Health plans battle for share of youth market

Numerous insurers issue customized plans for 20-somethings who can afford insurance but haven't bought it.

By Emily Berry, AMNews staff. Nov. 12, 2007.

More insurers are coming to the conclusion that if they want young people to buy their health plans, they need to make them less costly and more fun.

"You probably wouldn't buy 50 kegs of beer when you're having three friends over to watch the Longhorns on TV," starts a pitch on the Web site of Livonia, Mich.-based Precedent, which this year launched a youth plan in Texas. "So, why buy more health insurance than you need? It's just like anything else. It's your money, and you want to spend it wisely," the ad continues.

Precedent is one of many companies offering individual plans for 20-somethings. The plans cost less than what the targeted audience might have to contribute to a company plan at work -- though they offer less coverage, too. For example, most don't cover prenatal or maternity services, and many don't go beyond covering only the most basic of services.

The plans are operating under the assumption that a good number of the 19 million people ages 18 to 34 who were uninsured in 2006, were in that state because they believe health insurance is too expensive and unnecessary. The plans are using what they see as hipper marketing to convince younger people that health insurance is necessary and cool. On its Web site, Precedent has two 20-somethings, "Katie" and "Drew," backed by a rock music sound track, talking insurance for "young, healthy" people such as themselves.

"You're trying to talk to people who have pretty much decided they don't want to buy any product in your category and explain your concept," said Peter Michaelson, chief marketing officer for Precedent/Remix, the brand name given to Precedent's youth plans.