The new Medicare Part D prescription-drug benefit will be a major driver of the health-insurance sector in 2006, market analysts predicted, and certain health plans are already emerging as the front runners.
'I think Wall Street has been excited about the potential for the Medicare benefit, and the new members who will be booked into these plans (through) health maintenance organizations (HMOs) and preferred provider organizations (PPOs), but also, of course, the (Medicare Part D plan, Jane DuBose, a managed care market analyst with Nashville-based Health Leaders-InterStudy, told United Press International.
'I think the potential will be realized for some companies, but for others. it will not. I think the market will begin to reflect the winners and losers,' she said.
In fact, according to DuBose, the difference between the clear winners and the also-rans, as with most business sectors, boils down to strategic alliances, getting the brand into consumers` consciousness, and location, location, location.
'I think United Health Group will clearly do well because they have this partnership with (American Association of Retired Persons) and that`s a name that seniors trust,' DuBose said.
'Humana will do well because they`ve been the most aggressive at marketing, and they have partnered with Walmart,' she added.
'I`ve seen statistics about the number of seniors who actually walk into a Walmart. Humana has had on site real people to answer questions.
I think that`s going to be a good strategy, so they`ve really blanketed in terms of marketing,' she said.
In addition, Humana has entered into numerous new PPOs across the country that will further increase the health-insurance giant`s exposure, DuBose noted.
Also, WellPoint -- expected to merge in 2006 with WellChoice -- is most likely to cash in on Medicare`s Part D in the nation`s heartland, she predicted. 'WellPoint has very strong presence in the Midwest,' DuBose said.
On the other hand, she predicted 'a toss up whether Aetna, Signa and Pacificare will be able to get their share' in this emerging market.
Although there are 10 or 11 national (health insurance) carriers, DuBose pointed out, 'in some states, you just don`t see marketing from some of these vendors. Pharmaceutical benefit management organizations (PBMs) like Medco Health Solutions and Caremark, for example, just don`t get into the (consumer) consciousness as much as these health plans in terms of marketing, so I`m not sure they`ll do as well as some of the health plans,' she said.
Medicare`s new program, which takes effect Jan. 1, will also unveil another first-of-its kind plan, the Medicare PPO -- and another potential cash cow for the major health-insurance players, DuBose added.
'The interesting thing about the (Medicare) PPO is, this is the first time that seniors all over the country, rural areas and urban, are going to have access to these (plans). In the past, it was only financially feasible for these health plans to offer the plans in urban markets,' she noted.
So which health insurer is most likely to benefit? 'Humana, big time,' DuBose predicted.
'They`re staking more than any other health plan on the acceptance of the Medicare PPO concept. The question is whether seniors want to do it, but if anybody gets uptake, it would be (Humana) because they simply have gone into more regions than anybody else in the country,' she said.
WellPoint, with its high Midwest profile, is also banking on the Medicare PPO, launching regional PPOs in Ohio, Kentucky and Indiana, she said. Other potential PPO winners include certain Blue Cross plans, DuBose added.
'Blue Cross of South Carolina, which is sort of a quiet giant that is not publicly held, is going to do the regional PPO concept in South Carolina and Georgia,' she said.
Charles Boorady, a managed-care-industry analyst with Citigroup, agreed that Medicare`s prescription-drug benefit will be a primary market mover in 2006.
'The summit ahead would be the largest expansion of Medicare since its inception and the largest privatization in our history: that of Medicare recipients (transitioning) into private health plans,' Boorady said in a note issued earlier this week.
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