Industry: Healthcare

Healthcare organizations are navigating seismic change. New regulations, client/patient expectations for digital-first and omnichannel service, and integrated care delivery models are reshaping how the industry operates. Amid the expanding healthcare ecosystem, leaders face greater competition, as well as new partnership opportunities, all while trying to control costs, heighten compliance and increase quality outcomes.

From payers and providers to medical and biotech innovations to digital health startups, we help healthcare leaders drive growth amid complexity. Supporting our clients’ strategic priorities and KPIs, we determine the optimal multi-route strategy—from channel mix to coverage—to improve channel performance. We build high-performing marketing plans through scenario planning and marketing mix optimization. And we responsibly activate data and technology to enable personalized, resonant and galvanizing experiences for all audience members. Ultimately, we help healthcare organizations achieve integration, alignment and measured effectiveness end to end.

Declining Member Lifetime Value in Medicare Advantage market

Posted on April 21, 2025April 21, 2025 by Elizabeth Moore

Over the past several years, the growth seen by Medicare Advantage (MA) carriers and brokers has begun to stagnate. One of the forces driving this stagnation is the decline of Member Lifetime Value (MLV). MLV is a member’s inbound cash flow, minus outbound cash flow, over a member’s tenure with a single insurer; essentially, the expected net profit from a member for the time they are expected to remain with the carrier, discounted in future years by a carrier’s weighted average cost of capital (WACC). Over the past four years, three primary forces have concurrently exerted downward pressure on average Medicare Advantage MLVs:

Declining member tenure
Stagnant CMS payments
Increasing claims costs

1. Declining member tenure

With a plateau in age-in Medicare Advantage penetration beginning in roughly 2022, an increasing number of new members are “switchers” from other carriers. Having already switched carriers at least once, these members may be more likely to switch again, regardless of actions taken by the carrier. With members remaining with a single carrier for a shorter period, the carrier has fewer years to extract value from that member.

2. Stagnant CMS payments

Over the past two years, carriers have seen lower reimbursements from CMS to pay for their members’ claims. In 2024, CMS payments under the Physician Fee Schedule adjusted for inflation began declining by 1.25%–in 2025, CMS payments will decline an additional 2.93%. However, with the policies in the CY 2026 Rate Announcement released by CMS last week projected to result in an increase of 5.06% in MA payments, this factor is expected to moderate for plan year 2026.

3. Increasing claims costs

Possibly the largest driver of declining MLVs, claims costs have been increasing for the past few years. During COVID, most members chose to delay screenings, tests, and non-emergency procedures (Journal of Clinical Oncology). From 2022 onward, the repercussions of these delays emerged, resulting in more serious—and costlier—diagnoses once members returned to the doctor (UC Davis Health). Members in the past few years have also been receiving the elective procedures that they delayed during the pandemic. It is likely that, over the next several years, these impacts of the pandemic will subside as members return to normal rates of screenings, tests, and non-emergency procedures.

Additionally, product decisions made during the 2020-2022 Plan Years to attract customers often resulted in coverage for expensive services not previously included, such as vision, hearing, and in-home support services. Finally, CMS temporarily expanded the definition of dually eligible members during the pandemic, but once these members began to be dropped in June 2023, carriers had fewer profitable DSNP members—and those that remained were less healthy and more expensive to service.

Toward higher Member Lifetime Value

Business leaders in the Medicare Advantage industry must adapt to the changes to Member Lifetime Value that have been observed over the past four years:

Better audience targeting can allow a carrier to isolate and target audiences by their estimated mean lifetime value and to only invest in acquisition marketing and sales up to the point where the marginal acquisition cost is estimated to be equal to the present value of future cash flows.
Adoption of vertical integration can result in tighter communication and better information from the carrier, leading to longer member tenure and higher lifetime values.
Digital and digitally assisted application technologies can improve speed, accuracy, and applicant satisfaction, reducing buyers’ remorse and the resulting switching behavior that decreases member tenure—with longer tenure, a higher MLV is possible.

For more information on how to succeed in the face of declining Member Lifetime Value, and other challenges in the MA industry, read our executive whitepaper: “The next decade of Medicare Advantage: 2025 and beyond.”

How the demographic cliff shapes Medicare Advantage success

Posted on March 31, 2025March 31, 2025 by TJ Brock

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.

Article sources: American Community Survey, NCHS birth data, CMS.gov data, Marketbridge

5 forces stalling Medicare Advantage growth in the next decade

Posted on March 24, 2025March 31, 2025 by Cher Jiang

Five forces are converging to stall growth of the Medicare Advantage industry over the next decade—halting momentum enjoyed since the 1990s. While inflation and immutable demographic trends are recurring characters in this story, trends in trust and product quality reveal that carrier actions also contribute to the five stagnation forces:

Increased member acquisition costs
Fewer age-ins
Declining member lifetime values
Declining innovation on both product and member services
A rapidly changing go-to-market landscape

1 – Increased Member Acquisition Costs: Marketing and Sales

Since Covid, inflation has left its mark across the marketing funnel. Competition for cost per click is ensuring the Paid Search dollar doesn’t go as far, especially during the Annual Enrollment period peak. Postage rates make key Direct Mail campaigns costlier at 120% the rate of core inflation. Meanwhile in upper funnel, cost-per-thousand (CPM) was increasing by 5% per year shortly before 2024, leading to costlier brand marketing.

On the sales front, expenses are climbing too. On-target earnings (OTEs) for captive field agents have risen 5-10% per year since Covid. Agent turnover rate has also increased, lowering sales productivity, as newer agents need more training and “at bats” to sell more.

The takeaway: Costs are not going down, but better audience targeting over the next decade can make acquisition budgets drive a greater impact.

2 – Fewer age-ins

All Baby Boomers will have turned 65 by 2030, spelling an end to the era of rapid growth in newly eligibles. Between 2022 and 2027, an estimated 4.2-4.3 million individuals turn 65 per year. By 2040, the annual age-in population will be only 70% of that, around 3.1 million.

Medicare Advantage penetration of the eligible population also seems to be approaching a plateau around 55%. The sum effect is that annual net new enrollments in Medicare Advantage will trend downward in the decade to come. (American Community Survey, NCHS birth data, CMS.gov data)

The takeaway: In order to sustain growth, the industry will have to nurture product attractiveness and clinical maturity. In other words, insurers will have to work harder to grow.

3 – Declining Member Lifetime Values

Member Lifetime Value (MLV) is a member’s inbound cash flow minus outbound cash flow over a member’s tenure with a single insurer. All three parts of the equation are driving down MLV: members are disenrolling more frequently in the face of declining benefits, stagnant CMS payments and mounting claims costs. These claim costs can trace to Medicaid eligibility changes affecting Dual-eligible Special Needs Plan (DSNP) members, added dental and vision benefits, and forgone preventive care during Covid.

The takeaway: CMS payments are not keeping pace with the costs of servicing the neediest members, and a more productive partnership with CMS will be key to remedying this shift.

4 – Declining Innovation on Product and Member Services

Product innovation – adding fitness programs or dental benefits to health plan benefits for example – characterized recent years of Medicare Advantage. Inflation, once again, acts as a headwind here by discouraging maintenance of characteristic benefits and by reducing the value of food cards. But abandoned benefits stem from other sources too—in-home nurses’ visits, for example, received negative publicity with accusations of abundant fraud. Consequently, they became deemphasized.

Member service innovation might temper member disillusionment, but it occurs in a narrow domain. Government regulations require many communications, driving members to largely ignore most insurer messages. Another potential communication channel, insurer mobile apps, suffer low adoption rates due to competition with separate provider apps and limited data portability and functionality.

The takeaway: Innovation can happen under constraints, but a return to quality can light the path forward through greater efficiency across acquisition, member retention, and care delivery.

5 – Rapidly Changing Go-to-Market Landscape

Unit economics and member preferences comprise serious threats to the traditional channels for reaching the Medicare population. Linear TV is less captivating for seniors, direct mail is being hit with inflation, and effective paid search now requires commitment to bidding wars.

Insurers are rethinking their distribution channels, too. Third-party call centers and aggregators rose to importance around 2010, as Medicare Advantage welcomed age-ins at unprecedented volumes. However, aggregators have shown to generate customer confusion while attracting low lifetime value members, and third-party call centers may have eroded trust by their less than honest call tactics.

The takeaway: Winning over the next decade will look a few different ways. We present more data and additional considerations in our whitepaper, which you can download below.

The state of healthcare digital CX

How consumer expectations are reshaping payer and provider go-to-market strategies

Digital expectations, rapid technological advancements, and changing regulations are reshaping how consumers buy health insurance and access healthcare. Today’s consumers demand seamless, personalized, and digitally integrated experiences, driving payers and providers to evolve or risk falling further behind.

We surveyed 1,000+ privately insured individuals (across ACA, Group, and Medicare Advantage plans) to uncover key CX trends across three areas:

Purchasing health insurance
Accessing healthcare services
Engaging in health and wellness activities

Within each area, we highlight survey findings, strategic implications and provide actionable insights to help payers and providers refine their CX strategies and boost engagement in today’s increasingly digital and consumer-driven market.

Select insights from the report:

Digital enrollment must boost member confidence: Consumers who work with agents report about 23% higher enrollment satisfaction compared to those who enroll without an agent.
Pharmacy BOPIS usage is 22% across segments: Group members use ‘buy online purchase in-store’ the most at 26%.
Health insurers trail other insurers in using email to communicate with members: 58% of consumers with homeowners’ insurance said email was a top communication channel from their insurer vs. 49% for those with medical health insurance.

Unlock key insights for CX success

Download “The state of healthcare digital CX” report to explore how consumer expectations are reshaping payer and provider go-to-market strategies and discover how to navigate today’s rapidly evolving CX landscape.

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The next decade of Medicare Advantage: 2025 and beyond

Medicare Advantage leaders must pivot to win in an era of stagnation and fierce competition

After years of steady growth, Medicare Advantage faces new headwinds. Carriers are struggling with rising acquisition costs, reduced member lifetime values, and increased complexity in delivering member services and refining go-to-market strategies. This paper examines the market forces behind these changes and provides actionable strategies for leaders to thrive by balancing financial discipline with data-driven agility.

This paper covers:

The five forces transforming Medicare Advantage: Rising costs, fewer age-ins, declining member lifetime values, stagnant innovation, and changing go-to-market dynamics.

Declining member lifetime value (MLV): Driven by shrinking member tenure, stagnant CMS payments, and rising costs—together threatening profitability.
Communication overload: Overwhelming member communications—from ANOCs to EOBs—lead to poor engagement and diminishing member trust.
Digital transformation opportunities: Simplified and digitally assisted application processes can reduce switching and improve member retention.
The aggregator impact: A media buying frenzy driven by aggregators has created confusion, high acquisition costs, and lower-quality members.
Data-driven decision-making: Advanced analytics and democratized data quality empower carriers to make smarter decisions, while profitability-based audience targeting ensures channels are aligned to acquire and retain higher-quality members.

Download the paper now to learn how the next decade will reward Medicare Advantage leaders who embrace agility, analytics, and a member-first approach.