Current Medicare demographic trends are rooted in the Baby Boom. Post-war prosperity and GIs returning home in the 1950s and 60s led to inflated numbers of Medicare-eligible seniors entering the market from 2010 to 2025. Healthcare payers have been able to ride that demographic wave and observe year-over-year growth during this period with over four million new seniors becoming Medicare-eligible each year.
However, moving forward, we will likely never see so many people turning sixty-five. The number of incoming Medicare-eligible seniors has peaked and will begin to decline in the coming years. This will translate directly to fewer net-new Medicare Advantage enrollments each year.
Impact of the demographic cliff on customer acquisition
Smaller incoming applicant pools mean carriers will have to fight much harder for a limited supply of prospective Medicare Advantage members. These carriers will be competing in a highly saturated market as higher numbers of carriers have further increased competition. Increased competition also means more difficult marketing.
Marketing challenges:
- The amount of mail, television ads, and other marketing that individuals receive has increased threefold over the past decade, decreasing the effectiveness of marketing.
- Media costs continue to rise above the rate of inflation. In other words, carriers are spending more on less efficient marketing.
The road ahead for Medicare Advantage
The road ahead looks difficult for the Medicare Advantage market. Applicant pools are shrinking, competition has increased, marketing is more expensive yet less efficient, and decreasing member tenure combined with stagnant CMS payments and increasing claims costs is driving down member lifetime value (MLV).
Those who will win in the Medicare Advantage market throughout the next decade will need to turn to go-to-market, product attractiveness, and clinical maturity as the leading drivers of growth. For more information on how to succeed in the face of these challenges, read our executive whitepaper The next decade of Medicare Advantage: 2025 and beyond.
Download our whitepaper, “The next decade of Medicare Advantage: 2025 and beyond”
Learn how the next decade will reward Medicare Advantage leaders who embrace agility, analytics, and a member-first approach.
Article sources: American Community Survey, NCHS birth data, CMS.gov data, Marketbridge
