Medicare Supplement and the Aging Population
Imagine being in a business selling an insurance product where your potential customer base is going to increase by 10,000 people a day, on average, for the next 16 years?1 … Actually, such a market exists today - Medicare Supplement Insurance (sometimes called Medigap or even Med Supp).
In our recent Bulletin publication, I examined the Medicare choices available to people when they turn 65 and the opportunity that the coverage represents to insurers in the context of our aging society.
Medicare Supplement coverage provides significant value to policyholders. In addition to the obvious direct financial benefits, it allows seniors to budget better for medical costs and cuts out complex medical bills, which is especially important for seniors who are on a fixed budget.
Not surprisingly, Medicare Supplement is attracting a lot of attention from insurance carriers. There are 285 carriers currently in the market, with 175 of them selling new business with additional carriers poised to enter the market in 2014.
Along with the popularity of Medicare Supplement there are questions and concerns being raised in Washington about benefits being too rich and driving up overall Medicare costs. There are no changes imminent; however, legislators are currently reviewing their options and may make changes in the future.
Whatever happens, the number of people age 65 and older will continue to grow, and the market for Medicare and Medicare-related products will expand. In 2012 there were 10.5 million people with Medicare Supplement policies. That number is expected to grow to 13 million in 2017 and 16.6 million in 2022.2
With that projected growth and the profitability the product is currently showing, Medicare Supplement is sure to continue to attract new carriers. The concern is growing too fast and commoditizing Medicare Supplement which would most likely be a negative for both carriers and consumers in the long run. Gen Re is a leader in the Medicare Supplement reinsurance market, and we’re committed to the business. We plan to build on our successes with new and improved reinsurance capabilities that sustain carriers already active in the Medicare Supplement market as well as those planning to enter the market in the future.
Read my full article for the details on the growing opportunity presented by Medicare Supplement.
1 “Baby Boomers Retire,” Pew Research Center, Dec. 29, 2010
2 The Future of Medicare Supplement, 3rd Annual Market Projection, CSG Actuarial