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California Blues markets a hipper health plan to young adults

The state medical association says the new products could be unfair to physicians and leave young adults with unanswered questions.

By — Posted Jan. 17, 2005

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WellPoint subsidiary Blue Cross of California is trying to persuade young adults ages 19 to 29 that having health insurance is not only smart and affordable, but as cool and trendy as iPods, cell phones with video screens, and a working knowledge of poker.

The Thousand Oaks, Calif.-based company's new suite of PPO products for the individual market, collectively dubbed Tonik, is intended to attract young people who are essentially healthy and haven't felt a need for insurance, think it's too expensive or just don't understand what coverage is all about.

The insurance products themselves are similar to existing Blue Cross offerings, but the jazzed-up advertising is designed to conjure an image light years away from the usual sober insurance marketing.

But the emphasis on style, says the California Medical Assn., might be ignoring major matters of substance. First, the association says, features of the new coverage will be more burdensome to physicians, who will face more intensive money collection and billing than with most existing policies, and will have no say in the matter. Second, the association says, the details and potential shortcomings of the plan might still be unclear to young buyers, despite Blue Cross's attempt to speak to them in what it sees as their own language.

Blue Cross began targeting the young population late last year with slick ads in sports magazines, billboards and Web sites. The insurer is promoting the new product using what it appears to believe is the casual language of a new generation of hipsters -- one they think is grudgingly willing to pay a modest sum for health coverage but wanting to be convinced it's worth the money.

The Web site takes pains to define common insurance terms, such as "PPO," "co-pay" and "agent" in a decidedly colloquial dialect. The explanation of "premium," for instance, says it's "the stuffy way to say how much you pay for your health insurance each month. ... Not to be your Mom, but if you don't want to be dropped, make sure you get your payment in on time."

Three plan options -- or "flavors," as the ads call them -- bear unusual names aimed at piquing a youthful audience's presumed interest in freedom and adventure: "thrill-seeker," "part-time daredevil," and "calculated risk-taker."

The plans were introduced in mid-November 2004.

Of the more than 6 million uninsured residents of California, about 1.6 million are between ages 19 and 29, Blue Cross said. That represents between 30% to 40% of everyone in the age group, said Steve Synott, general manager for individual services at Blue Cross.

"We really saw a window of opportunity," he said. "We knew we really had to get to know these kids -- why they weren't buying -- and design the product around their lifestyle."

Blue Cross refers to people in this age group, or particularly those who have dodged responsibility for buying insurance so far, as the "young invincibles." Many of them have recently graduated from school and are no longer insured under parents' plans, and could be either unemployed or working for small companies that don't pay for insurance, Synott said. Others earn good salaries but seem oblivious to the need for coverage, he added.

The Tonik plans range from $64 to $80 per month. Deductibles are high compared with most health plans, ranging from $1,500 for the most expensive Tonik plan to $5,000 for the least expensive. The two less expensive plans cover four routine physician visits per year, to which the deductible does not apply, while the most expensive variety pays for unlimited office visits.

Because young people tend to be confused by complicated insurance pricing, Synott said, co-pays for Tonik have been simplified: $100 for an emergency department visit and between $20 and $40 for doctor visits.

The features of the products parallel many of those in the payer's traditional PPO plans offered in the individual market, but Tonik includes a dental plan and limited benefits in a vision plan in addition to health coverage. Young people told Blue Cross they cared as much about taking care of their teeth as their bodies, Synott said.

Applicants for a Tonik policy will be able to get an "instant response" on acceptance by answering several online questions about past hospital stays, prescription drugs they take and medical conditions. The company's standard underwriting policies apply, so any applicant with a chronic illness could be rejected, Synott said. The plan is intended to appeal to generally healthy young people who may experience a sudden illness or injury, such as appendicitis or a broken limb, not to cover those with existing, serious health problems, he said.

The plan does not cover standard maternity expenses because Blue Cross found, through its research, that potential customers for the product didn't want a maternity benefit, Synott said.

Better availability of health insurance to a new age bracket is not a bad thing, and Blue Cross has proven itself to be skilled in marketing in the past, said Peter Warren, spokesman for the California Medical Assn. But Tonik could leave a bad taste in physicians' mouths, he said, because of added work and expense involved in taking on patients with high-deductible plans. Doctors will have no choice but to accept patients with Tonik, he said, because of all-contracts clauses with Blue Cross that won't let them reject a segment of Blue Cross subscribers.

And higher co-payments and deductibles will mean that practices will be taking in more money from Tonik patients and sending out more bills to them, without getting any higher reimbursements from the payer for their trouble.

Warren also said the presentation of Tonik might be unfair to young audiences because the marketing campaign is unclear on various aspects of coverage. "I'm a professional in this area, and I'm left with dozens of questions that aren't answered," he said.

The high deductibles of Tonik mean that the products "are obviously geared to the hip and healthy, with access to at least some income," said Sara R. Collins, PhD, senior program officer at the Commonwealth Fund, a New York-based research foundation that studies health issues.

Because two-thirds of young adults who are uninsured have a family income of 200% of the poverty threshold or less, many people in this age group stand to gain no benefit from the new product, she said, because it's still out of their financial reach.

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