Insurers thinking younger: Healthy, uninsured and 20? WellPoint, Golden Rule, others would like to sell you a policy

August 29, 2005

WellPoint Inc. and other insurers think they've found a hot new market-offering high-deductible individual health insurance policies to uninsured people who are young and healthy.

It's a market insurers historically may have overlooked, based on the misconception that uninsured people are poor and in bad health, said Dana McMurtry, vice president of health policy and analysis at WellPoint.

Nationally, more than half the 45 million uninsured earn more than $25,000 a year and more than one-quarter top $50,000 annually, according to the U.S. Census Bureau. Nearly 12 million are between the ages of 19 and 29.

"Young people who are healthy would prefer to spend any disposable income on other things," McMurtry said. "They know they should have insurance, but choose to take the risk of going without."

WellPoint officials say it's wise for young people to have insurance even if they're healthy, because they're exposing themselves to calamitous financial consequences if they become seriously ill.

"You can't address the problem of the uninsured without addressing the young, invincible segment," said Deborah Lachman, senior vice president of individual and small group at Blue Cross of California, a WellPoint subsidiary.

Many of the nation's health insurers have begun aggressively pursuing this market, including Indianapolis-based Golden Rule Insurance, which was bought two years ago by Minneapolisbased UnitedHealthcare.

Indianapolis-based WellPoint, the nation's biggest health insurer, began ramping up marketing efforts about a year ago. Early on, company officials realized young consumers were turned off by standard insurance lingo. So they hired marketers from outside the industry, and developed product names tied to culture and lifestyle.

"We treat this like any other consumer product," said Jude Thompson, president of WellPoint's Anthem Blue Cross and Blue Shield individual market in Kentucky, Indiana and Ohio. "We should probably have done this a long time ago."

For example, a line of coverage in California, called Tonik, sells policies under the names "Thrill-Seeker," "Calculated Risk-Taker" and "Part-time Daredevil."

WellPoint said its research shows that young, healthy individuals don't mind high-deductible insurance as long as the plan includes coverage for doctor visits.

The company in January began offering its so-called Blue Access Economy plan in Indiana. It includes several deductible options while covering three doctor visits a year and up to $500 in generic drugs.

A 25-year-old male pays $95.91 a month for a plan with a $1,000 deductible and $25 co-pay for doctor visits. Insurers say such policies typically cost 25 percent less than traditional coverage, though a purchaser could end up spending more out of pocket if he had frequent health problems.

More than half the buyers of the Blue Access plan previously were uninsured, Thompson said. And 99 percent are new WellPoint customers.

"So we're not cannibalizing our book of business," Thompson said.

But some health care experts aren't convinced the high-deductible policies are thinning the ranks of the uninsured.

"In many cases, the people buying these products would just have bought a different individual market product if this one hadn't been offered," said Sherry Glied, professor and chairwoman of the Department of Health Policy and Management at Columbia University.

However, Golden Rule spokeswoman Ellen Laden thinks the high-deductible coverage fills a void. Her company in February debuted its Saver plan. Under it, a healthy 25-year-old male pays $73.26 a month for a $2,000 deductible plan. It covers two doctor visits a year, with a $35 co-payment for each.

"We're addressing those people who think they can't afford coverage," Laden said. "Our perspective is many of the uninsured have simply given up trying to find affordable insurance."

She likened the new breed of health policies to car insurance. That coverage, she noted, "doesn't pay for minor tuneups or oil changes, but it does cover accidents."

Insurers say they think the demand for high-deductible policies will increase as health insurance costs continue to rise, prompting many small firms to drop coverage or charge their employees substantially more.

Eve Hopper of Indianapolis opted out of her employer plan a year ago when her premiums for single coverage rose to $280 a month. The doctor's office where she worked had about 45 employees.

"I just couldn't afford it, and I'm healthy," she said.

Hopper, 28, bought an individual policy with Milwaukee-based Fortis Insurance Co., for $86 a month.

She saved herself hundreds of dollars before marrying six months later and obtaining coverage under her husband's plan.

But some health care experts say purchasers of the low-cost policies may face more risk than they realize, because the policies often include significant restrictions or exclusions.

"There are more insured, that's true, but being underinsured results in many of the same issues as being uninsured," said Sara Collins, senior program officer with The Commonwealth Fund, a New Yorkbased health care policy group. "I question what access to health care is being provided."

Insurance companies counter that some coverage is better than none.

"It's not the doctor visits that send people into bankruptcy," Laden said. "It's the major illnesses and hospitalizations that will send people into financial ruin if they don't have health insurance coverage."
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