Medicare Market Place
Markets are constantly changing. The Wednesday and Sunday additions of the Omaha World Herald are full of ads and fliers. Stores publicize sales, put up posters with markdowns, advertise deals, and promote special events. Prices and products are constantly changing. The market place does not stand still.
The insurance and Medicare market is no different. Aetna announced a 37 billion dollar bid with a capital B for Humana this week. Anthem Blue Cross is in talks about acquiring Cigna. Centene Corp agreed to buy Health Net Inc for $6.3 billion. The insurance landscape is changing.
These are big players, so when they move, the Medicare market will be affected. Some will argue that consolidation will reduce costs. Others will say that bigger and fewer insurance companies means monopolistic pricing. How it plays out is yet to be seen. Analysis will fill up hours of television and radio time with speculation about the Medicare market. The reality is insurance products, including Medicare supplements, will change. The changes will come primarily in the form of prices.
An endless list of variables go into Medicare supplement premiums. Creating and administering a Medicare Supplement product costs something. Medical claims come out of the premiums collected, so the premium needs to be high enough. In the end, the company must generate a profit for the shareholders. Otherwise, there is no point and the company’s assets will be sold off.
To generate those profits, the company needs to acquire clients. That is done in a number of ways. Slick advertising and marketing campaigns get prospects in the doors. Have you ever received any mail from an insurance company? During open enrollment (Oct 15th—Dec 7th), the Medicare commercials are like political adds at election time. They are endless. You can’t wait for them to stop.
The other way that insurance companies get prospects in the door is price. But how low can a company price the product? In other words, how lean can the company run its operation and still make a reasonable profit? If they guess wrong on pricing, it could be devastating for everyone involved—clients, employees, and shareholders.
If they lower the price too much and cannot meet claims and expenses, the company will be forced to raise premiums and drive away healthy clients. If they are too high, they will not have enough clients to create an adequate pool to assume the risk. Claims could further drive up costs and cause the company to raise premiums even higher.
So, like oranges, asparagus, and lettuce, the price of supplements are in a state of constant flux. Some of the factors are age. Price goes up with age. Rate increases are announced by the company because medical costs go up. And sometimes, there is even an occasional decrease.
Who is your shopper? Who will let you know what is happening in the Medicare market place? Who can find the lowest price supplement for you? I am Chris Grimmond the found of Omaha Insurance Solutions. I have worked for and with insurance companies for 13 years. I understand the Medicare market and how it works. We will shop your Medicare supplement and make sure you always have the best value for your dollar 402-614-3389
