MEDICARE MARKETING 2016: RETHINKING YOUR STRATEGIES

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MEDICARE MARKETING 2016: RETHINKING YOUR STRATEGIES

Over the past few years, an empowered and emboldened consumer has caused marketers to respond to a new dynamic. In the Age of the Consumer, we are living a marketing reality that requires a new set of strategies, objectives and tactics. Medicare marketers who take a “Business-as-usual” approach in this new climate are flirting with disaster.

THE CONVERGENCE OF 4 MAJOR FORCES IN MEDICARE MARKETING IN 2016 IS THE CATALYST FOR CHANGE.

In 2016, there is a “perfect storm” of 4 major forces that will significantly impact marketers who are focused on developing programs for Medicare prospects and members:

1. The Impact of the 2016 Election

2. The New Faces of Medicare

3. The Competitive Landscape and the Proposed Consolidation of Health Payers

4. The Emergence of Medicare Marketing Megatrends

Saying that 2016 will be an action-packed year for Medicare marketers is a gross understatement. Let’s take a closer look at the waves of change that must be considered, confronted and planned for.

THE IMPACT OF THE 2016 ELECTION ON MEDICARE MARKETING

With political coverage of Medicare in the news nearly every day, consumers will find themselves confused and overwhelmed. Many are unable to separate the political posturing and positioning from actual data, despite the fact that, regardless of how they play out, these political issues will not be resolved until 2017.

Political ideas regarding Medicare run the gamut from expanding Medicare coverage for the entire U.S. population to overhauling the system and abolishing Medicare completely.

Politics aside, the real issue for Medicare marketers is how the election will impact media availability during AEP.

45% OF AEP WILL TAKE PLACE DURING THE FIRESTORM OF TELEVISION AND CABLE TELEVISION ADVERTISING DURING THE PRESIDENTIAL ELECTION.

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If you’re thinking about reusing the same 2015 television budget for your 2016 AEP, think again. Nearly half of AEP will be severely impacted by election media placement. There are 54 days of AEP. Twenty-four of those will take place during the presidential election television commercial blitz.

In a recent article in USA Today, Kip Cassino, executive vice president for market research company Borrell Associates, is quoted as saying, “In some of these [swing] states, there’s literally going to be no available advertising space left on television. The local TV stations are literally going to have to turn down ad spending.”

The article goes on to state that “cutting through the clutter will be harder later,” presenting a direct conflict with AEP timing and causing a “bottleneck” of media to be run in the 30 days of non-election television. This bottleneck introduces a compressed competition between plans to break through even more clutter than usual in a dash for the finish line in a 30-day sprint.

THE COMPETITIVE LANDSCAPE AND THE PROPOSED CONSOLIDATION OF HEALTH PAYERS

While the Aetna-Humana and Cigna-Anthem mergers are certainly top of mind for marketers who work at those companies —and perhaps for those who compete against them—the proposed mergers can’t possibly be approved before 2017. Therefore, they pose no threat of directly impacting the 2016 Medicare marketing season.

THE REMAINING 22% AND “THE MAGNIFICENT MEDICARE SEVEN”

Considering Medicare Advantage enrollments of market leaders, only seven companies account for nearly three-quarters of enrollments for the entire market. If we put the mergers and acquisitions on the shelf for the sake of discussion, 73% of Medicare Advantage members belong to these Magnificent Medicare Seven companies with other national insurers holding another 5% and the rest of the market holding the remaining 22%.

23% - United Healthcare

19% - Humana

13% - BCBS Affiliates

8% - Kaiser Permanente

22% - All Others

EARLY 2016 MEDICARE ADVANTAGE ENROLLMENT

7% - Aetna

6% - Other National Insurers

3% - Anthem

3% - Cigna

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In a recent article, Bob Herman of Modern Healthcare detailed the 2016 AEP acquisition increase by payer. UnitedHealthcare, which is currently the largest insurer, added 14,600 Medicare beneficiaries during 2015 AEP, more than any other insurer. Humana enrolled 11,500 Medicare Advantage beneficiaries and Kaiser Permanente was close behind at 11,400. Following were Cigna with 4,000 and Aetna with 1,300. Centene Corp., Health Net and Molina Healthcare have lost the most Medicare members since the 2016 enrollment period ended with each insurer losing more than 2,000 members.

According to the article, as of December 2015 there were 17.76 million seniors and disabled people enrolled in a Medicare Advantage plan. Herman asserts, “There were also 24.27 million people with a Medicare Part D prescription drug plan as of December 1, a 3.1% bump from a year ago, according to CMS data. UnitedHealthcare, Humana, CVS Health and Express Scripts Holding Co. control 70% of the Part D market.”

THE NEW FACES OF MEDICARE - ELIGIBLE MEMBERS

About 40 million Americans are 65 and older, which accounts for 13% of the U.S. population. By the year 2030, ALL baby boomers will have turned 65, and the senior population in the U.S. will grow to over 20% of all Americans. At that time the median age of Americans will increase to 39.6 years, up from 37.2 today. That’s a significant increase from just under 30 in the 1960s and ’70s.

Baby boomers are greater digital adopters than their predecessors. In 2016, digital lifestyle is now the norm for the New Faces of Medicare. The facts keep piling up in support of just how much the faces of Medicare-Eligible members are changing.

Looking at projected growth over the next three years in the number of 65-year-old-and-older Internet users, we can see a steady increase to nearly 7 million more people than in 2015. When you consider the enrollment numbers of Medicare Advantage members (which was 17.76 million as of December 2015), and you realize that there will be an increase of nearly 7 million 65-and-older Internet users by 2018, those 7 million people would account for nearly 18% of the total amount of Medicare Advantage users today.

Does your digital budget for 2016 sit at 9% higher than it did for 2015? According to these projections, it should since in 2015 30.5 million 65+ people were using the Internet, and in 2016, 9% more, up to 33.4 million, will be using it. Projections show in 2018 there will be 37.3 million people 65 and older using the Internet. That’s an increase of 22% in the total addressable market in only three years.

Nick and Bobbie Ercoline

were dating at the time of the

Woodstock concert in 1969 and

didn't know their photo was being

taken. Later they got married

and have been together for over

47 years and are now proud

grandparents. Their photo, which

appeared on the cover of the

Woodstock album, defined their

generation. Coincidentally, Nick

and Bobbie are 65 this year.

BABY BOOMERS ARE GREATER DIGITAL ADOPTERS THAN THEIR PREDECESSORS.

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Medicare marketers who ignore the shift of boomers coming into the market will be at a significant disadvantage to those Medicare marketers who try to find a way to make Medicare appear “cool” to the New Faces of Medicare.

THE EMERGENCE OF MEDICARE MARKETING MEGATRENDS

1. The Audience Has Changed and So Must Marketers

The most significant megatrend is that the Medicare audience is changing. There is a new senior in town. They’re not only identifiable by their age. Other factors are critical to segmenting the New Faces of Medicare in 2016, as the population moves from the Greatest Generation to leading-edge and trailing-edge baby boomers who behave much differently than the seniors that most Medicare marketers are prepared for.

We see a digital-savvy consumer that spends more time online and on social networks than previous seniors. But we also see Medicare marketing organizations ignoring this enlightened new group of seniors by planning the same old print, DM and TV marketing, and pretending that digital adoption by the New Faces of Medicare isn’t a real thing.

As society and our audience move from traditional to digital media, Medicare marketers need to create new media and budget strategies. Most are not likely to be wildly successful out of the gate considering that constant reevaluation and optimization on the fly during a compressed AEP might prove to be difficult without a seasoned and experienced marketing agency partner.

2. New Member Acquisition: Balancing Age-In and AEP Acquisition Strategies

Knowing that new member acquisition is the important lifeblood of any insurer’s success, Medicare marketers are struggling to decide which is the greater pot of gold: age-in, with 10,000 people in the U.S. turning 65 every day, or AEP, during which multiple research documents show only

27.2

2014

Internet Users, Ages 65+ (Millions)

INTERNET USERS BY AGE | UNITED STATES | 2014-2018

30.5

2015

33.4

2016

35.9

2017

37.3

2018 9% INCREASEAccording to projections,

digital budget for 2016 should sit at 9% higher

than it did for 2015.

37.3 MILLIONAccording to projections, 37.3 million people 65 and older will be using

the internet in 2018.

BABY BOOMERSWe see a digital-savvy consumer that spends

more time online.

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10% of the Medicare Advantage enrollees opt to switch at all. Should Medicare marketing organizations put their resources and emphasis on age-ins or on AEP?

And continuing with the acquisition theme, Medicare marketers are beginning to wonder what is actually within their control. Are they vying for a piece of the 22% of Medicare Advantage enrollees in AEP? Do they really have any hope of denting the acquisition numbers of the Magnificent Medicare Seven?

3. Medicare Strategies for Those Who Work Past Age 65

What about the increasing number of seniors delaying retirement, keeping their workplace insurance and entering the Medicare market late? Organizations must have strategies in place to attract and acquire members of this increasingly growing segment. Do you have the ability to identify and engage these important prospective members? Best-in-class organizations either have or plan to have strategies in place to do so for 2016 and beyond.

4. Marketing Owns Customer Experience

Customer experience is now of paramount importance to Medicare marketing organizations. From the moment a prospective member becomes aware of your organization or has an interaction with your organization, each and every touch point is vital. Something as simple as a planned and cohesive customer-experience process can be the difference between a lifelong member and a fleeting prospect.

2016 AEP MEDIA MIXWhat’s your new media mix strategy for 2016?

TELEVISION RADIO DIRECT MAIL NEWSPAPER

MAGAZINE ALT MEDIA PORTALS NETWORKS

PRE-ROLL OTT VIDEO ENDEMIC SITES RTB PLATFORMS SOCIAL MEDIA

NATIVE ADVERTISING SEARCH DISPLAY RE-MARKETING

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5. Retention and Loyalty Transition of Legacy Members

Since insurer members are most likely to remain with the same insurance company when entering Medicare, those insurers should be ready to fight to keep those legacy members through extraordinary retention and loyalty efforts.

6. Star Rating System

Medicare marketers are struggling with the importance of the star rating system and are grappling with the actual importance of a 5-star rating as it pertains to acquisition efforts. An organization’s star rating is a direct reflection of its level of professionalism in providing an excellent customer experience across all touch points.

7. New Media Strategies Are Needed

In the Age of the Consumer, Medicare marketing organizations must adapt and evolve to remain relevant and effective. New marketing positioning and messaging must be compelling to the enlightened and empowered consumer. Marketers must be creatively digital and mobile in their thinking, and adapt to a rapidly changing audience’s new media consumption habits.

8. Medicare Is Changing

According to an ABC News website article from January 4, 2016, “Whether it’s coverage for end-of-life counseling or an experimental payment scheme for common surgeries, Medicare in 2016 is undergoing some of the biggest changes in its 50 years. Grandma’s Medicare usually just paid the bills as they came in. Today, the nation’s flagship health-care program is seeking better ways to balance cost, quality and access.”

9. New Perceptions of Life Expectancy

There are significant new megatrends in elder healthcare. From connected healthcare to virtual doctor visits, we have entered what some are calling the longevity economy, where 60 years old is the new 40.

Life expectancy has risen to a little over 78 years, which some will attribute to many new life-extension procedures. Just recently, Medicare announced there may be a program developed to support physicians with end-of-life counseling.

CUSTOMER EXPERIENCEis now of paramount

importance to Medicare marketing organizations.

NEW STRATEGY Medicare marketing

organizations must adopt and evolve to remain

relevant and effective.

LIFE EXPECTANCY60 years old is the

new 40.

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10. Simplifying the Complex is Essential

Some megatrends are not new, such as attempting to solve the complexities of Medicare through simple and concise communications. Consumers have always been overwhelmed by the complexities of making an informed decision regarding their Medicare coverage. Let’s face it, it’s never been an easy or simple explanation regarding plan choices, and marketers must strive to make the complex simple.

And without a doubt, the greatest megatrend that Medicare marketers will need to deal with is the New Faces of Medicare-eligible members.

A MEGATRENDMedicare marketers will

need to deal with the New Faces of Medicare-

eligible members.

MAKE SIMPLEConsumers have always

been overwhelmed with the complexities of

Medicare coverage.

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The Impact of the 2016 Election on Medicare Marketing

With 45% of AEP occurring simultaneously with the finale of Election 2016, television is nearly off the table, and other media options are going to be more expensive than in non-election years. Reusing the 2015 media plan is not viable.

The Competitive Landscape and The Proposed Consolidation of Health Payers

The Magnificent Medicare Seven (UnitedHealthcare, Humana, Blue Cross Blue Shield Association, Kaiser Permanente, Aetna, Cigna and Anthem) have a combined Medicare Advantage market share of 73%. When other national insurers controlling 5% are added, that market share rises to 78%, leaving only 22% for ALL OTHERS. With consolidation looming in the future, the competition will never be fiercer than in 2016. Ignoring the competition in 2016 is not an option.

The Emergence of Medicare Marketing Megatrends

Megatrends impact the way business is done.

1. The Audience Has Changed and So Must Marketers

2. New Member Acquisition: Balancing Age-In and AEP Acquisition Strategies

3. Still Working at Medicare Eligible Age Strategies

4. Star Rating System: Marketing Owns Customer Experience

5. Retention and Loyalty Transition of Legacy Members

6. Media Megatrends-Digital is a Must Have-Social Media Becomes a Vital Channel

7. Medicare is Changing

8. New Perceptions of Life Expectancy

9. Simplifying the Complex Is Essential

In 2016, resources and strategies to attract available market share must include a new media strategy, new retention, loyalty and transition strategies, and new positioning and messaging to successfully accomplish their organizational goals.

SUMMARYWHY BUSINESS AS USUAL IS NOT AN OPTION FOR MEDICARE MARKETERS IN 2016

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The New Faces of Medicare - Eligible Members

Shifting from traditional toward digital, this year’s crop of Medicare-eligible members will bring a decidedly different flavor to most organizations’ Medicare marketing efforts. Content created in previous years will no longer be relevant or compelling to this new class of market entrants. Collateral, ads, event materials and possibly even event selection and focus will need to evolve to meet the needs of and gain awareness, consideration and, ultimately, business from the New Faces of Medicare-eligible members.

New faces, new trends, new strategies, a new media mix, new data models, new personas, new messaging and positioning, new creative and a whole new way of thinking will cause many Medicare marketing organizations to feel more overwhelmed than the seniors grappling with understanding Medicare options.

New Partner for the New Faces of Medicare

KERN Health is an Omnicom agency. We provide best-in-class Medicare and senior marketing to the health-insurance industry.

We’d love to be your new partner.

KERN understands the distinguishing characteristics of the senior audience as our expertise in strategy, creative, data, analytics, production, activation and media planning is leveraged to achieve your immediate member-acquisition marketing goals and to support your long-term strategies for building brand awareness and membership advocacy. We’d like to invite you to contact us now to learn more.

kernagency.com/health | (818) 703-8775 | info@kernagency.com