Once content to stay put, MA members are now more empowered and willing to switch health plans

By Ralph Judah, managing director, Deloitte Consulting LLP

There is an ever-expanding list of issues that remind me I’m getting older. I have more aches and pains than I used to. I sometimes can’t locate my reading glasses (I usually find them perched on the top of my head). And I’m increasingly inundated with television commercials and online ads for Medicare Advantage (MA) plans—particularly between September and December.

These advertisements are reaching current Medicare beneficiaries (and future ones like me) where they live. Rather than relying on traditional outlets, some MA carriers are now promoting their products during sporting events or on late-night TV and are encouraging people to consider alternatives—even if they are already enrolled. Television ads and digital marketing campaigns can be powerful tools of consumer empowerment. This is particularly true for the trailing-edge baby-boomer population (ages 55-64), according to research we published last year. We found that future Medicare enrollees appear to be even more interested in using technology to support their health care needs than current enrollees. This includes member-engagement strategies, which should emphasize digital support tools and opportunities to engage with members virtually.

Medicare beneficiaries have historically stayed put once they enrolled. According to the US Centers for Medicare and Medicaid Services (CMS), 45% of Medicare enrollees say they never or rarely compare health plans. Moreover, just 8% of MA enrollees switched to another plan or moved to traditional Medicare in 2016, according to a study from the Kaiser Family Foundation. Either these members were completely satisfied with their coverage, or they didn’t feel empowered to search for an alternative that might have been a better fit. That scenario appears to be changing. Some large MA plans have reported more dis-enrollments as their members are encouraged to consider coverage options. Moreover, younger enrollees who grew accustomed to switching coverage at work during open enrollment, might be more willing to switch MA plans compared to older generations.

People who sign up for a MA plan during the open-enrollment period are able to switch coverage between the first of the year and the end of March. Sometimes just a minor abrasion—like the name spelled wrong on a membership card, is enough to push people to make a move. This is a relatively new phenomenon that is occurring as beneficiaries realize they don’t need to be passive and can disenroll if they’re not fully satisfied.

I’ve also been seeing more competition among Medicaid managed care plans—particularly in states that expanded Medicaid eligibility. These Medicaid beneficiaries recognize that they sometimes have a choice in their health benefits. Similarly, many of the carriers that sell coverage through the public health insurance exchanges are incorporating more benefits (particularly in their Platinum-tier plans).

Just a few years ago, MA was viewed by beneficiaries as a narrow-network alternative to traditional Medicare. Today it’s often seen as being much more comprehensive. Many MA plans offer benefits not available through traditional Medicare, also known as supplemental benefits. Such benefits can include post-discharge meal deliveries, transportation, dental and vision coverage, fitness programs, and in-home care for members discharged from a hospital or skilled nursing facilities. Our research in this area found that more health plans are offering these benefits due both to COVID-19 and CMS expanding the definition of what is allowed under supplemental benefits. Supplemental benefit enrichment has become a focus of competition.

Along with enriched supplemental benefits, there are more MA plans from which to choose. During the 2021 plan year, most Medicare beneficiaries had access to more than 30 MA plans from an average of eight carriers. Nationally, there are at least 3,550 MA plans—up 13% from a year ago.¹

Meet the empowered health care consumer

The empowered consumer is a relatively new phenomenon in health care—particularly in government-run health programs such as Medicare, Medicaid, and in the health insurance exchanges.

These health care consumers are increasingly demanding the same consumer-centric experiences they have come to expect from the retail and financial sectors. They don’t want to have to call a doctor’s office to book an appointment—particularly if they are accustomed to using their phone for making restaurant reservations or ordering anything online. Health care consumers have also become accustomed to having access to unfiltered information about experiences from other consumers.

The hospital price transparency and data interoperability requirements that went into effect in January, coupled with the recent anti-blocking rule, will likely help to further empower health care consumers and give them more control over their health information. I see this as a Freedom of Information Act for health care consumers. Tech-savvy consumer-centric companies are watching this space closely.

Health plans and providers have historically collaborated in a pricing shell game where the real price is under one of the shells. At least that is how consumers often think about it. Consumers typically don’t know the full price of a procedure or what sort of bill they might see in the mail three months later. It is difficult to challenge a bill once it has been adjudicated. By that time, consumers usually don’t remember all the services they received, and they don’t know what the hospital charged or what the health plan paid.

Moreover, many health plan leaders are changing how they think about digital transformation. Nearly 60% of health plan chief information officers say improved customer service and engagement is their top goal for digital transformation, according to a recent survey conducted by the Deloitte Center for Health Solutions. Increased price transparency, more investments in digital technologies, and greater interoperability—combined with consumer sentiment—could lead to more structured pricing, better digital engagement, and a consumer market for health care that hasn’t previously existed. Some primary care providers are already posting prices, after a fashion. They are walking away from the protective shield of provider-pricing mystification that others continue to hide behind.

Conclusion

Enrollment in MA has been steadily climbing as carriers enhance their product designs, meet consumer expectations, invest in digital technologies, and aggressively promote their products. However, the stickiness that MA plans have enjoyed since their inception appears to be dissipating. Enrollment has become more like a carousal where people can get off when they want. To thrive in this environment, MA plans should continue to refine their digital strategies and integrate technology into their future benefits products and processes. They should also capitalize on the broader trends—consumer demand, digital transformation, physician engagement, and regulatory changes (e.g., impending interoperability regulations, telehealth flexibilities, supplemental benefit changes)—helping support them in this shift.

Health is fast becoming a consumer business. The bargaining power that the health care industry has always held is shifting to the consumer through a combination of government activity and growing consumer bargaining power. I see this as an irreversible shift that is being triggered by regulation. It is being woven into the fabric of the health care industry and the net effect is going to be to more choice, greater consumer information control, and more products and services that are tailored to the individual. 

Endnotes

^{1 Medicare beneficiaries can pick from more than 30 Advantage Plans, CNBC Personal Finance, November 20, 2020}