The Next Boom: What's Driving the Medicare Market Growth—And Changing The Way Agents Do Business

The Medicare market is already big, but it's about to get much bigger. It's projected to peak at nearly 80 million in the coming decades. Recent legislation has also expanded Medicare privatization, creating a huge opportunity and challenge for agents to understand what seniors need and how they're increasingly using the Internet to get answers - and buy their policies.

Medicare Privatization
In the last 18 years, Medicare enrollment has grown from 34 million to more than 45 million Americans today. That's nearly a 33%increase.

But what really interests agents and brokers is that, according to the Kaiser Family Foundation, 9 out of every 10 Medicare enrollees now use private carrier-provided coverage - either through a prescription drug program (PDP) or Medicare Advantage program.

In just over two decades, the foundation projects that Medicare enrollment will hit 79 million - a 77% increase.

What's driving this growth?

Life expectancy is one factor. The average American born today can expect to live almost 78 years. And that average life expectancy actually goes up further for Americans with adequate health insurance.

But living longer only helps to explain the increase in Medicare enrollment up to now. It cannot explain the huge jump coming over the next 20 years. The nearly doubling of Medicare enrollment in the coming decades can be explained in two words: "Baby Boomer"!

Baby Boomers
The Baby Boom generation has been behind the major demographic trends in the U.S. over the past 60 years. They were the first TV generation. They came of age during the turbulent 60s. They helped drive America's boom economy during the late 80s and 90s. And now they're heading for retirement.

The first Baby Boomer will turn 65 and qualify for Medicare in just 27 months. Behind her are another 76 million Americans.

But first a little background history. The Baby Boom generation refers to the population born during the 20 years after the end of World War II, from 1946 to 1965.

The end of the war saw America emerge as a revitalized world power primed for growth. Returning veterans and Americans ready for a normal life launched a baby boom that spiked U.S. population by 50%!

Now these Baby Boomers are entering retirement. But they're nothing like the stereotypical retirees of past generations who spent their days in a rocking chair. Seniors today are more active, and they plan to stay that way.

They're also more wired.

Senior Internet Use
Some studies estimate that nearly 38% of seniors over 65 now use the Internet. That may not sound like a lot when compared to the 77% of 18- to 29-year-olds who go online, but consider these facts:

• Upward Trend

  Seniors make up the fastest growing population on the Internet. The Pew Internet & American Life Project recently reported that from 2000 to 2007, Internet use among Medicare-eligible seniors grew by a whopping 160% - and there are no signs of a slow down!

• Enthusiastic users

  Once seniors do start using the Internet, they're just as likely to use it on a regular basis as younger users.

• Medicare search

  Wire seniors are avid information seekers, with health insurance and Medicare on the top of their search lists.

This pre-Baby-Boomer generation is adopting the Internet at an ever fast rate. But Internet use among Medicare-eligible seniors is about to go higher, as web-savvy Baby Boomers turn 65.

In fact, Baby Boomers currently in their 50s are just as likely to go online as Generation X (the offspring of Baby Boomers). For example, 75% of both Generation X users and Baby Boomers in their 50s get their news online. Similarly, 59% of Generation X users use the Internet for job searches, while 55% of Baby Boomers do the same.

As these Baby Boomer turn 65, they'll probably continue to turn to the Internet for many of the health and Medicare questions.

The Pew Internet Project sums it up best: "As Internet users in their 50s get older and retire, they are unlikely to give up their wired ways and therefore will transform the wired senior stereotype."

Putting It All Together
The growth trends are clear. The Medicare market will transform the individual health insurance industry for decades to come. But brokers and agents will need an integrated online marketing program to serve increasingly online seniors.

The potential volume is incredibly large, but it will probably be the agents with the right tools who'll capture the lion's share of the market.

For example, a senior quoting engine will help agents serve at least 20X more clients by reducing quoting time by 96%. Instead of spending up to an hour (or more) running quotes by hand, a senior quoting engine can generate multi-carrier quotes in seconds.

Agents are able to help clients compare various Medicare plans side by side to find the one that best fits the buyer's needs. They can then go directly into an online application for faster submissions and closing.

Better yet, the senior quoting engine can be embedded into an agent's website, allowing visitors to generate quotes and compare plans whenever they want. And when a visitor uses your quote engine, they become your exclusive lead.

In addition to increasing business, a senior quoting engine will expand an agent's capacity. To fill that capacity, producers should turn to Medicare leads - especially online "search engine driven" Medicare leads.

Together, Medicare leads and the senior quoting engine will allow agents to meet increasingly wired seniors where they're shopping for a Medicare plan that works. These tools will also help agents better serve the huge and growing senior population - more efficiently and affordably.