An Idea For Saving The Senior Health Care Market
The Medicare prescription drug bill that passed in Congress brings with it more than a much-needed pharmaceutical benefit to seniors. This legislation really marks the inauguration of the deconstruction of the original fee-for-service Medicare plan.
As you know, the fee-for-service Medicare is a system that has served the needs of multiple millions over more than 3 decades. Sooner or later, it will be replaced by more modern delivery systems of the managed care stripe.
But in the process, the industry needs to find a way to save its own share of the senior market. There is a way to do that, and this is the subject here.
Due to the changes coming down the pike in Medicare, individual agents and carriers in the supplemental Medicare, hospital indemnity and similar markets must now begin the difficult but necessary changeover to new and more serviceable supplemental health care products.
The next generation supplemental product that will help meet the need is called “post-hospital extended care insurance.”
This is a type of short-term insurance that protects individuals and families from the burden and cost of caring for the acute care patient who is discharged but needs continuing supportive care.
By virtue of the risk this coverage manages, such insurance offers a benefit with high utility.
This utility is not only for the senior retiree but also for all demographic age groups concerned about managing the unexpected financial fallout of acute care illness. In this age of limited and circumscribed inpatient hospital care coverage, that aspect is of critical importance.
Currently and in the future, the key to cost containment for Medicare recipients is removal of the patient from the high-end inpatient care venue (the hospital) at the earliest point possible.
(By the way, this cost-containment approach is also the trend for care involving individuals who have private health insurance and/or group health insurance, including managed care plans.)
While cost effective, these traditional programs pose a problem for the individuals, their families and society. Thats because the process often entails transferring patients either back to their families or into lower level facilities such as assisted living or short-stay nursing homes. Many times, the families and/or short-stay facilities are ill-equipped to provide adequate care.
Therefore, the transfers are tearing wide open the umbrella of protection once afforded by conventional health care coverage.
The patients and the patient families are now becoming exposed to paying the costs associated with supportive care services. Either that or they must arrange to, and learn how to, supply that care themselves.
Already, folklore is spreading like wildfire in patient communities. Friends, neighbors and colleagues swap tales of woe about the stresses and heartbreaks that have transpired due to this situation. “Oh, thats terrible,” someone will say. “It happened to my father, tooand, worse yet, when he got back home, he fell and”
It is into this gap that the new supplemental product of the future must stepthe post-hospital extended care product mentioned above.
Because the product is short term only, the exposure is knownand manageablefor insurers. And because of the changes in Medicare and general health care insurance mentioned above, the potential market is extensiveand eager to buy.
Whats more, by marketing smaller, individually affordable supplemental benefit packages, insurers can revitalize a segment of the private health insurance industry that may otherwise go under, due to changes in Medicare.
The post-hospital extended care market is a huge untapped arena for growth. It will swell as boomers age into retirement and seek reasonably affordable and high utility benefit plans such as these products.
Due to the fact that they are of limited scope and duration, such products would be universally more affordable than traditional long term care insurance. They would have a more immediate mass market appeal, too, because they offer an acute care rather than chronic care benefit.
These products already exist, but only a limited number of carriers offer them.
In light of the clearly changing face of the health care delivery system, carriers that make the commitment to designing short duration extended care plans and agents who are willing to learn how to market them stand to reap huge rewards.
is principal of Financial Care Services, a Grand Rapids, Mich., agency specializing in senior health care products. His e-mail is [email protected].
Reproduced from National Underwriter Life & Health/Financial Services Edition, December 5, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.