Medicare is confusing, and digital adoption is still fairly low among Medicare members – what does a digital approach to this important phase of healthcare look like?
Even during the pandemic, less than half of Medicare enrollments were done via digital applications, and many of those were still agent-assisted apps. While an analysis of the financial viability of both Original Medicare and Medicare Advantage lean toward digital adoption to some degree, the relatively low digital enrollment rate stands as a stark barrier.
So, how can Medicare and all its adjacent private cohort make the necessary leap into the future? And what would marrying digital transformation with human Medicare interfaces look like?
Why has Medicare not seen widespread digital transformation?
Seniors are comfortable with online banking tools, online shopping, and social media, yet the majority aren’t comfortable with exclusively online insurance and health tools. In fact, only about 40 percent of seniors say they would be highly comfortable shopping for coverage online.
While some of that story is one about trust and digital comfort, some of it is about fundamental questions of access. As recently as 2018, more than a quarter of seniors said they didn’t even have access to a high-speed internet-capable computer or smartphone. When one of the primary hurdles is basic digital access, it’s hard to expect an all-digital Medicare future.
Even positing that new generations will increase digital adoption, there may still be a fundamental trust gap when it comes to a digital-only Medicare experience. As Niji Sabharwal (CEO and co-founder of AgentSync) posited at the June 2022 Medicarians conference:
“Certain types of products – travel, renters insurance – make a lot of sense to have a frictionless, self-serve experience that is completely online,” said Sabharwal. “But when it comes to really complex, personal products like Medicare, every consumer has a price-sensitivity threshold. Above a certain price, they’re going to want to talk to a human who is an expert advisor.”
Selecting Original Medicare (and possibly an accompanying Medigap plan) or Medicare Advantage is a decision seniors really get one shot to do right (without penalties, that is). The pressure to choose what’s right for you – not just right now, but for the rest of your life – is enormous.
The variety of Medicare plans and coverage confuses seniors and enrollees
Should I go with Original Medicare and get a MedSup plan? What kind of MedSup is right for me? Is Medicare Advantage the way to go? What if I live outside of an urban center?
These kinds of questions are only scratching the surface when it comes to making Medicare decisions. Medicare Advantage enrollees enroll in their plans with the promise that they’ll have an annual option to review their coverage and enroll in a different choice, should they wish. Yet more than half of Medicare recipients don’t review coverage annually. Medicare recipients’ understanding of the program also varies, with age, education, and general ability each playing a role in a person’s self-reported understanding.
Many Medicare recipients report they don’t understand the options, with a third saying it’s somewhat or very difficult to understand and compare options, and the majority of the respondents to Kaiser Family Foundation’s survey said they haven’t engaged with the federal resources available to them.
For the record, CMS sends out a booklet to Medicare-eligible individuals each year, detailing the Medicare program and its various private supplements and alternatives, with county-by-county availability. The CMS website also provides thorough, easy-to-understand information. Yet, as U.S. seniors approach Medicare, most aren’t reading or looking, and 12 percent of respondents to the Kaiser survey said they “don’t make decisions about their plan” in the first place.
If you’re looking for the reason Medicare members aren’t taking advantage of resources, it boils down to general confusion. A New York Times report that expanded some qualitative analysis based on Kaiser’s quantitative data showed many of the seniors who tune out do so because the preponderance of options is overwhelming. The average retiree could access 40 to 50 plans, each with varying degrees of appropriateness based on region, health, financial ability, and personal preference.
In such a confusing space, people need help – producers are VITAL
The sheer amount of information and number of plans available to Medicare beneficiaries partly explains why digital Medicare enrollment hasn’t caught on. A digital tool that shows you 40 options might feel overwhelming!
A small-scale study of Medicare enrollees in Rhode Island found that these seniors strongly preferred having a human advisor who could walk them through pricing, explain benefits, and compare coverage options. The study suggested that, overall, seniors want digital tools, but they also want supplementary resources and hands-on assistance from influential human agents.
If you need further proof that the hyperabundance of available information and options on Medicare leads to analysis paralysis, a Senate Committee on Aging report found 776,000 seniors are paying Medicare Part B penalties because they avoided making decisions altogether about initial enrollment until past their deadline.
How agents influence Medicare beneficiaries’ plan choices
Hopefully you’re convinced at this point that Medicare members are primed to look for solutions from human agents.
However, the current state of Medicare sales leaves a lot of room for improvement. While Medicare Supplement plans are required to cover the same things for the plan category – for instance, Company A’s Supplement Plan M will offer the same benefits as Company B’s Supplement Plan M, regardless of price point – Medicare Advantage plans and Part D plans can vary widely in their coverage.
So, an agent may be contracted with several companies to sell Medicare Supplement plans, or Medigap plans, as well as Medicare Advantage plans. Their Medigap plans don’t vary in what they offer, yet the Medicare Advantage plans do. Not having access to Medicare Advantage plans could limit what the agent is able to present to clients.
One study found 96 percent of Medicare Advantage and Part D plans contract with agents to sell and enroll beneficiaries. Like regular insurance, the Medicare agents aren’t required to show consumers all available plans, just the ones they sell. This becomes a conflict when so many consumers are making decisions that will affect their finances and health, potentially for the rest of their lives.
It’s clear consumers need unbiased, nuanced, personalized help making decisions that will benefit them in the long run, but it’s unclear where they can turn. The study found popular broker plan selection tools typically include less than half of the Medicare Advantage plans available for a specific area, and less than two-thirds of Part D plans. This makes it difficult for agents and beneficiaries alike to accurately compare available coverage. Many of the available options – via digital or in-person means – ultimately drive toward a sale, with profit incentives determining outcomes.
What could the role of the agent look like?
Clearly, private insurance plans will always function with profit as the central tenet. Yet, a focus on sales at the expense of consumer needs damages the industry as a whole, leading to higher churn and an overall decrease in adequate health care access and quality for beneficiaries.
Aside from being a spiral that could lead to higher regulation, this vacuum of service also makes customer acquisition less profitable – an industry death-by-a-thousand-cuts scenario.
“It was an incredibly lucrative business,” said Sabharwal at the Medicarians conference. “The focus was on distribution […] getting folks at 65 and then switching, cutting the pie thinner and thinner. That erodes that lifetime value really quickly.
“This industry is going to be challenged to invest in innovation – not just in distribution, but through the customer’s lifetime to deliver the most value to their members. It’s going to make or break winners and losers.”
A longer-term service oriented vision of the industry could see a digital-first approach, where HIPAA issues are addressed head on and consumers could share medical records as an initial entry point. This could cut through hours of phone calls collecting medical history and reading pill bottles in cabinets (a process that often ends up being incomplete at best).
Once an objective system addresses personal and family health history, geographical location and overall healthcare access – something that could happen via a digital process or one that is synchronized with human interface – then it could surface the top recommendations and assign a beneficiary to an agent who can work with the appropriate plans. That agent, using the digital information provided, can get to understand the consumer before meeting them, know where they’re at in the process, and initiate conversations to help that person feel seen and heard. In other words, digitization could simplify the necessary legwork on the part of plan beneficiaries and agents, freeing up both sides to focus on the necessary advisory role of the agent.
In this system, the agent may be responsible for a lot more than simply enrolling that consumer and calling it a day. Likely, they would also need to help the consumer navigate their plan, understand benefits, and hunt for doctors and services that are part of the plan. Ongoing health coaching and assistance may be part of a Medicare agent role into the future.
Perhaps, if we’re to dream big, it looks less like an extension of a life insurance business and more like the extension of a personal trainer. Or perhaps not.
The new era of senior health insurance may need to undergo a few iterations to marry service, digital means, and human intuition. Yet, Medicare plans remain a facet of the industry ripe for positive disruption.
If you’d like to see what AgentSync is doing to help lead positive changes in Medicare and other insurance businesses, get in touch.