Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - The Wild Medicare Market 🤠- AEP 2025

3. Compliance Chatter 📢 - Section 1557 of the ACA and more…

4. Sponsor Snapshot 🚀 - brought to you by Medicare Market Insights - Plus

5. DATA VISUAL of the Week 📊 - MA enrollment since 2010 for the largest Carriers

It’s only a 5 minute read, but it will make you 10x smarter.

DEEP DIVE 📚

The Wild Medicare Market 🤠- What it Means for AEP 2025

The next 4 months in the Medicare industry are shaping up to be wild.

There are so many moving pieces that it’s daunting to try and summarize it in one place.

But, that’s my goal. To provide a summary of what got us to this point, and what it means for AEP 2025.

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Medicare Carriers are experiencing Higher Loss Ratios and Lower Profit Margins.

Last week’s deep dive looked at Medicare Carrier Q2 financials side-by-side.

We highlighted the fact that Carriers (sometime referred to as “Payers”) are experiencing higher loss ratios, driven by higher utilization leading to lower profit margins.

Combined, the companies highlighted saw a 1.8% increase in loss ratios and a 9% drop in profits.

Going into 2025 this pressure will remain or worsen.

Here’s why:

1. Small change in MA reimbursement rate increase for 2025

   1. Overall payments are expected to increase 3.7%, less than the Industry argued would be adequate (link)

2. Shift to V28 risk adjustment model

   1. The V28 model is expected to decrease Medicare Advantage risk scores by 3-8% (link)

3. Inflation Reduction Act shifting more Part D cost to Carriers and requiring added administrative burden (link)

4. Changes to pre-authorization rules

   1. While good for consumers, likely increases (and speeds up) medical cost to payers (link)

The result is Payers are exiting the MA/PDP space altogether, reducing service areas, squeezing benefits, increasing cost sharing, increasing premiums, or combinations of all of these.

Here are a few examples:

1. BCBS of KC is exiting the MA market (link).

   1. Here’s our analysis of the move (link).

2. Centene is exiting 6 states (link).

3. CVS has said they expect to exit numerous counties and expect to lose 10% of membership (link).

4. Humana expects to exit unprofitable markets (link).

Agents are getting “first looks” as we speak, and with some exceptions, it’s clear that we’re generally seeing reductions.

We won’t know the full scope of specific changes until late September or Early October.

This fall consumers will be receiving communication letting them know about changes to their plans.

1. Annual Notice of Change (ANOC): By September 30th each year, MA plans must send an Annual Notice of Change (ANOC) to their members letting them know what is changing (link).

2. Some consumers will get notice that their plan is not being renewed.

These communications are not new, but it’s likely more seniors will be seeing “bad news” this fall. The logical result is that more consumers will be shopping.

So, Carriers, Agents, FMOs, Call Centers should be ready to help even more people this year.

… In the Meantime ….

Distributors (Agents, FMOs, Call Centers) face uncertainty and changes with how they will be compensated this fall.

1. In most years, distributors know exactly what their compensation contracts and marketing allowances look like by this time of the year. It’s been reported that this year these have not been ironed out yet. Making it hard for distributors to finalize their strategy for this AEP.

2. Part of the uncertainty is due to the new Broker Compensation rule released by CMS in April (link).

   1. This rule caused a lot of uncertainty in the industry

   2. Carriers spent significant time considering how to apply the rules.

   3. But, a Texas court issued a Stay on the new rule and so compensation rules remain unchanged for now (link).

   4. Carriers still have to navigate how to handle this going forward which may be impacting current plans.

The Inflation Reduction Act shifts Part D costs to Carriers.

1. The result of this is that Part D products will likely see reduced benefits and higher premiums this AEP (link). 

2. The increased subsidy and Premium Stabilization Demonstration will likely help offset this (link), but it’s also worth noting that Republicans are challenging the legality of the program (link).

3. Some Carriers are indicating they will not be paying commissions on standalone PDP products.

Combine this will the fact that Medicare Supplement rate increases have been elevated significantly (link). Likely leading to a higher number of consumers who currently have Medicare Supplement with a Stand-alone PDP shopping this AEP.

So, in addition to more Medicare Advantage shoppers, there will also likely be more Medicare Supplement/PDP shoppers.

All combined, a large number of seniors will be reviewing their plan options this fall.

If this wasn’t enough, we also have a presidential election going on this fall. (Sorry to remind you!)

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With all these changes, it’s important that you as a leader in the Medicare space stay informed, come up with a plan, but be ready to adjust as things play out over the next several months.

Because, the reality is, all of the moving pieces will cause opportunities in the Market.

Opportunities for you to help numerous consumers.

Opportunities for distributors to grow books of business.

Opportunities for Carriers to add new members.

Opportunities for Investors to invest in companies solving problems in the changing Medicare space.

What are you going to do to take advantage? 

DATA VISUAL of the Week 📊

This week’s visual comes from KFF.org and looks at the change in MA enrollment since 2010 for the largest Carriers.

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: Promote your product or services to leaders in the Medicare space. Let’s discuss. (link)

• Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)

• Consulting: We can help you develop new insurance products for the Medicare market, appraise your books of business, and keep you compliant. Let’s discuss. (link)