Corporate Compliance

Medicare competition begins

Compliance Monitor, October 5, 2005

Earlier this week, insurers got the government go-ahead to start pitching their new Medicare drug plans, according to the Arizona Republic of Phoenix.

The multimillion-dollar marketing campaigns will include everything from television ads to talks with insurance brokers.

For insurers, pharmacy-benefits managers, and drugstore chains, the stakes are high: The new drug benefit is expected to cost Medicare nearly $400 billion over 10 years.

Goldman Sachs & Co. has estimated that the country's nine largest insurers could make $10 billion in revenues and $250 million in profits next year.

According to the Republic, companies must get their names out there as much as possible yet not scare away seniors, who may not enroll because of information overload.

"We are focusing on simple. Our research with seniors shows that is what they want the most," said Scott Ptacek, vice president of Medicare sales and marketing of Health Net of Arizona.

PacifiCare, which operates Arizona's largest Medicare managed-care plan, expects to spend $50 million in ramping up its new Medicare programs and will be using newspapers, mailers, and television ads.

In addition to the traditional methods, PacifiCare is working with brokers to whom seniors have gone for supplemental insurance.

Other insurers are partnering up as well.

UnitedHealth, one of the nation's largest insurance companies, is teaming with AARP, the nation's largest senior advocacy group, to offer the "AARP MedicareRx Plan."

Aetna has a strategic alliance with drugstore chain CVS.

Humana reported it was partnering with Wal-Mart so it can talk with its customers in stores.

Enrollment will begin November 15.

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