President Barack Obama’s home state agreed to spend $33 million in federal money promoting his health care law, hiring a high-priced public relations firm for work that initially was mocked and spending far more per enrollee on television ads than any other large state.
After getting a late start and facing intense pressure to avoid more embarrassment for the much-maligned law, Illinois officials last summer inked the most lavish contract in the history of FleishmanHillard’s Chicago office. The goal was getting uninsured residents to sign up for coverage.
More than 90 people, including executives from the firm and its subcontractors, billed at least $270 an hour for salary and overhead during the first four months.
The hourly amount far exceeded the contracts other states signed for similar work. Colorado paid its ad agency $120 per hour, for example. In Connecticut, a similar contract had rates topping out at $175 an hour.
The Associated Press, using open records requests, obtained hundreds of pages of contracts, bills, plans and heavily redacted emails between the marketing team and state officials. Together, they raise questions about whether the state did enough to keep federal taxpayer costs under control.
The hourly rates are “absolutely excessive,” said Illinois Rep. Darlene Senger, a Naperville Republican who is running for Congress.
“That is more than you would pay a top surgeon,” Senger said. “They knew this had to be done years in advance, and they did everything last minute.”
The results were mixed for “Get Covered Illinois,” which the campaign was named after focus groups rejected the PR firm’s early proposal of “Wellinois” as too cheesy. More than 217,000 new enrollees signed up, meeting the cautious a federal target but lagging far behind the state’s own goal of 337,000, according to an internal document obtained by the AP.
Failing at a state-run insurance exchange embraced by several other progressive states, Illinois officials had belatedly formed a partnership with the federal government by the spring of 2013. Up against the wall and with a generous federal grant, officials in the cash-strapped state constructed the deluxe contract to sell the idea of what pro-Republican political ads were attacking as “Obamacare.”
“It seems like it was a heavily front-loaded effort and it was. It was all hands on deck,” said FleishmanHillard senior partner Jack Modzelewski, arguing Illinois got good value for the price, despite the late start.
Jerry Swerling, director of public relations studies at the University of California’s Annenberg School for Communication and Journalism, said it wasn’t surprising that the spending escalated — especially with the technical problems of the federal HealthCare.gov website.
“You have responsibility for a hugely controversial program that’s become a political hot button,” said Swerling, who wasn’t involved in the contract. “You’re now charged with getting people to enroll in a system, the highest profile element of which is frozen. How do you instill confidence and credibility when the system isn’t working?”
Paying the best rates encourages work by high-level professionals, said Jose Munoz, the state’s chief marketing officer for the campaign. A task-based contract, on the other hand, yields work by junior level staff to increase the profit margin for the agency. “You end up having shoddy work,” Munoz said. “At the end of the day, it comes down to managing the vendor.”
The AP analysis of the first $9.6 million spent on the “Get Covered Illinois” campaign — the first four months of the 12-month, $33 million contract — is a limited snapshot. State officials are still dissecting the billing for December through March.
The documents reviewed by AP show:
— Of the top five bidders for the work, the FH contract included the highest hourly rates, ranging from $158 to $282 per hour, plus a 2.85 percent commission for placing ads. That commission was the lowest among the top bidders, but it represented less than 2 percent of the contract amount.
In comparison, a state contract with ad agency J. Walter Thompson to promote Illinois as a tourist destination pays at one blended hourly rate of $165, with no commission for ad placements.
— The FH contract also lacked standard curbs found in other states’ contracts for promoting the health law. In Minnesota, the ad agency BBDO Proximity’s contract has no hourly rates. Instead, the contract is task-based with payments specified and paid only when the work is delivered and accepted by the state.
— Illinois, the third-largest state to conduct a campaign promoting the law, spent $37 per enrollee on television ads — one of the highest rates in the nation. That’s nearly double California’s $19 per enrollee and nearly quadruple New York’s $10, according to an AP analysis using data from nonpartisan Kantar Media CMAG.
— The branding research was costly and fraught with delays. After the focus groups rejected “Wellinois,” the firm recommended “HealthIllinois,” but state officials sent the agency back to the drawing board.
The resulting “Get Covered Illinois” name, unveiled less than a week before the marketplace launch, was untested by focus groups. It was very similar to “Covered California,” which that state selected a full year earlier.
Illinois officials predict costs will come in under the $33 million ceiling when the contract ends in August. They point out $7 million worth of PSAs and other media promotions that cost taxpayers nothing. They say they’re scrutinizing invoices and have kicked some back to FleishmanHillard for adjustments.
“We’re making sure there are legitimate justifications for every expense,” said Jennifer Koehler, an attorney and the state’s top official for Get Covered Illinois. “The federal government has been very generous to Illinois, but we want to make sure we’re getting the absolute best value for the taxpayers.”
CARLA K. JOHNSON, AP Medical Writer