Hidden Gems of Healthcare

Aging Boomers

Another attractive target for health insurers with Medicare-related products—including Medicare Advantage plans, Medicare Supplemental (Medigap) plans, and Medicare Prescription Drug (Part D) plans—is the cohort of baby boomers (born 1946– 1964). In 2011, the first of the boomer population will turn 65, the age of Medicare eligibility. By gearing up efforts now to identify prospects and build consumer awareness of Medicare products, health insurers can create marketing momentum for an ongoing transition of this generation numbering about 78 million members.

A dwindling number of employers offer health benefits to retirees. An annual survey by the Kaiser Family Foundation/ Health Research & Educational Trust found that of large firms (200 or more workers) 31 percent offered retiree health benefits in 2008, down from 66 percent in 1988.⁵ That helps to explain why most Medigap and Medicare Advantage plan enrollment is obtained through direct purchase by individuals. Based on 2007 data, only about 10 percent of all seniors are enrolled in Medicare Advantage and Medigap plans through their former employers, according to Mark Farrah Associates.⁶
Researchers at McKinsey & Company cite a notable lapse in marketing to the senior group. They report that among insured people ages 60 to 64, more than two-thirds (68 percent) said that they’d never been approached by their current insurers to discuss retirement options. No surprise, then, that only 33 percent thought their health insurance carrier offered Medicare products. Although most major insurance carriers do offer Medicare products, they’re obviously not getting the word out. What a missed opportunity, says McKinsey, since more than 80 percent of the 60- to 64-year-olds surveyed said that if they left their jobs or retired, they’d consider purchasing an individual insurance product from their current health insurer.⁷

Aging College Students

Young-adult college students are another promising market segment for health insurers. Many students are covered as dependents on their parents’ medical plans, but will eventually age out of that coverage. If they’re still in school after aging out of a family plan, they may be eligible for a university-sponsored student health plan but decline it because they (or their parents) decide that such coverage is insufficient. College graduates entering the workforce will soon discover that job-based group coverage is a far-from-certain employee benefit, particularly in today’s economy.