Medicare Plan Brokerages Have a 'Churn Problem': Corey Metzman
And most of these agents represent either a single plan or a small number of carriers, so it’s more challenging for a consumer to get a full plan comparison.
While many of the agents you see at a table in a retail store this annual enrollment period are well-intentioned, they typically don’t have the tools or technology to pinpoint the right plan for consumers after searching across all available options.
Specifically, detailed tools that take into account the doctors consumers see, the prescriptions they use, and other benefits they need.
Insurers seem to be talking more about medical costs. How do you see the health care cost environment?
As the COVID situation continues to normalize, insurers are paying close attention to medical costs.
Legally, there’s a provision of the Affordable Care Act that requires Medicare Advantage plans to spend at least 85% of premium revenue on medical claims. The question most plans are facing now is how much more they will need to spend on medical costs, and plans keep a very close eye on this metric — called the medical loss ratio — each year.
What trends, in general, are you noticing in terms of communities’ plan menus?
One trend we are seeing is most clients of financial advisors prefer Medicare supplements, also known as Medigap plans.
These plans offer peace of mind by nearly eliminating out-of-pocket medical costs for Medicare-approved services, in exchange for a monthly premium. They also allow policyholders to see any doctor or health care provider that accepts Original Medicare.
Many people who work with financial advisors are looking for this type of flexibility when it comes to their health care options.
Finally, these plans have legally commoditized medical benefits. This means, for example, that a Medigap Plan G from one carrier offers identical medical benefits as a Plan G from another carrier.
Among Medicare supplements, we are seeing premium stability offered among a subset of the strongest carriers in each area.
However, some carriers offer larger premium increases, especially as beneficiaries get older.
This dynamic means that it’s important for all consumers to consider not just the initial premium level of their Medicare supplement plan, but also consider how that premium may change over time.
One signal to gauge potential price increases in the future is to assess how each carrier currently prices its products for older cohorts of beneficiaries.
We are also seeing Medicare Advantage plans — also known as Part C plans — continue to grow in popularity. Many analysts expect more than 50% of Medicare beneficiaries to receive coverage through a Medicare Advantage plan over the next two to three years.
These plans typically bundle Part A (hospital coverage), Part B (medical coverage), and Part D (prescription coverage) in a single plan offered through a private insurance company.
These plans typically have a predefined network of providers and are structured as HMOs or PPOs. To stay competitive, the strongest carriers are continuing to invest in both the strength of their provider networks and the prescription drugs that are covered.
There are thousands of Medicare Advantage plans available nationwide and typically 35+ in a typical urban county, so there are still meaningful differences across plan options.
Another area where we are seeing Medicare Advantage plans invest are ancillary benefits.
While these have traditionally included benefits like dental, vision, and hearing, many plans are expanding these benefits to cover options like fitness memberships, a quarterly over-the-counter allowance, meals or grocery credits, and even transportation to and from the doctor’s office.
Finally, we are seeing a large number of Medicare Advantage carriers start to offer more plans focused on the specific needs of veterans.
For context. veterans often receive their prescription drugs via their VA benefits so these Veteran-focused Medicare Advantage plans often do not include Part D Drug coverage.
Many of these plans that do not include a Part D Drug plan invest that money in other benefits, sometimes including a partial “give-back” of consumers’ Part B premiums rebated each month.
Medigap has medical underwriting for people who want to change coverage. How much do you think that affects the Medigap market?
In the majority of states, consumers who want to change Medicare supplements must undergo medical underwriting and answer health questions.
The sad reality is that many people won’t pass, particularly if they have certain chronic health conditions, recently had a serious medical procedure, or take certain prescriptions.
The good news is that every American is eligible to get a Medicare supplement plan — with no underwriting requirements — if they sign up during their first six months of Part B coverage.
At Chapter, we have a saying we use with our clients: “Marry your Medigap plan. Date your prescription drug plan.” The underwriting requirement for Medigap doesn’t apply for prescription drug coverage, which can be changed every year during the annual enrollment period.
And while the underwriting requirement does make it harder to change Medigap plans, it also contributes to more affordable premiums for people with those plans. As a result, there is not tremendously strong interest in changing the Medigap underwriting rules. However, each state has discretion here.
For example, in New York and Connecticut, Medicare-eligible consumers can change their Medicare supplement plan year-round, and underwriting is never required. The result is that Medicare supplement premiums are at least 2.5 times higher in New York for a 65-year-old, relative to identical coverage in a state like Tennessee.
Corey Metzman. (Photo: Chapter)