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Maximize Value May 24, 2015

Points of View: The Retiree Health Insurance Opportunity

As employers increasingly turn to exchanges as a way to provide choice to their retirees and capitalize on government funding for Medicare eligibles, insurers are exploring new ways to capture this burgeoning market. In a recent example, the Blue Cross and Blue Shield Companies announced plans to launch the BCBS Marketplace, a retiree health insurance exchange aimed at supporting employers’ efforts to help retirees transition from group health benefits to individual Medicare coverage.

According to BCBS, the new BCBS Marketplace will offer Blue Cross and Blue Shield Medicare Supplement Insurance (Medigap), Medicare Advantage Plans, and Medicare Part D prescription drug coverage in more than 45 states and Washington, D.C. Maureen Sullivan, senior vice president and chief strategy officer for the Blue Cross Blue Shield Association (BCBSA), said the exchange will launch this summer and was set up to “ensure that more retirees continue to benefit from the security and stability of Blue Cross and Blue Shield insurance.”

Our in-house experts offer some market perspective below:

This is a smart and needed move by BCBSA. The Blues need to address the challenge that their collective strength in the commercial group market has not translated into leadership in the Medicare Advantage (MA) space. MA is an important growth market due to population demographics and the growing popularity of MA plans relative to traditional Medicare, and the Blues need to do a better job of converting their commercial membership into MA enrollment. BCBS Marketplace is a mechanism for better retaining their commercial members as they age into Medicare. – Todd Van Tol, Health Services team leader, Oliver Wyman
The gap between UnitedHealthcare and Humana as the leaders in the Medicare space and the rest of the players, including all the independent Blues plans, is now so large that they are unlikely to be overtaken. This means United and Humana will gain more membership on both group and individual, and as the strong get stronger and offer better benefits and solutions they will continue to leverage their platforms and brands. The move by BCBSA is critical (and somewhat overdue) if they are to try and close the gap and continue to meaningfully participate in the fastest growing segment of health insurance, namely Medicare (MA, PDP, and Supp). – Martin Graf, Government Programs advisor, Oliver Wyman
The new BCBS Marketplace has some trends boding well for its launch: Retirees are more computer literate than ever, and likely would have used an employer exchange prior to retiring. Medicare Advantage and Medicare Supplement are both growing incredibly fast, with the baby boomers aging, and BCBSA has strong name recognition. A nationwide exchange makes strategic sense for reaching both their customers and their association membership. – Tom Scales, Research Director, Celent

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