Future Growth of Medicare Supplements

CSG Actuarial recently published a research paper entitled “Medicare Supplement: 2010-2020 Market Projection”.  In this research paper, CGS analyzes Medicare Supplement policy numbers from the past five years and gives projections on the growth of policies through 2020.

First off, if you sell Medicare Supplements, you should read this report.  CGS does a great job of explaining the market.  It’s packed with easy to understand information, graphs and data tables.  It only takes about 15 minutes to read and it gives you a better understanding of who is buying Medicare Supplements and why.

If you don’t have 15 minutes, below are my “CliffsNotes”:

The total number of Medicare Supplement polices has declined over the last five years.  CGS suggests three reasons for the decline:

• Medicare Advantage enrollment increased from 4.8 million (2004) to 11.9 million (2010).
• The cost of Medicare Supplement plans has increased since 2004.
• The number of Medicare Part B beneficiaries has decreased.

Despite the declines of Medicare Supplement polices of the last five years, CGS concludes there will be a year over year increase in policies through 2020.  They list four primary opportunities for growth:

1. Baby Boomers
2. Medicare Advantage Reductions
3. Decrease in Retiree Health Benefits
4. New Medicare Supplement Plans

I’ve only posted a high level summary.  CGS’s research paper goes into more detail and provides data for each of the reasons and opportunities listed above.  Trust me; it’s worth the time to read it.

Munich Re has agreed to acquire Windsor Health Group, Inc.

Munich Re is the parent company of Sterling Health Plans of Bellingham, Washington.  Sterling offers plans to seniors in all fifty states.  They offer Medicare Advantage (PFFS, NPFFS & PPO), Medicare Part D and Medicare Supplements.  Windsor offers Medicare Advantage Plans (HMO) in Alabama, Arkansas, Mississippi, South Carolina and Tennessee.  Combined, the companies serve over 200,000 members.

The combination of Sterling and Windsor will create a larger and more complete healthcare organization, with the products, services, distribution channels and resources needed to compete in the years ahead.

This acquisition is similar to HealthSpring’s purchase of Bravo Health.  I wouldn’t be surprised if we see more mergers/acquisitions like these.  It enables companies to compete with the big boys (UnitedHealthcare, Humana and WellPoint).

Here is a link to Munich Re’s press release.

Here is a link to Bloomberg’s article.

What does this mean to you?  Better Medicare Advantage options in 2012.