Blog Post

Health Insurers Who Focus on Service See Increased Member Engagement and Enrollment
by Richard Hamer


Now that Medicare’s annual election period (AEP) is complete, clients of Deft Research are eagerly anticipating the release of 2018’s Medicare Shopping and Switching study (due at the end of February).  While we can’t say anything yet about the AEP’s results, we can identify three of the trends we will be tracking and evaluating in the report.  Deft researchers are working on these now.

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Source: 2017 Medicare Shopping and Switching study, Deft Research, LLC

Trend 1: The Rate at Which Seniors Switch Health Plans is Declining

Since 2015 the rate at which seniors’ switch health plans has dropped.  And this is beginning to have a profound impact on Medicare marketing.  As switching rates remain low or continue to drop, health plans must evaluate their marketing expenditures and make decisions about where to put resources.  If the pool of consumers who will switch is shrinking or already small, then instead of broadcasting market messages, health plans might shift resources into targeting consumers who are most likely to be interested in specific products and most likely to respond to specific value propositions.

Another important impact of low switch rates is that resources may need to be shifted out of the AEP and into marketing campaigns aimed at populations who can join Medicare plans at any time of the year – specifically, Age-Ins and Dual Eligibles.  Current lower rates of switching indicate that satisfactory health plan growth depends on enrolling as many Age-Ins and Duals during the off-season as enrolled during the AEP.

Trend 2:  The Rise of Service and the Decline of Provider Access as Factors in Consumer Decision Making

Historically, high levels of switching and shopping have been caused by changes in health plan benefits.  Seniors have been most driven to shop by jumps in premiums, changes in pharmacy benefits, and changes in provider networks.

 In more recent years, annual changes in plan benefits have been less frequent and less dramatic.  Consequently, switching rates dropped.  That means that perennially top switching drivers, network restrictiveness and drug formularies, have been replaced by network and formulary familiarity – consumers are content to stick with what they know, even when what they know isn’t their ideal.  In behavioral economic terms, the effort required to switch is a cost that is greater than the extra value to be found elsewhere.

 What we didn’t anticipate is that now that benefit designs have stabilized, consumers are asking for better customer service.  Specifically, consumer loyalty and desire to switch plans is now being driven by whether the consumer feels their plan helped them use and understand their coverage.  With the past’s unstable benefits behind us and no longer the reason for confusion, consumers are no longer willing to tolerate murky explanations, vague guidance, and industry jargon.  For the behavioral economist, if the time and effort to switch is less than the incremental value of better service at a new plan, they switch.

Trend 3:  Digital Engagement is Becoming More Important for Seniors

The current thinking in marketing is that direct mail will remain a central component of Medicare promotion.  Direct mail continues to announce the start of AEP and to provide a high-quality source of comparable information.  But the role of direct mail as a prompt to visit on-line sites or use email, text, and social media has become more important.  In 2016 Deft observed that among Age-Ins, more web traffic was generated by direct mail than by TV or Internet ads. 

 A multi-channel approach strengthens the message and guides members through the buyer’s journey. Using technology to track consumer activity through all channels and using drip-campaigns as well as personalized outreach to keep them engaged provides an effective way for health plans to reach new members.

 The 2018 Senior Market Insights Subscription Service begins with the Medicare Shopping and Switching Study in February and continues to deliver insights at key planning times througout the year with three additional studies. The data behind these research projects will be used to create predictive models that predict product preference and likelihood to respond to direct mail  as well as most likely responders to various messages and promotions.  Please stay tuned.

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