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Sunday, December 20, 2009

What Generation Y Wants with Health Insurance

Last week, I attended 2 focuses groups that asked Generation Y their thoughts about health insurance. We all had some theories about what this generation wanted. I was right about one of my theories but otherwise was completely surprised by their opinions and knowledge of insurance. About as surprised as I was when the punk rock attired participant said that he was most interested in the tax savings associated with a Health Savings Account (HSA).

As I had previously posted, I had a theory that Generation Y believed that health insurance costs hundreds of dollars. If they knew that they could get fairly comprehensive plans (albeit with deductibles of $5000), for less than $125, I thought that they would be interested. It turns out that I was right. For those who were employed, they said that they could find the money to spend $125 per month for insurance that they thought was a good value.

However, they typically weren't quite ready to make that purchase due to self-admitted laziness or attitude that health insurance isn't completely important yet. For the most part, they were willing to gamble with being uninsured.

What surprised me the most was 1) Generation Y pretty much has the same interests in health insurance as other generations, 2) they have deep privacy concerns and a healthy skepticism of using the internet for health care services and information, 3) they are very savvy potential purchases of health care.

1. When it comes to health care, we're all pink on the inside: Even Senator Max Baucus assumed that Generation Y just wanted coverage for emergencies or catastrophes when he designed a "Young Invincible Plan" in his initial bill. However, the participants didn't feel like it was worth buying insurance if they couldn't use it. They wanted comprehensive coverage for doctor office visits and prescription drugs. They wanted the kind of coverage that they had with their parents' plans.

2. Privacy trumps all: We had some assumptions that a more on-line, interactive experience via the internet would be extremely attractive. Turns out, that they are just as concerned about privacy and having their health information on-line as any other generation. They were just as skeptical about the advice that they would get and who was behind the experts on various websites.

The recent Facebook privacy changes were cited as a driving force for this concern. As a side note, I could visualize Facebook's downfall during this session. While I never thought that people would stop using Facebook, privacy was the bedrock behind their exponential growth. If that foundation crumbles, so could Facebook.

3. They may not have bought health insurance but they know how to shop for it: When we have previously showed insurance plans to older participants, it has taken them a while to understand how it all works. The Generation Y participants, for the most part, were very easily able to understand how much services would cost them and what kind of value they would get for their money. Some of them were as good as the average actuary with their calculations.

If and when Generation Y starts buying health insurance at the same rate as the rest of the population (or is required to start buying it), it looks like they will understand the health insurance market as well as anyone.

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