Prepared by: Jay ChangJune 11, 2011

The “Millennial The “Millennial Effect” on Boomers Effect” on Boomers

& MCOs& MCOs

*Millenials are the children of Boomers

Function Change Key Impact

Healthcare Consumerism

Boomers will be influenced by Millennials to weigh cost vs. choice

Sales & Marketing MCO’s need to demonstrate value to Boomers & Millennials

Member Services E-Services for Millennials will facilitate decision making for Boomers

Provider Contracting Millennials are working to virtualize services

Legal & Regulatory MCO’s need to defend itself from Millennials

Executive Summary

MCO’s need to partner with Millennials as the Boomers move MCO’s need to partner with Millennials as the Boomers move through a virtualized healthcare systemthrough a virtualized healthcare system

Healthcare Consumerism

Wealth

Choice

MA Private FFS3%

MA HMO17%

1

1 Less affluent Boomers will move toward MA HMO and sacrifice choice of providers ~ 87% < $50k annual income at retirement

Cannot rely on Millenials for financial support. Higher debt generation ~ $23k vs. $333 avg college debt

2 Affluent Boomers will move toward FFS w/Medigap or MA Private FFS to maintain choice

Boomers currently prefer choice: 21% HMO vs. 58% PPO

Medicare FFS75%

MA PPO5%

22

Sources: NY Times

Boomers will be influenced by Millennials to weigh cost vs. choiceBoomers will be influenced by Millennials to weigh cost vs. choice

Value of Choice & Care Education

Future Trends

• Payers will market and price their products based on outcomes

Evidence

• Subtle difference between HMO & PPO regarding “Getting the care they need”

Future Trends

• Channel 1: Payers will ramp up websites to target Millenials

• Channel 2: Payers will create more large print brochures

Evidence

• 64% of Boomers know “little or nothing” about Medicare

• 32% of Boomers use the internet for health information

• 85% of Millennials use the internet for health information

Payer HMO PPO

Health Net 83% 82%

CIGNA 84% 86%

Aetna 82% 87%

Anthem 78% 87%

Sources: California Healthcare Foundation

Sales & Marketing

MCO’s need to demonstrate value with a two-channel approachMCO’s need to demonstrate value with a two-channel approach

Member Services

75% of Millennial women enter the workforce

Pressure on MCO’s

Email for their parents

Text messages for urgent

notifications

Portals to view lab and test results

Benefits & eligibility to

estimate costs

MCO’s need e-services to partner with Millennials & Boomers for careMCO’s need e-services to partner with Millennials & Boomers for care

Prescription mail ordering

60% of Millennials expected to coordinate care for Boomers

51% of Millennials live greater than 30 miles away from parents

decision making

Provider ContractingMCO’s will help re-define or define new reimbursable services MCO’s will help re-define or define new reimbursable services developed by Millennialsdeveloped by Millennials

Source: Gartner, CBS News, AMA

Pressure to Virtualize for Boomers

•Over 65 population to double by 2030

•Projected shortage of 130,000 specialists, 60,000 PCPs and 220,000 nurses

•Access to specialist services in rural areas & reduced travel

•Closer patient monitoring

•On-going need to lower healthcare costs

•New revenue sources for providers

secure messaging

self-diagnosis & robotic surgeries

home devices, etc.

Legal & Regulatory MCO’s need to increase utilization management & tighten compliance MCO’s need to increase utilization management & tighten compliance against Millennialsagainst Millennials

Source: U.S. Government Accountability Office

Utilization Management Compliance

• CA appeal success rate = 54%

• Increased burden for legal staff

• Increased scrutiny for physician reviewers

• Increased confidentiality concerns (e.g., PHI)

• Increased workforce compliance needs (e.g., SOX)

• Tighter IT security demands

Questions?

Thank you!