This fall is Medicare open enrollment time and you can count on seeing Joe Namath on television, along with William Shatner and Jimmie “J J” Walker. They are the most prominent pitchmen for what has become an annual fall selling frenzy for Medicare Advantage policies.
After a surge in consumer complaints, and stiffer government rules, the sales pitches will likely be tamer this year however. The federal Centers for Medicare and Medicaid Services toughened its oversight after consumer marketing complaints surged 165% last year to 41,136 compared with 2020. Brokerages, agents and other marketing businesses tried to convince Medicare recipients to switch plans, with promises of perks in their new plans such as home-delivered meals, rides to doctors’ appointments and cash.
In some cases, beneficiaries would effectively pay for the perks with more-limited provider networks, forcing them to find new doctors, regulators say. The celebrity pitchmen do not tell the whole story.
The aggressive sales efforts by marketers are the result of billions invested by private-equity firms, financial-services companies and stock-market investors into virtual call centers, internet-based lead-origination firms and other marketing businesses over the past several years.
The investors all focused on the annual sign-up period for Medicare Advantage plans. Enrollment in the plans, which are offered by private insurers and paid for by the government, grew 8% last year to 28.4 million in 2022, according to the Kaiser Family Foundation.
Consumers can sign up for new plans every year, making them a prime opportunity to generate sales commissions for brokers. “Seniors are being bombarded,” said Bob Garrison with ICUSA. The sign-up period runs from Oct. 15 to Dec. 7.
Several brokers and other firms with specialties in Medicare Advantage were acquired or went public in pricey deals in recent years. In 2019, Prudential Financial Inc. spent $2.3 billion on a startup that uses algorithms and machine learning in selling life and health policies.
In 2020, brokers GoHealth and another broker, SelectQuote Inc., raised more than $1.2 billion between them in initial public offerings. Financial-services company Primerica Inc. last year added sales firepower in a deal with Medicare Advantage-focused e-Telequote valued at $515 million.
Competitors for Medicare Advantage business also include Health IQ, an insuretech founded in 2013 to sell term-life to runners, cyclists and other health-conscious people that now promotes itself as Health IQ Precision Medicare.
Not all deals have worked out as planned. Prudential has written down its investment by roughly half, while shares of GoHealth and SelectQuote are down more than 90% since the IPOs.
A CMS spokeswoman said recordings of sales calls showed that many people were confused “regarding who they are speaking to.” Some thought they were talking to the government.
Surveys of state insurance departments by the National Association of Insurance Commissioners, meanwhile, identified complaints about alleged fraudulent activity. This includes beneficiaries being enrolled with forged signatures, according to letters from the standards-setting group to Congressional leaders in May.
The TV ads featuring Messrs. Namath, Shatner and Walker urge viewers to use an on-screen toll-free number to call a helpline about extra benefits for which they may qualify.
Mr. Namath, the former star quarterback for the New York Jets, has appeared for four years in commercials for a Florida-based brokerage and lead-generation business of Benefytt Technologies Inc., which is owned by funds affiliated with private-equity firm Madison Dearborn Partners.
Seniors should always contact a trusted Medicare advisor before making any plan changes this fall.
Contact our Medicare support team at 940-382-4700 if you have any questions.