Ritter Insurance Marketing

This post is for INSURANCE AGENT USE ONLY and is just my opinion on the 2009 market.

First, I’ve been getting questions every day, “what do the ’09 plans look like??”  For some reason, the carriers seem to be tight lipped about what they plan to do for 09.  Specifics will begin to leak out in mid-July.  All the carriers seem to be waiting for the other carriers to show their cards before they release their plans.

Here is my best guess on 2009 plans and what the carriers will do. . .

• Cigna – This one is easy because they released their plans.  If you are a licensed agent and would like to see information on the 2009 plans, please click here.
• Aetna – No other plans have been released, but I’ll give my best guess.  Aetna had great 08 enrollment numbers for PFFS.  Big drivers appeared to be Western states and Large Employer group.  Aetna has a “steady as she goes” philosophy, so don’t look for big changes.  Aetna is historically a network driven carrier, so PFFS was a bit of a different play.  My guess is that Aetna will look to grow in the network products, but look to maintain PFFS about level.  Aetna’s management is first class, so look for them to improve in all areas operationally.  They tend to take a more conservative stance on price and benefits, so don’t look for them to make radical changes.  They will continue to leverage their brand and core competencies with disease management and provider relations (read – network focused).
• Coventry – Another company which had an excellent 08 enrollment.  Some large state retiree plans helped with PFFS.  Also, had an excellent year with networked plans (HMO/PPO).  Coventry will look to expand into some new markets on the network side.  Recently, the company announced a reduction in their 2008 profit projections.  Partly, this had to do with the lag time with respect to PFFS claims from hospitals.  As such, Coventry was not fully aware of their Medical Expense Ratio (MER) on the PFFS.  This was discovered right around the time the CMS bid was due (June 2).  Coventry had done an excellent job in keep plan benefits level from 07 to 08.  On their analyst conference call, they still sounded upbeat on PFFS.  The Freedom 1 plan ($98/mo. with very low OOP) has had a nice 2 year run.  This plan, to me, seems ripe for adverse selection, so I was a bit surprised to see it hang in.  I’ll be surprised (again) if this plan continues to maintain it’s present form.  Although Coventry is a very disciplined company when it comes to pricing, I also believe that they understand the need not to “rock the boat” with major changes.  Look for the $0 premium plans to stay very close to 08 plan design and I’m guessing the Freedom 1 might get “re-tooled” a bit.
• Humana – First, I must admit that I have a “love/hate” relationship with Humana.  I love that they’re so smart and I hate that they’re so smart.  I think Humana has clearly been the big winner in the PFFS space on the heels of a brilliant PDP/Walmart marketing strategy.  They are DOMINANT in many markets.  While I believe that you can find better plan designs out there, they simply out market the competition.  Driven by a large career force, they don’t face the “ups and downs” of the brokerage market.  They don’t need to raise margins on their plans and they’re sharp, so I don’t imagine much of a benefit change.  Maybe some small tweaks on inpatient, level Dr. co-pays and slight changes around the edges.  Look for something unique in Value added benefits in 2009 as they do a great job selling the “extras”.
• Today’s Options – Again, I have no inside information, so this is pure opinion.  First, they had a bit of a “sophomore jinx” in 2008 following a huge enrollment in 2007.  They moved to 5 tiered rating in 2008 from versus 2 and 3 (American Progressive and Pyramid, respectively) in 2007.  This hurt.  On the flip side, they eliminated virtually all of the reduced commission counties in 2008.  They kept the benefits very consistent from 07 to 08, but, I believe, the 5 tiered rating system hurt.  This company was one of the only Medicare Supplement company smart enough to see the “writing on the wall” and move into the MA space in a big way early.  They have had some issues with their acquisition of MemberRX, but with some discipline, they can right that for 2008-9.  Excellent top management.  I’m thinking they’ll modestly bump product, but look closely at their county tier structure to boost business in 2009.
• Wellcare – From a benefit/pricing standpoint, one of the best values on the market.  They had a very smart stategy in 2007 with respect to converting “auto enrollee PDP members” from Original Medicare to PFFS, using their “duet” product, but caught some heat (I read some posts on this), I imagine, since this plan is a PFFS plan and not a “true” special needs plan (SNP).  Still, I though that was pretty intelligent marketing.  They had the whole FBI raid/Medicaid Fraud issue pop up in late 2007, but they came out with “out of this world” pricing and benefits, which turned what should have been a disastrous year into a very respectable enrollement for 2008.   From where I’m sitting, my best guess is that they’re acquiring business in order to attract a buyer.  There have been rumors that other larger Health Insurance Companies have been interested in buying Wellcare.  These rumors peaked and drove the stock price up to $55/share in late May.  Since, the stock has plummeted down to $35 which, one would think, makes them even more attractive to potential suitors.  S&P cut their counter party credit rating on June 19th to B from B+ due to lower than expected statutory surplus and eroded earnings margin in the first quarter.  Recently, they cut their commission to zero on the Duet plan in many states.  My guess is that they, again, filed a very strong product since there’s not a lot else going in their favor.  If they keep growing the way they are in the face of surplus issues, they’ll either run low on surplus (and stop writing new business) or they’ll be acquired. 

Craig