2. Medicare Advantage will stay hot
Enrollment in Medicare Advantage plans is exploding as baby boomers, who have experience with managed care, turn 65 years old. CIGNA, Humana, UnitedHealth, and WellPoint each happily opened their wallets in 2011 to acquire MA plans. Expect interest in the senior segment to continue as insurers with strong cash positions compete for a share of this lucrative market.
These acquisitions can create an opportunity for commercial insurers to attract lifelong members who can be easily shifted to a Medicare Advantage plan at age 65. The MA market is fragmented, and analysts say it’s getting harder and harder for small MA plans to achieve those important economies of scale. Time is of the essence, as coding changes that will be implemented for hospital reimbursements beginning in 2013 will require costly investments in IT that will be tough for small MA players to afford.
3. Medicaid insurers will get hot
As state budgets flounder and Medicaid costs increase, states are turning to Medicaid managed care to try to control those program costs. Adding to the problem—or opportunity, depending on your outlook—is that as part of healthcare reform, Medicaid eligibility standards will expand in 2014 and 2015, with coverage available to all individuals under age 65 with incomes up to 133% of the federal poverty level.
Enrollment is expected to increase by 30%—adding about 17 million beneficiaries to the Medicaid rolls. The size of the potential market has the attention of commercial insurers, which are seeking turn-key acquisitions that provide an immediate presence in the Medicaid market. Meanwhile, existing Medicaid insurers are looking to expand their footprint. Either way, 2012 looks like a good year for Medicaid insurers who want to make a deal.