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Blue Cross and Blue ShieldFeatured Health Business Daily Story October 1, 2007 Blues Plans Launch Ad Campaigns and Low-Cost New Products Targeted at Young, Uninsured Individuals Reprinted from The AIS Report on Blue Cross and Blue Shield Plans, a hard-hitting independent monthly newsletter on business strategies, products and markets, mergers and alliances, and financing of BC/BS plans. IIn new print advertisements for its Simply Blue product, Blue Cross and Blue Shield of Minnesota uses terms familiar to recent college graduates. "Done with Ramen? You're ready for Simply Blue," states one ad referencing the post-college Zeitgeist. The product, launched in January, targets individuals under the age of 30. The insurer is among a growing number of Blue Cross and Blue Shield plans that have launched marketing campaigns, or introduced low-cost products, aimed at young and uninsured individuals — a vast and potentially lucrative market. A report released late last month by the U.S. Census Bureau estimates that 47 million people in the U.S. lacked health insurance in 2006. While people between the ages of 18 and 35 make up about 26% of the U.S. population, they account for a disproportionate 41% of the uninsured population, according to the Washington, D.C.-based Employee Benefit Research Institute. Blues plans tell The AIS Report that people under the age of 35 often don't see the value of health insurance because they tend not to use many health care services. Blues plans say they are working to change that perception. A postcard from Blue Cross and Blue Shield of Kansas City, for example, features a photograph of two young men on a basketball court. Using graphics and words designed to catch the eye of people in their 20s, the ad highlights the high cost of a sports-related knee surgery ($15,000) vs. the cost of a $5,000-deductible health policy (about $30 a month). "The perception among young people is that [health coverage] is something I don't need or can't afford," says Ron Rowe, sales manager for consumer products. "They might not be able to relate to [the cost of treating] cancer, but they can relate to athletes who blow out their knees." The marketing campaign also encourages individuals to apply for coverage online if they don't want to speak directly with a salesperson, adds spokesperson Susan Johnson. But low-cost, catastrophic-coverage plans could lead to problems when enrollees have to pay for care or when they seek services that aren't covered. "These bare-bone policies are not traditional insurance and are therefore easy to criticize," says Scott Rottluff, marketing manager at BlueCross BlueShield of South Carolina. "The problem is that you get what you pay for, and with lower cost comes lower insurance benefits." The South Carolina Blues plan considered developing such a product a couple of years ago, but opted against it. However, Rottluff says that "we may find ourselves doing something like this in the future due to competitive pressures." Johnson of the Kansas City Blues plan agrees that young people often hunt for the lowest premiums with little regard for the level of coverage. "We make sure our [sales representatives] are trained to explain things that might not be covered by a low-cost plan," she says. Short-Term Policies Aimed at New Grads When children of current enrollees graduate from college, Highmark, Inc. mails the parents a letter detailing individual coverage options for their children. About 30% of Highmark's individual-market enrollment is under the age of 30. "This tends to be a very healthy population, and our rates are age rated," says Sandy Troia, Direct Pay product director at Highmark. The insurer also intends to market a short-term health policy by the first quarter of 2008. ShortTermBlue PPO will target recent college graduates, people between jobs and employees on a waiting list for group coverage. A direct-mail marketing campaign will target parents of recent college graduates, Troia adds. Policies will provide coverage in 30-day increments for up to six months, and will include deductibles during the period of $250, $500 or $1,000 and an out-of-pocket maximum of $2,000. The policy covers 80% of eligible expenses after the deductible. Once that maximum is met, qualified expenses are covered at 100% up to a lifetime maximum of $1 million. Applicants will be required to identify pre-existing medical issues in a questionnaire. Some expenses, such as those related to maternity and behavioral health, are not covered. The product, which will be medically underwritten, is pending approval by the Pennsylvania Insurance Department. The Kansas City Blues plan has a similar product called Short-Term Security. The "limited-benefit" PPO typically is sold in increments of six months, has deductibles of between $500 and $5,000, and does not include pharmacy benefits or cover pre-existing conditions. For a 25-year-old, a policy with a $1,000 deductible would cost between $35 and $38 a month, Rowe says. "Brokers are telling us the 19-to-29-year-old market wants a short-term plan that covers catastrophic [events], three or four office visits each year and generic drugs," Rowe says. "Most [enrollees] don't have a family doctor." Blues Plans Employ Innovative Strategies Here's a look at strategies some Blues plans say they have developed to attract potential enrollees in the individual market:
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