INDIANAPOLIS, IN — Health insurers trying to boost individual policy sales are making a new push into an older market the roughly 7 million uninsured Americans between the ages of 50 and 64.
Financially stable baby boomers who either retire young or need coverage after a corporate downsizing are driving this push, experts say. Insurers also want to build ties to customers who may need Medicare-related insurance after they turn 65.
Humana Inc. launched a new individual policy last spring that targets early retirees. WellPoint Inc., the nation’s largest health insurer, is testing a similar plan. Aetna Inc. announced in April a seven-year agreement with AARP to sell individual insurance to its members between the ages of 50 and 64.
But this coverage push draws skepticism from consumer watchdogs who say insurers have a history of avoiding this age range and the expensive claims for illnesses that often hit that group.
"That is a market that needs to be served, partly because traditionally WellPoint won’t serve them," said Jamie Court of the California-based Foundation for Taxpayer and Consumer Rights.
That is not the case, according to Jude Thompson, WellPoint‘s president of individual markets.
"We don’t have tougher underwriting or a different set of standards for 50 to 64 year olds than anyone else," he said.
Federal Medicare coverage starts at age 65. Insurers find the age group sitting in front of that marker attractive for many reasons.
One is sheer volume. The U.S. Census Bureau estimates the baby boomer population, ages 43 to 61, at 78 million people. That’s about a quarter of the U.S. population.
The market "represents a big chunk of potential," said Steve DeRaleau, chief operating officer of HumanaOne, Humana’s individual policy business.
Additionally, employers are dropping retiree benefits. The percentage of large companies that offer health benefits to employees and retirees has dropped from 66 percent in 1988 to 33 percent this year, according to a survey from the Kaiser Family Foundation.
Big companies also are cutting jobs, and their former workers are less likely these days to land with another large employer that provides benefits, said John Wider, vice president of health products and services for AARP Services Inc.
Many boomers also have money to spend. Their median household income of $60,000 was nearly $20,000 higher than the total for all adults, according to a Pew Research Center report released in late 2005. But a lack of insurance can quickly whittle away that wealth; according to some estimates, medical bills trigger about half of all personal bankruptcies.
Humana launched its Portrait individual insurance in April and has introduced it in 15 states so far. It plans to add it in 11 more over the next few months.
The monthly premium paid, like any insurance plan, depends on the customer’s age, gender, medical history and location, and the coverage desired. For example, a 50-year-old male nonsmoker living in Kentucky can find Portrait monthly rates starting at $133.
Market research done by WellPoint Inc. showed that people begin to shop for these individual policies around age 50.
"They’re a very good customer to have because they’re loyal to the brand once they get in," Thompson said.
But they also can be an expensive customer. People in that age group are far more likely to have chronic health conditions or need treatment for heart disease or cancer than younger populations, said Ron Pollack, executive director of Families USA, a health care advocacy group.
He said that makes insurance companies balk at providing coverage.
"For those companies that may be willing to provide coverage to you, they’ll charge you an arm and a leg because they will adjust their premiums to reflect what the risk might be," he said.
AARP’s Wider thinks insurers are more willing now to take on those risks because they see more potential customers in that age bracket. They also want to build a connection with customers who may later need to buy Medicare Advantage or other coverage that supplements the federal insurance.
The push doesn’t mean everyone will find coverage. Celeste McAllister, 52, dropped her student health coverage last year because it didn’t cover her blood pressure medication. She can’t find a replacement.
The fitness instructor, who returned to school to become a nurse, found coverage was too expensive or not comprehensive. One policy she found online charged a $400 monthly premium, which is too steep for her part-time salary. Another wouldn’t provide enough annual prescription coverage.
McAllister said she has no pre-existing conditions that scare away insurers. She thinks her best bet for finding decent coverage lies in landing a full-time job that offers it.
"As I get older it’s not going to get any easier," she said.
Her lack of success doesn’t surprise Court, of the consumer rights foundation. He worries that insurers rushing to this market will offer policies with low lifetime maximums or coverage that force patients to pay too much.
"If you’re an individual on your own in most states… and you’re over 50 years old, good luck trying to find health insurance," he said.
But DeRaleau said their insurance offers major medical coverage with at least a $2 million lifetime maximum.
And Thompson and Humana’s DeRaleau both note that insurers do underwrite risk. That means people may have to pay higher premiums to cover some conditions or an insurer may decline coverage for others.
Even so, Thompson said 80 to 90 percent of those who apply for Wellpoint insurance wind up with coverage. He hears that people think they have to "walk on water" to get coverage, but he insists that’s not the case.
"We don’t see denial rates higher at that age group as the other ones," he said.