Bracing Ourselves for 2017: An outlook on insurance market trends

As a new president soon takes office, the healthcare industry continues to speculate on what is to come in 2017. Media outlets have been buzzing with predictions on the transition from Obamacare to Trumpcare, debating what new leadership will mean for existing legislation. With 2016 behind us, here is my opinion on what to expect across individual, Medicare, and group insurance markets.

Individual: Aftermath of ACA, lean toward transparency

Following the election, news sources have proclaimed that President-elect Trump’s “repeal and replace” message is much easier said than done. The GOP’s repeal proposals are already meeting more resistance than Trump’s campaign trail preached. Recent reports suggest that Trump’s team is coming to grips with the good features of Obamacare that would ruffle too many feathers to repeal. Revoking the Affordable Care Act in its entirety is unlikely, given the millions of Americans who would lose coverage under the public exchange.

Representative Tom Price, Trump’s pick to be secretary of the Department of Health and Human Services, previously drafted a complete replacement for the ACA, indicating an aggressive attempt to overhaul current policy. While the ACA may be too massive to fully dismantle, a Trump-Price team signals determination to enact major change.

One of the themes we will see is the desire for more transparency—not just in insurance markets, but across providers and pharmaceutical companies. Government agencies will become more intertwined with private companies, requiring more transparency in the costs of medicine and medical procedures. More companies, like Healthcare BlueBook, will encourage consumers to make financially-informed decisions on where to book treatments and operations. While transparency may pose challenges on providers, this idea bodes well for conversations between insurance agents and consumers, creating more accountability for each side.

While we can only guess as to what will pass through Congress, we can confidently predict a few outcomes for next year. As I shared in my election post, we can expect prices to continue to increase. With the losses carriers continue to endure, we can also expect reduced or restricted compensation on individual plans outside of the Open Enrollment Period. Sources have suggested that the Trump administration will likely allow individual premiums to be tax-free. If this comes to fruition, we can anticipate continued growth in the individual market even if premiums continue to rise.

Medicare: Expansion and competition

As more of the Baby Boomer generation turns 65, we will undoubtedly see major expansion of Medicare. Naturally, more insurance agencies will be playing in the Medicare space to capture this huge segment of the population nearing retirement. But as more agencies run to Medicare, we will likely see higher competition from market saturation. This means more agents fighting over the same leads. Agencies will have to be more strategic in their approach to buying leads and training their agents to compete with others.

Medicare membership continues to grow an average of one million net new members per year. Year over year, premiums remain flat, with a 15% decrease over the last six years. More Americans will turn 65 each year for the next 24 years than any year since 2016.

Buffer Boesch, President of AmeriLife Direct, adds his take on the future of selling Medicare. “We see the continued domination of call centers in the senior health market. Due to the efficiency and cost effectiveness of delivering insurance products via telesales, we are convinced this is the future of the industry. Our continued expansion into this arena will be our primary focus in the coming years.”

Group: Consequences of the risk pool

Compared to earlier predictions, group insurance has been an unlikely performer in affordability. One of the primary reasons that individual insurance prices have increased is because of their risk pool. After the ACA was enacted, more sick people had access to health insurance, presenting tradeoffs for the population as a whole. On one hand, more people are getting access to the healthcare services they need. On the other hand, generally-healthy people are charged higher premiums to balance the weight of the risk pool. In these cases, employer-sponsored insurance plans have become more attractive.

Looking back on reports from two years ago, industry experts predicted that group insurance was dissolving. Much to their surprise, we are now seeing more companies reverting back to group insurance, keeping risk pools based only on the health of people within the company. Networks and plan coverage are typically stronger within group insurance plans, and rates for any group are likely better for individuals who don’t qualify for a subsidy. Going forward, I suspect we will see a rise in companies adopting group insurance.

However, fully insured groups are reaching a breaking point for some employers’ budgets. According to Justin Clements of Remodel Health, employers are running out of carrier options in the fully insured space as numerous small regional carriers have closed their doors or reduced their footprint. Some large employers are using minimum essential coverage (MEC) plans as a way to avoid penalties. Third-party experts agree that the Trump administration will likely remove the penalty requiring employers to offer traditional group medical.

Takeaways for Insurance Agents

As an insurance agent, what should you anticipate for 2017? Over the next year, agents will find it extremely important to present every option to clients. Explore different verticals of health insurance: individual, Medicare, and group as the new presidential administration is likely to make changes across all three industries. For new ideas on growing your agency’s client base, see our recent blog on digital marketing tactics for reaching more of your target audience.