plans are folks who previously had health insurance coverage. Valuing coverage more than those who never had it, they are more willing to purchase Obamacare plans even though, on balance, they typically are inferior (for their purposes) to their prior plans.
So far, the numbers are stark. Surveys from insurers and other industry players indicate that only around 11 percent of those on Obamacare’s exchanges were previously uninsured. Yet, the main rationale for Obamacare was the need to vastly expand the number of people who have health insurance.
Avik Roy believes that numbers like these could provide a scenario for the repeal of Obamacare:

I, along with most observers, have viewed as doubtful the likelihood that Obamacare ever gets repealed. Even if Republicans manage to regain the White House and the Senate by 2017, there will be tens of millions of people on Obamacare-based coverage by then. Prior to the website fiasco of October, the Congressional Budget Office projected that 34 million Americans would be enrolled in either the exchanges or the Medicaid expansion in 2017. It would be politically impossible to disrupt the coverage of 34 million people.
But what if the number is far less than 34 million? What if it’s only 5 million? Such an epic fail would seem far-fetched, but then again, so did the dismal performance of Obamacare to date. For 2014, the CBO has projected that 14 million previously uninsured Americans would gain coverage under the law. With about ten weeks left in this year’s enrollment period, we’re looking at a coverage expansion of less than a million.
Remember also that as many as 100 million previously insured Americans will endure higher premiums—and higher taxes—under Obamacare. The political constituency of the newly insured could be dwarfed by the political constituency of those harmed by the law. If that turns out to be the case, President Obama’s signature legislation may not be long for this world.

Perhaps even in this age there are limits to the extent that the federal government can disrupt peoples’ lives for little social gain without being reversed by the political process


http://www.powerlineblog.com/archives/2014/01/obamacare-no-internet-sensation.php