A team inside WellPoint Inc. that created a successful product for the 20-somethings is now hard at work trying to create
a similar winner among Hispanics.
Centered in WellPoint's southern California offices, this roughly 25-person team has intensely researched Hispanics for two years and now is using its market intelligence to establish a separate brand name, a new Web site and grass-roots techniques to reach Hispanics.
It is readying to launch new products called Nuestro Bien, which means "our well-being," in early 2008.
Indianapolis-based WellPoint is following essentially the same game plan it used to develop Tonik, its insurance product for 18- to 34-year-old customers--many of whom have no health insurance. Launched in California in 2003, Tonik now is in six states, and another five will come online this year. Tonik will start in Indiana in early 2008.
About three-quarters of Well-Point's Tonik customers previously were uninsured.
"That's been a success," said Les Funtleyder, a health care stock analyst at Miller Tabak & Co. in New York. "The uninsured is a huge market."
It's 45 million people, in fact. And Hispanics represent a huge chunk of it.
According to the U.S. Census Bureau, nearly one in three Americans without health insurance in 2005 were Hispanic. For WellPoint, that's more than 14 million potential customers.
As a group, Hispanics are the fastest-growing segment of U.S. society. There are about 45 million Hispanics in the United States now, but the Census Bureau projects more than 100 million by 2050.
Indiana's Hispanic population totals 285,000, up 30 percent in the last five years.
The percentage of uninsured Hispanics is triple that of whites and 70 percent higher than for blacks.
The reasons behind those numbers are complex, a mix of economic and cultural. Health insurers will have to do more than just speak Spanish to convert Hispanics to their products.
The disparity in health coverage is not explained entirely by economics, contend WellPoint and other health insurers.
About 40 percent of U.S. Hispanics were born in another country. Many of them emigrated--including some illegally--to take low-paying jobs in farming, construction and food service.
The average Hispanic household earns $36,000, or 22 percent below the national average. So as insurance customers, they are sensitive to price.
But perhaps a bigger challenge to health insurers is that Hispanic immigrants come from countries with significantly different health care systems than the one here. As they flock to the United States, they bring with them different habits in using health care and different methods of paying for it.
For example, Hispanics are far more likely to go to a neighborhood clinic for their mundane medical needs: kids with fevers, bacterial infections, prenatal care, etc.
For bigger needs such as serious injuries or surgeries, they tend to go to a hospital emergency room.
Understanding those different approaches to health care has been a big driver in WellPoint's shifting strategy toward Hispanics.
"We need to really understand their needs rather than just trying to get them to do business with us," said Sherry Jansen, who as WellPoint's individual product-innovation director is leading the team rolling out the new product for Hispanics. "We need to do business the way they want to do business and the way they access health care."
Toward that goal, WellPoint is doing three key things.
First, it is developing insurance policies that offer low co-pays for clinic care, but also give customers incentives to have a regular doctor--instead of using the emergency room. Visits to an ER are one of the most expensive events in health care.
Second, WellPoint is broadening its marketing efforts to reach all Hispanics. Until now, WellPoint's Hispanic marketing has focused on Hispanics making $40,000 or more per year. WellPoint also wants to craft its messages with an understanding of the diversity within the Hispanic population. The label applies to people hailing from more than 20 nations.
WellPoint advertises on Spanish-language television, such as Univision. It also offers its Web sites in Spanish. And in December, it launched NuestroBien.com.
But Web sites aren't always the prime way Hispanics learn about health care and insurance.
One way WellPoint thinks it can reach Hispanics is by building up a far more extensive network of insurance agents. Hispanics prefer face-to-face interactions, WellPoint has found in its research.
WellPoint also thinks it can reach Hispanics through educational seminars--on the benefits of good health and having health insurance.
So its third strategy is to set up Nuestro Bien booths at Hispanic cultural and business fairs, where it conducts educational seminars and passes out marketing materials. It started exhibiting at such events in May.
In addition, WellPoint offers to come in to churches to give talks about health topics.
In its research, WellPoint's team has found that Hispanics have a strong preference for tangible things over intangible things. All things being equal, they'd prefer to buy new shoes or new furniture than to have an intangible insurance policy.
Minnesota-based UnitedHealthcare, the nation's largest health insurer, has found similar characteristics. Its vice president for Latino Health Solutions, Russell Bennett, said some of his firm's employer clients have trouble getting Hispanic workers to sign up for health care benefits, even when the employer is footing some of the cost.
"They would rather have a few extra dollars in their paycheck than to have something they didn't understand how to use or didn't see how it would help them," Bennett said.
UnitedHealthcare already has 1.4 million Hispanic customers. WellPoint said it was unable to provide a similar figure.
Like WellPoint, UnitedHealthcare and Louisville-based Humana Inc. have tried to reach Hispanics with Spanish versions of their Web sites.
But WellPoint is different in its focus on signing up individual Hispanic customers. And that is a growing market, too.
As fewer employers offer health coverage at work, more American families are getting individual policies, according to the Kaiser Family Foundation.
WellPoint already has 2.5 million individual customers, more than three times its nearest competitor, UnitedHealthcare, according to estimates from Jefferies & Co., an investment research firm. Aetna Inc. and Humana have less than one-tenth of WellPoint's total.
"It's not as easy of a market to deal with as, say, large employers," said Funtleyder, the health care stock analyst. "But any time you have a growing market, it's worth paying attention to."