Millennials and Health Insurance: The Impact of Two Distinct Mindsets

Posted by: Jeff Fromm

To date, most health care organizations are not prepared for the impact the Millennial generation will have on their business. The same can be said for those in the health insurance industry. Not only do these organizations tend to lag behind in their deliverance of innovative and modern consumer-oriented solutions, they also struggle to identify the actual need to prioritize these relatively young consumers. After all, Millennial consumers aren’t prioritizing them.

Many say this is because Millennials believe themselves to be invincible, but in reality there is one major reason why this cohort struggles with health insurance – cost. Regardless of coverage type, we found that Millennials are more concerned about cost when choosing a carrier or health insurance plan than all other consumer groups: 55 percent compared to 46 percent. Being new to the market, they are also least concerned with network accessibility, showing a propensity to switch based on the potential for savings.

Adding additional pressure when it comes to cost is Millennials’ lack of understanding when it comes to the language of insurance. They feel more confused than other generations about how to understand their coverage, their responsibility and how to fully benefit from their existing plan. They are unclear on the terms of how various components (OOP, deductibles, co-insurance, FSA/HSA, etc.) work together in their health insurance experience. And, unfortunately, this confusion exists even when Millennials feel they have a positive relationship with their insurance carriers.

This juxtaposition of uncertainty and trust is exemplified by the close split we’ve identified between how Millennials identify as users of health insurance carriers: 38 percent identify as Members, but a significant 24 percent identify as Customers. While the Member mindset tends to be the gold standard for carriers, they can’t ignore the remarkable differences in characteristics and expectations that Customers provide.

So, who are Members compared to Customers?

The Member Mindset vs. the Customer Mindset

When it comes to insurance coverage, Members chose their coverage first and foremost because of cost (60%). Yet, when it came to their carrier experiences, more than half felt both supported by their carrier (66%) and content with their carrier (58%) even though most did not make their choice based on plan design (only 35%).

While Customers chose their coverage mainly because of cost, as well, the percentage was lower and more closely split between other factors. Fifty-two percent of Customers chose their coverage based on cost, while a nearly equal 51 percent chose their coverage because of plan design. However, only 33 percent of this group felt confident about their carrier and 27 percent felt supported.

But there’s an interesting explanation for this. As Customers tend to have coverage from individual or family plans more so than Members (33% compared to 25%), they are more likely to purchase their plans directly from carriers (or through a broker), which indicates a more transactional mentality. As they are reviewing coverage options and making selections on their own, they feel even more personally tied – thus raising their expectations of their carriers.

Members, on the other hand, are more likely to have employer-sponsored coverage, leading to a more communal mentality. As a result, Members tend to be more satisfied and accepting of the fact they are paying into a pool for the health benefit of all enrollees. This can reduce their negative feelings and cause them to rely more heavily on carriers.

This means the way health insurance brands approach consumers in these mindsets can’t be the same. Rather, the differentiation between Members and Customers is shaping the future of the insurance industry and completely disrupting how brands must interact with them.

Check out our latest report, A New Picture of Health, to find out actionable takeaways for reaching both Members and Customers.

About Jeff Fromm

Although not a Millennial as defined by his age, Jeff Fromm is the Millennial Marketing Guy. Jeff is President of FutureCast, a marketing consultancy that specializes in Millennial trends, and is a contributing writer at...See Jeff's full bio.