Introduction: The end of a demographic tailwind
For the past two decades, Medicare Advantage (MA) growth was fueled by a steady flow of age-ins thanks to the Baby Boomer generation. From 1946 to 1964, Americans reversed a steady decline in birthrates and had a lot more children—and these children of the post-war years have been turning 65 since 2011. However, the peak of the baby boom turning 65 is already in the rear-view mirror. To make things even rosier for MA payers, this demographic boom coincided with favorable policy and benefit enhancements which drove a growth in preference for MA over traditional Medicare. However, demographics are destiny, and the political winds have changed—maybe for good.
As we discussed in our July 8 webinar and explored in our recent whitepaper, the MA market is approaching a critical turning point. The combination of the current Boomer demographic plateau and imminent drop, tightening policies, and rising cost pressures means that future growth will depend less on who’s aging in, and more on how well plans compete for remaining preference. In other words, competition will be fierce.
The Baby Boom effect: A growth engine slowing down
The Baby Boomer generation — those born between 1946 and 1964 — has been the primary driver of Medicare enrollment growth. But we’ve now reached the peak of that wave.
- In 2024, the U.S. hit a high of 4.3 million net new Medicare eligibles.
- By 2040, that number is projected to decline to 3.1 million — a 28% drop.
This shift marks the end the “demographic party.” The steep climb in new enrollees is flattening, and soon, it will begin to decline.
From organic growth to net preference
Historically, MA growth came from two sources:
- Net Organic Growth: New 65+ eligibles entering the system
- Net Preference Growth: Beneficiaries switching from traditional Medicare to MA
As the pool of new eligibles shrinks, net preference becomes the dominant — and eventually the only — growth lever.
In 2024, over 55% of MA enrollment growth came from net preference. That number will only increase as organic growth slows. This means plans must now compete more aggressively for members already in the system, and do so in a more constrained, cost-sensitive environment.
What’s driving preference?
Historically, preference for MA has been driven by:
- Enhanced benefits (e.g., dental, vision, transportation)
- Lower out-of-pocket costs
- Simplified care coordination
But as the “One Big, Beautiful Bill” tightens funding and limits supplemental benefits, these differentiators may weaken. Plans will need to find new ways to stand out, and that means focusing on trust, experience, and long-term value.
Strategic implications: Competing in a shrinking pool with smart growth
To succeed in this new era, MA plans must rethink their growth strategies, moving from “growth at all costs” to smart growth.
1. Focus on member lifetime value
Plans must focus on member lifetime value (LTV). Critically, lifetime value must factor in to both acquisition and retention strategies. In the past, most new members acquired during the Annual Enrollment Period (AEP) have been chronic switchers—members who never stick around long enough to get into the groove of quality preventative care. This outcome is bad for everyone—payers, providers, and patients. It’s up to carriers to not encourage switching behavior among likely future defectors; if their current plan is degraded, they will find another—without a nudge by acquisition marketing.
Fortunately, the math allows carriers to make these decisions effectively and at scale. As media becomes more targetable, it’s increasingly possible to isolate audiences by projected LTV and align acquisition spend accordingly. The goal: invest only up to the point (or below) where the marginal acquisition cost equals the net present value of future cash flows. This approach helps reduce overspending on high churn “switchers,” who tend to have lower LTV from the outset.
By segmenting audiences based on profitability, which often correlates with loyalty, plans can:
- Align channels to acquire higher-value members
- Reduce media waste and froth, lowering overall costs for everyone
- Build separate CAC/LTV curves for key segments (e.g., switchers vs. loyalists)
- Prioritize quality acquisition over volume
2. Invest in brand equity
In a market where demographic growth is slowing and preference is the new battleground; brand equity becomes a critical—and often underleveraged—asset.
As discussed in our July 8 webinar, brand equity is a latent construct—not always visible in short-term metrics, but deeply influential in long-term performance. It shapes how members perceive your organization, how likely they are to choose your plan, and how long they stay.
Yet many plans underinvest in upper funnel, brand-building activities, because their impact is harder to measure than lower funnel demand generation tactics. This is what Marketbridge calls the measurement trap: The tendency to overvalue easily tracked lower-funnel tactics and undervalue upper-funnel brand-building efforts.
Fortunately, for most health carriers, brand equity—and trust—are local. In other words, most plans have very strong equity in a few states and metro areas, many mid-level, high-potential markets, and many more markets where breaking through is prohibitively expensive. By using this to their advantage, carriers can invest in brand building strategically, targeting markets using provider and local marketing tactics to turn “mid-level” markets into long-run winners.
To break this cycle, plans should:
- Track brand equity consistently across DMAs using awareness, affinity, and base lift metrics;
- Identify “elastic” markets where brand investment can shift preference;
- And, maintain consistent presence in strategic markets to allow equity to accrue over time.
3. Embrace digital go-to-market and experience innovation
Every year, new age-in MA members get more technologically savvy. Today’s age-ins were 40 on 9/11; remember what technology use looked like 25 years ago. It’s clear that successful plans must fully embrace digital go-to-market strategies and member experience platforms. Moving forward, each new cohort of age-ins will be even more digitally native, making e-commerce not just an acceptable alternative to call center or in-person enrollment, but a preferred one.
Digital video is a standout opportunity. Channels like YouTube, social reels, and connected TV offer hyper-targeted reach with faster deployment, a major advantage during AEP. These upper- and mid-funnel formats are already displacing traditional DRTV and are expected to dominate by 2030.
On the fulfillment side, digital and digitally assisted applications are improving speed, accuracy, and satisfaction, while reducing buyer’s remorse and OEP switching. This directly supports higher member lifetime value.
Finally, journey-based marketing and unified CX platforms — though still emerging — offer the potential to streamline communications across ANOCs, billing, clinical reminders, and more. Carriers that standardize and scale these systems will gain a long-term edge in retention and cost efficiency.
Conclusion: A new era of strategic growth
The rules of the Medicare Advantage game are changing. The days of easy growth are behind us. It’s time to focus on strategic growth: a more competitive, more disciplined, and more analytical decision-making paradigm for go-to-market leaders.
Plans that understand the demographic shift, embrace net preference as a core strategy, and invest in long-term value creation will be best positioned to lead in this new era.
Watch the peer insights webinar, “Navigating Medicare and Medicaid marketing, sales, & retention in a dynamic environment”
Hear how leading organizations are adapting their strategies in the face of rising costs and shifting consumer behavior.
