Corporations engage in rebranding for a variety of reasons. Often they are trying to hide from past shortcomings or wipe away a negative image. Phillip Morris attempted to change its image by changing its name and logo to Altria in 2003. More recently after emerging from bankruptcy, General Motors began selling itself as “the New GM” with fewer models, stronger models, and greater efficiencies. Rebranding is either accompanied by a change in the product being sold or it’s simply an attempt to escape a bad image.
A January 16, 2013, post on the HealthCare Blog from HHS Secretary Kathleen Sebelius (http://www.healthcare.gov/blog/2013/01/affordable-insurance-countdown.html ) provides a good example of rebranding. One of the key elements in the legislation is the establishment of “American Health Benefit Exchanges,” that will serve as a mechanism for individuals to purchase qualified insurance plans. Called “exchanges” from the beginning of the debate, Sebelius has now introduced new language referring to them as the “new Health Insurance Marketplace,” or simply “Marketplace.” A newly redesigned website (www.Healthcare.gov) has expunged all reference to exchanges and is using the term marketplace exclusively.
So, what’s the problem with these changes, you ask? It’s just marketing. No, it’s not just marketing. It’s putting lipstick on a pig. It’s still a pig. Normally, when private companies reintroduce a product, rebrand it, there is some change. The product is always marketed as “new, improved, redesigned, or updated.” There are no such changes in the exchanges. They’re still the same mechanism as envisioned in the original legislation, except now 25 states have said that they will not create their own exchange. Instead, they will let the federal government set them up, run them, and spend billions of dollars in the process. This in my opinion is a pretty smart move.
Let’s be clear. These exchanges are not marketplaces. As established these exchanges are required to undertake activities that are not typically a part of an open marketplace, who can buy, who can sell, what is available, and the price that is charged. Specifically:
- The exchanges must screen all applicants to determine if they are eligible to participate. This requires the exchange administrators to have the prospective participants employment records, including income, insurance status, availability of employer sponsored insurance, number of dependents, and the same information on other members of the household (in particular, the spouse). Additionally, the exchange must keep track of any changes in employment information in order to determine eligibility for government subsidies.
- The exchanges must certify and rate plans according to HHS guidelines to ensure that they are qualified. This means that to qualify as an insurance option, a plan must meet certain standards as defined by HHS, including a required benefit package and pricing. If premiums are determined to be too high, the exchange can refuse to include the plan in its offerings. The freedom to determine the product being sold and its price is determined solely by the government.
- The exchange must provide this information to the government and the applicant’s employer.
No wonder so many states are not eager to join the federal government in setting up these highly regulated insurance pools. No wonder that Secretary Sebelius is changing the name of one of the centerpieces of ObamaCare. No more popular now than the day it was signed into law, the Administration is desperately trying to rebrand one of the main components of the legislation, hoping that by changing what it’s called, we will suddenly see the exchanges as marketplaces. Let’s hope that Americans are smart enough to see this ruse for what it is, putting lipstick on a pig.
The opinions expressed in this blog post are mine alone, and do not reflect the opinions of Baylor University. Baylor is not responsible for the accuracy of any of the information provided in this post.