5 Reasons Why the Individual Health Insurance Market is on Fire (In a Good Way)
Most would agree that we are in a massive industrial shift right now.
I think most would agree that we are in a massive industrial shift worldwide right now. Here at home in the United States, the service industry is exploding. This is mostly related to a convenience mindset, a shift in our thinking as a society and the baby boomer generation entering the decumulation phase of life.
Of the many different faucets of the service industry, we're seeing massive private equity investment and consolidation in the individual health insurance space both on the Affordable Care Act side and the Medicare side. Obviously Medicare has been around for awhile and has become the standard for healthcare as we see many proponents of a "Medicare for All" solution. The trajectory of that conversation seems to really be leading to a managed care model for healthcare, paid for by higher payroll taxes with and backed/administered by private health insurance companies.
Here are five reasons why the health insurance market is on fire (in a good way).
1. All signs point to group health offerings diminishing over the next 10 years and individual health enrollment becoming more prevalent.
I am indifferent when I say this, but the indoctrination of our society that the employer needs to offer health insurance is already shifting. The Affordable Care Act often now offers a much more affordable and quality alternative compared to many small group health plans and the members of said group plans do not even realize they're paying more through work than they would on the individual market. As these employers are forced to increase their payroll tax contributions to pay for healthcare in America, they will lobby for less stringent laws that require them to provide healthcare for their employees since they're also being taxed to pay for individual healthcare systems.
2. Medicare age reduction.
We have all seen the ramblings about lowering the Medicare age to 60. Well, it may very well happen! Several years ago Social Security full retirement age changed and it got put on the back of a sliding age in over time. The same happened when Congress decided to "close the Coverage Gap" on Medicare Part D. They passed the bill and year by year, it chiseled away at the cost with an increased emphasis on pharmaceutical companies helping eat some of the cost.
It will not be long before they do the same for sliding age, and when they do this I fully anticipate the Medicare Part B premiums to be paid for with a gradual reduction as people age to the current age of 65. This actually should be looked at positively as a way to insure Medicare remains solvent, with younger healthier people paying slightly higher premiums.
3. The silver tsunami
The baby boomer population has been in the scene for a while, but the peak of the baby boomer age in is currently slated by statisticians as 2024-2025. This means that as alarmingly rapid as the growth we have seen in the Medicare industry is, it will get larger and larger. Those businesses currently positioned to help these boomers are going to prosper handsomely, but honestly we do not believe the infrastructure of the industry is properly prepared for that growth. There is still a tremendous amount of opportunity to start local agencies and resource centers for Medicare beneficiaries. The managed care side of Medicare has grown so fast and we really have only scratched the surface of exploring the level of service at a local level.
4. CARES act gasoline
Now that we've seen the possibility of both group and individual enrollment opportunities, Medicare age reduction and the certainty of baby boomers aging in to the current Medicare system explores how 2020-2021 has fueled the public opinion of the Affordable Care Act. Through 2019 we saw a lot of negativity towards HMO plans commonly sold on the Health Insurance Marketplace, but since then the Affordable Care Act has become a more necessary option for millions of people. These plans have now become more established with hospital networks, which has led to many satisfied clients. We saw this same trajectory with Medicare advantage as it has evolved over the years.
5. Residual income
We hear talks of passive or residual income all the time, and we're increasingly seeing businesses operate in ways that provide subscription-based models to create this type of revenue. However, the health insurance industry has been paying its agents and distribution channels in this way for years. The healthcare system is beginning to even cater to these types of plans to get subscription-based payouts from the Medicare advantage companies. Residual revenue drives a basis from which to predict and plan for your business growth. Medicare and health insurance provide a massive amount of residual revenue opportunity, no matter how we slice the pie.
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