There may be a "boom" coming, but where might be surprising. In an article in Forbes, the McKinsey Quarterly is reporting that a market is developing because of the fears (or reality) of employers not being able to support retiree health benefits at the levels promised to them. In part because the evolving needs of future retirees are new to health insurers, few of them have moved to grasp this new opportunity so far. They must now do so--and urgently. The baby boomers soon will have to start making decisions about how to pay for their health care in retirement, since many of them won't have the luxury of company-funded health care plans to supplement Medicare. People are living longer, heath care costs continue to rise, and businesses are finding it increasingly difficult to fulfill health care obligations to their retirees.
It may not be fair, but it's a reality. McKinsey research shows that pre-retirees worry about how to pay for their health care, and that these concerns will drive them to solidify their financial plans five to ten years before they actually retire. So far, however, they have been stymied by a dearth of quality advice about how to plan for health care in retirement--including realistic estimates of the total costs they might face. It looks like financial services companies are the early "thought leaders" for this burgeoning industry. But don't be surprised to see many more come to the party.
Given the insurance and managed-care experience of leading health insurers, they should be in a strong position to tap into the demand for retirement health care advice and solutions--particularly if they have invested heavily in new Medicare programs. Nevertheless, many health insurers lack the product, consumer advice and distribution capabilities needed to get the most from this market. They should be concerned that financial-services companies have taken an early lead in establishing themselves as retirement specialists in the minds of consumers.
So it looks like there will be a battle for retirement healthcare market. A battle will ultimately be good for the consumer.
One of the top three concerns that pre-retirees cite is the management of risks related to health care expenses. Although awareness of this issue is rising, many pre-retirees don't fully understand the risks and their potential financial consequences. Two-thirds of pre-retirees believe, for example, that employers will provide health care coverage in retirement. In reality, only 30% of all retirees now have employer-provided health care coverage, and most employers plan to cut back or eliminate these programs in the near future.
The only thing I can see that could unnecessarily complicate the process is directly related to how much the government gets involved in the process. The more they do, the better off for them - not the consumer.
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