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Second Quarter Managed Vision Care Update

Second Quarter Managed Vision Care Update

With a majority of eye exams and Rx eyeglass purchases involving some type of MVC coverage or vision insurance, it is important to track the number of consumers possessing vision insurance or some type of MVC coverage. Trends show, MVC hit a new high in the last quarter with 50.5% of the US adult population having benefits in June 2016. As coverage increases, so do eye exams and eyewear purchases. As of June 2016, we conservatively estimate that over 122.8 million American adults have vision benefits. Thanks to a rising adult population (2 million to 2.4 million annually), and to an improved economy and higher employment, the number of adults with MVC coverage increased for about 6 years now after declining during the recession. In fact, the number of covered lives increased by about 2.3% (or 2.7 million additional adults) during the 12 month ending period June 2015 alone. In fact, compared to 2007 (before the recession started), the aggregate number of adults with some form of MVC coverage is up by 14.2 million from December 2007 to June 2016.

The demographics of the US adult population with MVC coverage are similar to, but slightly different from the demographics of the general population. However, women, adults between the ages of 35 to 54, adults from higher income households, adults from the Northeast and Mid-Pacific regions of the US, and adults that currently wear some form of vision correction are all more likely to possess some type of vision insurance or MVC benefit. Over the course of the past year, MVC coverage grew most among men, adults under the age of 35, adults from higher-income households ($60K+), people from the Southeast and Mid-Pacific regions of the country and people who regularly wear contact lenses.

Of the 74.4 million pairs of frames purchased during the 12 month ending period June 2016, most (48.2 million) were purchased with some type of assistance from a managed vision care plan. The remaining 26.2 million pairs were purchased without any form of insurance assistance.

During the year-ending period June 2016 there were 1.8 million more frames purchased in the United States with the assistance of vision insurance when compared to the previous year—which should not be a surprise considering the increase in MVC coverage among the American adult population. During the 12 month ending period June 2016 there was a net increase of 2.7 million covered adult 18+ lives who were covered by some type of MVC plan. This increase can be attributable to rising employment and additional employers offering vision insurance benefits as the economy improves. As a result of this increase in the number of MVC “covered lives”, the portion of frames purchased with some type of MVC assistance has actually increased for the fourth straight year (June-to-June) time since 2008-2009. During the recession, people with MVC benefits were taking advantage of their benefits before they expired or lost them, leading to a huge, unsustainable spike in MVC utilization for frame purchases.

In contrast, the number of frames purchased without vision insurance assistance declined over the past year after rising from 2009 to 2013. There were 26.2 million pairs of frames purchased without any type of insurance assistance during the year-ending period June 2016 (-740K pairs during the 12 month ending period June 2015, a drop of 2.8%); however, despite this recent decline, the number of FTC/non-insured frame unit purchases is still up by a respectable 3.3 million pairs over the past six years since the end of the recession (+12.2% growth). One reason behind the growth of the FTC market in 2010-2013 is the fact that many eyeglass wearers without MVC coverage were postponing their eyeglass purchases for significant periods of time during the recession.

During the 12 month ending period June 2016, MVC insurance frame purchases increased most among all major distribution channels and most retailers, with independent ECP retailers (+4.9%) and conventional optical chain retailers (+2.5%) seeing the largest increases in frame purchases with insurance assistance. Demographically, MVC frame purchases increased most during the 12 month ending period June 2016 among just about all consumers but increased most for men, adults over the age of 55, people from higher-income households (AHI: $60K+), residents from the Midwest region of the US and people using FSA/flex spending plans and people using a standard, stand-alone MVC vision insurance plan.

When we ask consumers on our VisionWatch survey about the role of “managed vision care and insurance usage” when making a frame or eyewear purchase, there are several different sources of coverage that buyers are using when making a purchase. Women, Americans between the ages of 35 to 54 and Americans from higher income households are more likely to specific “standard vision insurance” as the main source of insurance assistance when buying frames. Also, people buying frames priced at more than $150 per pair, or people purchasing their frames from an independent ECP, were more likely to use a standard MVC plan when buying frames.

After traditional MVC, many recent frame buyers claim that their standard medical insurance with some type of vision coverage was used to help buy their most recent pair of frames. Almost one out of every five MVC frame buyers claimed that the insurance coverage used was a government supplied benefit. Finally, about one out of every eight MVC frame buyers used some type of discount plan or a tax-deferred flex spend plan when buying their most recent pair of frames. Generally speaking recent male eyeglass buyers and younger eyeglass buyers rely on discount plans and flex-spending accounts to help cover the cost of recent frame purchases.

During the 12 month ending period June 2016 these figures have changed slightly. Usage of just about all types of insurance is up over the past year, indicating that many consumers who are still using insurance coverage are now more likely to use multiple types of coverage in an attempt to minimize what they pay out of their own pocket for eyeglasses. Regarding specific plan types, increased usage of standard, stand-alone MVC plans along with increased usage of standard health care and medical insurance plans with an MVC rider was the driving force behind the growth of the MVC market in 2016. Usage of all other insurance plan types during the 12 month ending period June 2016 only increased slightly or remained largely flat.

Data in this article was compiled from the 2016 Q2 U.S. Optical Market Eyewear Overview. For additional information, please contact Steve Kodey at 703-740-1095 or skodey@thevisioncouncil.org.

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