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Thursday, October 15, 2009

Understanding the Disconnection with Generation Y and Health Insurance

I work in the dysfunctional market of individual insurance. One of the dysfunctions is that Generation Y, despite the fact that they are usually health enough to be accepted and get a lower price because they're younger, view buying health insurance like scooping the cat's litter box. Avoided until the cat yells at them or the smell overcomes everyone. Actually, it's like scooping the litter box of the evil cat who urinates on your dry clean only bedspread since that's how insurance companies are viewed.

I listened with great interest to the NPR Broadcast of Molly Adams who describes being young and uninsured in Chicago. Molly aged off her parent's coverage and the option to continue the insurance through COBRA costs $300 per month. This was all of her income after food and shelter were paid. It wasn't affordable and Molly didn't need it unless she got hit while navigating her bike by some of the most aggressive drivers in the Midwest. Health insurance is not a priority and doesn't make a lot of financial sense for her and her colleagues.

This all makes complete sense. Why pay for something that you will probably use as often as a Christmas sweater when you don't have a lot of money. Here's what doesn't make sense based on what I heard in the broadcast:

Isn't Generation Y really good at finding information? The only health insurance option that I heard was her parent's COBRA plan for $300. A Google search would have revealed numerous plans for under $100 that covered all services including drugs and capped the maximum expenses for health care services at $5,000. A deeper search would have revealed catastrophic plans that Molly wanted to protect her from Chicago drivers called short-term medical for $30-$50/month. Generation Y is so supposed to be the most internet savvy and best generation at finding and synthesizing information. However, this doesn't seem to apply with navigating the health care system. Unfortunately, the ones who best understand the health care system are those who were uninsured and have debt from a hospitalization.

Do health plans speak to Generation Y? Every insurance company wants to enroll more young adults since its the most attractive segment with the most potential. Aetna has spent a lot of energy on finding what Generation Y wants and has been successful as 20% of their individual business is made up of young adults. They piloted the BodyGuard Health Plans (motto: Stuff Happens) in Chicago. They partnered with young adult social clubs, their marketing material looks like an Ipod commercial, and they took a genuine approach by creating insurance plans designed specifically for Generation Y.

My team is also looking to develop health plans for Generation that only cover services that they'll use so they'll be more affordable and easier to understand. However, these approaches do not seem to make a significant dent in the uninsured rate among Generation Y.

What can change? There are some obvious reasons that Generation Y doesn't buy health insurance that can't change. It costs money that they don't always have for something that they probably won't use.

What will change is that Generation Y will start to understand their insurance options as well as they understand their cell phone options. Generation Y has been very resilient as traditional institutions have fallen away. College leads to debt as well as opportunities and freelancing and independent work has supplemented the lack of traditional corporate jobs. Home ownership is a trap as much as an asset. Most of us never had to think about health insurance, let alone research it, since it came with the job just like a desk and a chair. Molly Adams' quote of, "Why is it that I'm working forty hours a week, contributing to society, and yet I still don't have health insurance? Aren't I earning it?" reflects another institution that has not served Generation Y as it served previous generations. Generation Y has proved its resiliency when other institutions fail and I think they will respond to health insurance. Just like they studied entrepreneurship to have an outlet from corporate America, they will learn how to navigate the individual insurance market.

Another reason that they don't purchase insurance is they possibly hate insurance companies more than the general population. My state's Blue Cross plan's downtown location has been a popular protest location. As Generation Y learns to navigate the individual insurance market, they will also learn that not all insurance companies are equal. There are for profit national carriers and non-profit local carriers that have different values. As an aside, sometimes the only difference between a for profit and a non-profit insurance company is that one calls the money they make profit and the other calls it margin. Maybe it's really a choice of the lesser of two evils, but there is a choice. Just as Generation Y researches companies to learn which match their values, they can do the same for insurance companies.

Some have run out of utensils to stick in their eye, when they hear about Generation Y. However, the participation of Generation Y in health insurance is a key part of reform. Senator Baucus even added a "Young Invincible" plan to attract them. The current disconnects that Generation Y has with health insurance confound me since it's the opposite of their behavior with other industries or aspects of society. As long as the health insurance industry and reform keeps trying to engage Generation Y, those disconnects will fade. Once those disconnects fade, Generation Y will be in a better position to transform health insurance as they like to do with other industries.

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