Medicare Advantage Overlooked As Growth Vehicle For Health Plans, KPMG Survey Finds
NEW YORK, Feb. 20, 2015 /PRNewswire/ -- Health plan executives may be missing an opportunity to capitalize on a growing demand for Medicare Advantage (MA), according to a survey of a number of top health plan executives and 175 U.S. residents conducted by KPMG LLP, the U.S. audit, tax and advisory firm.
Consumer adoption of these plans, which are private insurance plans used in place of traditional Medicare, is predicted to grow as more baby boomers enter their retirement years and look to control chronic illnesses, the survey found.
Despite interest and growing membership in MA, the number of health plans viewing the category as a "major part" of their market offerings decreased to 24 percent in 2014 from 35 percent in 2011. Only 29 percent of health plan executives see MA as a source of market segment growth in 2015, putting that category behind individual insurance and small and large group plans.
"Health plans have been going through unprecedented transformation as a result of the Affordable Care Act, as they try to gain traction selling individual insurance after focusing upon group health plans for decades," said Ashraf Shehata, U.S. Advisory Leader for Health Plans. "Individual insurance is expected to be a major part of health plan offerings, but there is an overlooked opportunity to engage aging baby boomers, who may see this as an option instead of traditional Medicare as they enter their retirement years."
Congressional Budget Office projections see MA enrollment growing to 19 million by 2017, an increase from the current 16 million in these plans, which are sometimes referred to as Medicare Part C because they encompass all of Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). The survey showed that two in three people older than 64, who are open to joining MA plans, are likely to do so this year. Renewal among current members is at 85 percent and one in three traditional Medicare plan beneficiaries were open to changing to MA.
'Pain Points' for Premiums
According to the KPMG survey, nearly half of the people covered by Medicare said they would be willing to absorb a premium increase of $100 per month, while 38 percent would switch to narrower provider networks and 14 percent would seek plans with higher deductibles. If the monthly premium for traditional Medicare increases by $200, only 19 percent would be willing to absorb the premium increase. Narrower networks would be the most attractive option to Medicare beneficiaries under that scenario over higher deductibles (54 percent vs 27 percent). Most people pay $104.90 for Medicare Part B, which covers durable medical equipment, medically necessary services and preventive care, according to CMS.
Medicare Advantage gains among chronically ill
KPMG's survey found that two-thirds of current MA enrollees have at least one serious chronic illness, compared with traditional Medicare's 34 percent. This disparity is likely to continue. More than half of those who said they were likely to enroll in MA in 2015 have a chronic condition, the survey found. And, in terms of satisfaction with their current plan, 77 percent of MA enrollees with chronic conditions are satisfied with their health plan, versus 66 percent of those with no chronic condition.
"Seniors are leaning toward MA plans as a better alternative to Medicare 'gap' coverage, and people with chronic conditions tend to be sensitive to out-of pocket medical costs," Shehata said. "Our survey also found that seniors might be inclined to switch to MA plans if vision care were covered, if their primary doctor was coordinating care, or if incentives were available for managing their blood sugar and blood pressure. There are some very interesting opportunities for health plans to profitably gain new customers, while delivering value to seniors."
KPMG is issuing a white paper, which is titled "Medicare Advantage Insights Study: An Untapped Advantage," based on a survey by Nielsen of a number of top health plan executives and 175 Medicare-eligible seniors who were not averse to joining Medicare Advantage – in May 2014.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 162,000 professionals, including more than 9,000 partners, in 155 countries.
Contact: Bill Borden
201-505-6351
[email protected]
SOURCE KPMG LLP
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