American cash money and yellow sticky note with text Medicare in black color aerial view
With the annual Medicare open enrollment period set to close on December 7, the onslaught of Medicare advertising hasn’t slowed down. These ads target the 65 million Americans on Medicare, who have a plethora of insurance coverage options and many of whom can only switch between during this Annual Enrollment Period (AEP).
This year’s ads must meet new requirements that limit how plans, brokers, and other third parties can use the Medicare logo and images of the Medicare identity card. They must also pass a Medicare agency review. These protections came along in the wake of increasing consumer complaints about misleading sales and marketing tactics.
Formal complaints likely undercount the true extent of the practices. According to a Commonwealth Fund analysis released this fall, 89% of older Americans surveyed said they don’t know how to file a complaint about Medicare marketing; 22% said they didn’t think they could figure it out.
The Commonwealth Fund report illustrates just how vital CMS’ new rules may be in protecting consumers from false and misleading ads. The analysis showed that lower-income Medicare beneficiaries may be particularly vulnerable to deceptive marketing tactics.
In a survey of 2,000 people age 65 and older in the midst of last year’s AEP, respondents reported being inundated with Medicare marketing messages. Almost all (94%) respondents reported seeing Medicare ads on TV or online, with 76% saying they saw at least one Medicare ad a day. Virtually all (95%) had received a mailing and about three-quarters had received emails (74%) or phone calls (73%). Nearly one-third (30%) said they’d received seven or more phone calls about Medicare per week.
The volume of phone calls is not only annoying; many of the calls may violate CMS rules. CMS prohibits marketers from calling Medicare enrollees unless those enrollees have agreed or requested to be called. However, three-quarters (74%) of survey respondents reported receiving an unsolicited call from a Medicare plan or plan representative. Nearly nine out of ten (88%) of Black respondents said they had received unwanted calls in the past year compared to 76% of white respondents.
Some of the other marketing tactics would be considered fraudulent according to federal rules. Medicare marketers are not allowed to ask for the consumer’s Medicare or Social Security number unless the consumer is knowingly and willingly enrolling in a Medicare plan. However, 10% of respondents said they’d been asked for this type of information outside of an enrollment process. Among respondents with annual incomes under $25,000, that figure was more than double (22%).
Similarly, Medicare plans are not allowed to offer special, time-limited discounts, yet nearly one in five (19%) respondents said they’d received calls or seen advertising messages that promised special discounts if they signed up right away or within a certain time period. This figure was in line with the rate among lower-income respondents (22%).
Nearly as many (17%) respondents said they had received advertising messages that they later learned not to be true. This figure was substantially higher (28%) among respondents with lower incomes. Worse, about one in ten (11%) of respondents actually enrolled in a plan thinking that their healthcare provider was covered under that plan, only to learn later that they were not.
Medicare itself does not promote or endorse any specific private plan, yet about half (51%) of respondents said they received a call or email, apparently from Medicare, promoting a specific plan. Among lower-income respondents, that figure was 65%.
Medicare marketers make all of this effort—and investment—despite relatively low yield. According to the survey, only 15% of respondents have responded to a Medicare ad or other marketing contact. Of those, only one-third say they enrolled in that plan.
About a 5% success rate may not seem like a lot, but each Medicare Advantage enrollee contributed more than $1,700 in gross profit in 2021, double or more the financial contribution of people insured in other types of plans. Overall, more than $450 billion of federal Medicare spending goes to Medicare Advantage.
The advertising blitz may work well enough for plans and brokers to keep doing it, but they’re looking for a relatively narrow slice of beneficiaries who actually switch each year.
In 2024, the typical Medicare beneficiary has a choice of 43 Medicare Advantage plans or 21 Medicare stand-alone prescription drug plans alongside Original Medicare.
The Commonwealth Fund survey revealed that when Medicare beneficiaries feel overwhelmed by the number of choices, inertia sets in: 96% of them stick with their current plan.
