Individual Health Insurance

Aug 22, 2007

  1. arnguy
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    [FONT=times new roman, times, arial]August 21, 2007 [/FONT]
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    Health Insurers Target
    The Individual Market

    Aetna, WellPoint, Others Roll Out Policies That Cater to People
    Who Lack Employer Coverage; Stripping Out Maternity Care
    By M.P. MCQUEEN
    August 21, 2007; Page D1

    Health insurers are targeting the two groups of people least likely to be covered by insurance at work -- young people in their 20s and 30s, and early retirees who don't yet qualify for Medicare.
    Companies including Aetna Inc. and WellPoint Inc. have recently begun offering individual health-insurance packages tailored for young adults, the fastest-growing population of uninsured Americans. Besides basic medical coverage, the packages also often include such benefits as teeth whitening and gym-membership discounts, because insurers say many young people are especially concerned about looking good. But to keep the policies affordable -- Humana Inc. packages start at $26 a month, for example -- the plans usually have high deductibles of as much as thousands of dollars a year and strip out some coverage that could be important, such as maternity care and brand-name prescription drugs.
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    Meanwhile, Humana also recently began marketing policies for the second-fastest-growing group of the uninsured, early retirees -- ages 50 to 64 -- who because of buyouts and company cutbacks in retirement benefits are increasingly caught in the gap between stopping work and Medicare eligibility. Aetna, WellPoint and other companies say they also plan to roll out packages for older adults in coming months.
    Eric Wolfson, a 32-year-old independent filmmaker in Los Angeles, says his mother bought him a policy from Blue Cross of California, a WellPoint subsidiary, because she was worried about his not having health insurance. Because of the high deductible, however, he recently had to pay $1,700 out of his own pocket to cover hospital emergency-room costs after separating his shoulder during a martial-arts workout. Still, Mr. Wolfson says he likes having the policy in case anything catastrophic happens. "It's protection for the big stuff," he says.
    Insurers are expanding their insurance offerings for individuals in part because of the dwindling share of employers -- especially smaller companies -- offering health benefits in recent years. Though the new plans could meet some of the needs of a number of young and older people, they won't necessarily reach those among the roughly 45 million uninsured Americans most in need of health coverage. That's because the new plans currently are available mainly in states where looser regulations allow insurers greater leeway to cull prospective policyholders, and thus choose the healthiest people as customers.
    WellPoint rolled out its Tonik policies in California two years ago and has since expanded them to six states, with five more planned soon. There are three plan designs, which the company advertises on social-networking sites such as MySpace and through event sponsorships like the US SurfOpen. The plans are known as Thrill Seeker, with a $5,000 deductible, Part-time Daredevil, with a deductible of $3,000, and Calculated Risk Taker, which has a $1,500 deductible. Rates can vary by state, ZIP Code, age and gender. In Los Angeles, a 25-year-old male or female can buy a Tonik plan with a $5,000 deductible for as little as $77 a month. A 50-year-old male or female can buy the same plan for $244 a month.
    GOING IT ALONE

    Insurers are touting health plans for individuals without employer-sponsored coverage.
    • The plans target young people early in their careers, as well as young retirees who haven't reached Medicare eligibility.
    • They are often cheap, but carry high deductibles and may not include some important areas of coverage.
    • Many of the plans encourage preventive care, but also may cap number of doctor visits per year.


    In two of the states where Tonik was rolled out this year, 20% of WellPoint's new sales are coming from the plans.
    Other youth-oriented policies include Simply Blue, offered by Blue Cross and Blue Shield of Minnesota, and several plans from Rocky Mountain Health Plans called "SOLO" policies. Premiums for Simply Blue plans, for example, run from about $70 a month to $150 a month for young men and women (exclusive of maternity benefits). The youth-oriented packages typically limit the number of doctor visits per year, sometimes to as few as three. They also may have a lifetime maximum payout of $1 million or $2 million.
    But these types of plans also aim to encourage preventive care by including regular check-ups and dental or vision care, generic-drug coverage and routine tests like Pap smears, often without a deductible. Some plans also allow policyholders to open a tax-advantaged Health Savings Account to help offset the out-of-pocket costs.
    Insurers say the new plans are selling well. Blue Cross and Blue Shield of Minnesota says it has sold between 5,000 and 10,000 Simply Blue policies since introducing the product in December.
    Jon Marcus, in his 40s, a self-employed recruiter for the tech industry in San Francisco, says he has had individual health insurance for several years but switched recently to an Aetna policy because of the relatively low premiums, currently $186 a month. But with a $5,000 deductible, Mr. Marcus says, he can't afford the surgery he needs to correct sleep apnea, which interrupts breathing during sleep. "If I spent the same amount of money at a regular job, I'd have a much better insurance policy," he says.
    Some regulators are critical of some of the new policies. "The Tonik program is specifically designed to create a significant profit for the insurance company," says John Garamendi, California's lieutenant governor and former insurance commissioner. "It is designed to cover everything that a 19- to 34-year-old is not going to need. That happens to be the principal childbearing age, and it doesn't cover pregnancy," he says.
    A normal pregnancy and delivery costs $8,000 to $12,000, according to insurance-industry officials. Adding maternity benefits to an individual health plan can add several hundred dollars a month to the premium.
    Christi Lanier-Robinson, a WellPoint spokeswoman, says: "There is a sizable portion of the population who are not interested in maternity coverage and don't want to pay for this benefit." She says that other WellPoint plans are available with maternity coverage and that more than 70% of every Tonik premium dollar goes toward medical care.
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    Portion of an interesting article in yesterday's Wall Street Journal. It is too long to post the entire article. You can access the entire article at the HealthDecisions.org Newsletter website
     
    arnguy, Aug 22, 2007
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  2. TXINSURANCE
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    TXINSURANCE Guru

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    I am so sick of hearing "45 million UNINSURED" - it is complete BS.

    Most are uninsured for VERY SMALL periods of time, the other portion CAN afford coverage they just choose shiny cars and cell phones instead, 1/3 or more are eligible for government programs they are just too lazy to apply for them, the remaining are simply deadbeats to put it nicely.

    Good article though and at least 50% of our sales are TONIK / SOUND (Wellpoint), insurance companies love the young and healthy! Of course the retention is HORRIBLE on these plans (young people get jobs... or don't pay their bills)
     
  3. somarco
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    somarco That Medicare Expert Guy

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    Tonik plans were imported into GA last year with a lot of hoopla.

    Shortly thereafter a number of people in sales & service with BX either quit or were let go.

    Tonik was billed as the answer to the under 30 market complete with a cheesy website where everything is done online. No paper apps. "Instant" underwriting (which lately has been anything but). Projected approval rates in the mid to high 80's with no riders for pre-ex.

    I write about one a month on average. When a single under 30 is looking for health insurance I send them to my site. Some sign up. Some don't.

    I could care less.

    Premiums are usually around $100 or less. Commissions around $10 or less.

    If BX, UHC (Belay series), Humana and others want to hit that market hard they can have it. It may be profitable in the short run but just don't see it really helping a carrier long run.

    I will continue to write a case or two each month on auto pilot and will concentrate on families in the 30 - 55 or so range where the money is.
     
    somarco, Aug 22, 2007
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  4. Guest
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    Guest Guest

    Please explain your logic here. Not a criticism, just confused and don't understand it what you mean.

    Thanks,

    Al
     
    Guest, Aug 23, 2007
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  5. STIBROKER
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    STIBROKER Like My post and enter the DRAWING,,,, Moderator

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    .........................

     
  6. somarco
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    somarco That Medicare Expert Guy

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    Low premium plans (such as Tonik, Belay, etc) generate nominal revenue at first but can quickly go south, especially among accident prone risk takers. Carriers cannot make it long run by only writing $80 premiums that eventually drop off the books.
     
    somarco, Aug 23, 2007
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  7. TXINSURANCE
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    My issue is COA (cost of acquisition) is the same on at $60 cheapo plan as a high end plan. Most insurance companies DIRECT marketing costs anywhere from $300 to $600 COA. Agents do a better job usually cutting this number in half (or less depending on volume) - i.e. why they pay us commission to do the marketing and grunt work...

    Limited commissions, virtually no renewals...

    Even something as minor as not accepting credit card monthly is a big issue - ask anyone under 35 what a routing number is and they will laugh at you.

    No stick rate is the bigger problem - trust me I am the king of low stick rate.
     
  8. michaelsavannah
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    michaelsavannah New Member

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    TxInsurance, great point about the 45M uninsured figure. It's ridiculous when I see GAs using this number to justify to new recruits that the market is so huge and untapped. Granted, the market opportunity is certainly there, but use realistic data based on the local markets you write business in, please...
     
  9. somarco
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    somarco That Medicare Expert Guy

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    michaelsavannah . . . any chance you are with Mega?
     
    somarco, Nov 29, 2008
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  10. retread
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    Even though you are responding to a post over a year old, it has current implications. AARP (who co-branded with UHC on their age 50-64 limited benefit plans) has been hit with accusations of scamming seniors recently, and UHC has responded by stopping all sales of these products indefinitely. Aetna actually had a part in this co-branded product list, with a major medical plan. I think the whole package was a stinker... should never have been bundled the way it was. Gave the impression to people that all of the AARP 50-64 plans were major medical.

    Sen. Grassley is riding them on this as we speak (Nov 2008).
     
    retread, Nov 29, 2008
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