Between 2006 and 2008, the Loyalty Index varied inversely with Switch Intention. In 2009 the pattern was broken — Loyalty and Switch Intention rose together.

Switch Intention remains a reliable leading indicator of actual health insurer switching by senior consumers.

Implications:
The contradictory combination of greater loyalty and high rates of switching means Medicare consumers are more active.

-Over four years, the red line is increasing.
-Future competition for customers will not just be a body count. Health insurers who understand their market well enough to target and keep the value shopper will enjoy better profitability than insurers who appeal to the frequent switcher.

HUMANA MAPD LOYALTY AND SWITCH TREND

SOURCE: DEFT RESEARCH, 2009

The graph shows that the loyalty of Humana’s customers has varied inversely with the switch intention percent.

In 2009 both Loyalty Index and Switch Intention indicators for Humana are above the industry averages. This is a paradox, their customers are more loyal than average but also have a higher likelihood of switching. The National Senior Loyalty Study 2009 suggests that Humana has attracted active consumers. These are consumers who, despite loyalty, remain shoppers and continue to look for health insurance that suits them even better.
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Generating Loyalty

The loyalty study identified six top attributes for generating loyalty. If, either through experience or promotion, customers come to believe that their insurer is better than competition regarding these attributes, they are likely to be loyal customers and less likely to switch. Below, the six attributes and Humana compared to the overall MAPD industry.

HUMANA AND SIX TOP ATTRIBUTES FOR GENERATING LOYALTY

SOURCE: DEFT RESEARCH, 2009

Humana’s % Better Scores are considerably higher than average for understanding the needs of seniors and having honest sales people. But customers are less likely to view Humana as better than competition at offering lower copayments, easy paperwork, or early detection programs.

The National Senior Loyalty Study’s Humana profile does show one unique theme pointing to the development of customer loyalty. Humana’s % Better Scores are much higher than average when customers assess the company’s communications with them and the information provided to help them save money on drugs.

Helping seniors watch their money is part of Humana’s brand image and attractiveness to active shoppers. But is it enough to keep customers loyal?

What is the National Senior Loyalty Study? The National Senior Loyalty Study is the largest study of its kind to track and measure senior customer loyalty, switch intention and market differentiation among health insurers.

Not only does the 2009 National Senior Loyalty Study equip and arm you with the best model for controlling disenrollment and increasing customer loyalty, it also gives you a better idea of how your competitors are doing.

You can phone, fax or e-mail us to get the full report, due to come out by early November.

The National Senior Loyalty Study reports an increase in our Senior Loyalty Index coinciding with a paradoxical increase in the percent of consumers with some intention to switch health plans in the coming months. In other words, senior consumers are as happy with their health insurance as ever, but that loyalty is not keeping people from staying on the lookout for something new.

Why? When our analysis is finished, we will show which of 53 market differentiators are associated with loyalty and switch intention. Separate analyses will be performed for MAPD, Medsupp, and PDP.

The analysis will also show how different competitors are generating loyalty among their customers.

We will have perspectives from hundreds of MAPD and Medsupp consumers indicating how top competitors are generating loyalty or how they are failing at it.

Based on retirement expectations, current income and sources of retirement income, Deft Research developed four market segments for it’s Age-in Study.

• On the Fence

• Working Secure

• Working with Less

• Retiring Well

IMPLICATIONS.

Although people are eligible for Medicare at age 65, this date is no longer significant for the majority’s approach to retirement from work. The result is a prospective market of Medicare age-ins where only one half will actually be in the market for individually purchased MA or Medigap plans.

Because of the variety of retirement approaches, age-ins can be divided into market segments whose health insurance needs also vary.

• On the Fence and Retiring Well are far more likely to need individually purchased health insurance. Which means that targeting them with specific and more intense marketing will result in a higher ROI for that marketing activity.

• Working Secure and Working with Less will continue to work and to rely more on employer-based insurance. These markets may need supplemental coverage or basic lean MA benefits to assure complete coverage.

Switching remained about the same however, as those who did shop were more serious about finding a new plan. Signaling a slowdown in the migration from Medsupp to Medicare Advantage, the rate of switching declined more among the Medsupp population than the Medicare Advantage population.

The study offers conclusions about:

• the impact of pricing and other benefit attributes on switching,
• the inactive segment of the market and what inhibits them,
• the changes in consumer perception of their health insurance over time,
• the impact of ancillary services on future consumer consideration,
• the best ways to reach consumers through a variety of promotional channels.

With this information your Medicare program will be helped because it will help you better predict the reaction of the market to product and marketing strategies.

Additional study sections address the following:

• Whether the group retiree market is thawing or not.
• How dual eligibles want to be reached.
• The story of consumers with original Medicare only and a PDP.

Deft Research’s Senior Market Dynamics Study is part of the Senior Market Intelligence Service a unique 3-part research program of the senior health consumer. The service includes three senior consumer research studies, 12 Executive Research Briefs, teleconference presentations, and on-going support.

MINNEAPOLIS, Minn., Nov. 17 — Customer retention is a primary concern for health plans now that Medicare Open Enrollment is underway. Customer loyalty – a key in successful member retention – varies between plans and is highly correlated with intention to shop for coverage alternatives. Deft Research, LLC recently released the 2008 National Senior Loyalty Study, which draws attention to AARP and Kaiser as Medicare insurers with different but successful approaches for generating loyalty among senior customers.

AARP’s Supplemental Medicare insurance (Medigap) business stands out. There exists consensus among its customers that AARP is better than competition at trustworthiness and nationwide healthcare access. “AARP Medigap generates loyalty by excelling at these basics,” reports Richard Hamer, Principal, Deft Research. AARP’s ratings drop off after assessing basics, but high basic measures still achieve high loyalty scores. “AARP’s brand promise is focused. It’s remarkable how many AARP’s customers believe it is better than competition in areas where all health plans compete,” said Hamer.

Kaiser’s Medicare Advantage business differentiates itself uniquely. Comparatively, Kaiser’s customers are convinced it is outstanding in member communications and delivering early detection and special programs. “Special health programs are difficult to execute. The percentage of Kaiser’s customers who believe their plan is better than others in this area is really impressive,” said Hamer.

Over 3,000 seniors participated, making this study the largest on-going project of its kind. The 2008 National Senior Loyalty Study uses customer perceptions to develop pictures of health plan loyalty. Results show that health plans use different ways to generate loyalty among customers. The research provides a scoring system that includes senior consumer perceptions of brands, medical and drug coverage, services, sales channels, prices and costs. The results give an overall measure of senior loyalty, a breakdown of how loyalty is generated, and insurer comparisons. Top competitors are profiled with these measures and fifty-three plan attributes or market differentiators.

About Deft Research, LLC
Deft Research, LLC is a market research firm specializing in custom and syndicated research designed for those in the healthcare, insurance, and pharmaceutical industries. Deft Research works with management to define pertinent issues and conducts research that guides management and allows them to make better, well supported decisions.

For more information see www.deftresearch.com or contact:

Barb Strnad
(612)436-8315
bstrnad@deftresearch.com

Your competitors are accessing Deft’s syndicated service.

• Identified the age-ins who will be easiest to enroll.
• Leads to several action items regarding the age-in opportunity.
• Great analysis about getting more age-ins to enroll on-line.
• This is very practical stuff.
• Addresses several current questions and sharpens the questions we want answered with future market research.
• This will ultimately save us money.
• Deft gave our team a presentation of the study at no extra charge.
• Deft worked with our team to assure the results were used.
• Deft provided us with a custom analysis based on the study data (no extra charge.)
• This will help us with strategy development over the next several months, and when we start again next year.
• There’s no other place to get information like this about in-home medical technology.

Study: Half of Age-ins will be easier to enroll. Which half?

The 2008 Age-In Study asked a national sample of 1500 consumers aged 63 and 64 for their perspectives on health insurance, in-home medical technology, and on-line enrollment.

More than just description

The study tells us that about half of all age-ins will give their current insurer a competitive advantage when it comes to considering their coverage once eligible for Medicare. Competitive advantage is described in terms of attachment to the current insurer and disinclination to shop.

But this study goes much further than that.

Its analysis will help you predict which age-ins will give you the competitive advantage. If you could do this, you could target your easiest to enroll with a marketing campaign that yields a higher ROI. The study tells you how, in the short term you can identify persons most likely to be easiest to enroll.

Get more details and order the 2008 Age-In Study.

Deft will send you a complete, free, overview of the study. Just make a your request to
Rich Hamer.

Segmentation leads to clear strategies

To see a FREE report overview of the 2008 Age-in Study click here.

Top Line Result

Segmentation allows for Medicare plans to focus on smaller groups of consumers and address issues in marketing that will reach them specifically. Inside Deft’s new 2008 Age-in Study segments of age-in consumers are created using two variables: attachment to current insurer and likelihood of shopping for other carriers, (shown in different colors above). Consumers in blue here don’t need much convincing because they are already attached to their current insurer and unlikely to shop around. In this case their insurer should focus on keeping these consumers aware of the insurer’s Medicare plans and make the enrollment process as seamless as possible.

To find out about the other benefits of segmenting age-ins, click here to download a FREE report overview.

Happy members, happy margins

The 2008 Age-in Study shows insurers that a positive relationship with their older commercial members can actually help them meet their Medicare plan enrollment goals. But even knowing this, insurers still need to know what types of experiences produce this kind of positive relationship. The Age-in Study answers these questions, and helps insurers plot a relationship building strategy.

Order the 2008 Age-In Study.

Experiences with insurer affect relationship

To see a FREE report overview of the 2008 Age-in Study click here.

Top Line Result

We all know that negative experiences, like having a claim denied, can reduce the positive feelings a member has towards their insurer. But what about a more ambivalent experience like calling customer service? Use of customer service line, as shown in the chart above, generally increases the chance that the member believes that the plan cares about their health and that their insurance company treats members better. This is the kind of experience that improves a customers relationship with their insurer and makes them more likely to stick with that insurer when they switch to a Medicare plan.

To find out about the other experiences that build relationships, click here to download a FREE report overview.