It’s rare to see health insurance marketing collateral tout such offhand sentiments as, “Life can be crazy unpredictable, and freak accidents do happen.” But Anthem Blue Cross Blue Shield (owned by WellPoint) recognized the opportunity to serve the young adult market and launched Tonik, a health insurance plan aimed at uninsured Millennials. Tonik, offered in California, Colorado, Nevada and Georgia, has three levels-- thrill-seeker, part-time daredevil and calculated risk-taker.
Tonik uses edgy and modern marketing to reach its target consumers. For example, carrier websites display bold colors and shadow outlines of young twenty-somethings, an image that recalls iconic iPod commercials. The consumer is shown pictures of active young adults listening to music or snowboarding. These images help connect Tonik with the idea of freedom, because the Millennial consumers are freed from traditional high-cost insurance.
Going deeper than the marketing approach, the consumer experience is also designed for Millennials, with an online application that takes just 15-20 minutes to complete and monthly rates as low as $60-80 per month. The comprehensive plans offer, “Health insurance for your body, eyes, teeth. You know, the important stuff.” Chris Mihm, Co-Founder of Medicoverage.com discusses the history of Tonik’s development:
“While there are aspects of Tonik designed for Millennials, 99% of it is similar to other plans. Anthem conducted focus group research to find out what was important to young adults and incorporated that into Tonik. It responded to what young people thought health insurance should have—health, dental and vision. The industry had never done that before for individuals. That really appealed to this demographic. Tonik is also straightforward. It’s one of the few plans that doesn’t have co-insurance. Millennials have been marketed to all their life, and they are always looking for the catch. After meeting the deductible, having the co-insurance felt deceptive—like a hidden, additional charge.”
Anthem was able to take an existing product and selectively change it to meet a new market. Mihm continues with his company’s experience selling the plans to Millennials:
“Anthem put together a marketing campaign targeting that demographic. This contributed to the early adopters signing up. For most of our members, that didn’t make them sign up. It was really word of mouth. When I ask members how they heard about us, it’s common for them to say they asked their friends on Facebook, who told them about Tonik.
“I don’t think the initial message that reached the early adopters was really appealing to everyone. Some Millennials are tired of the ‘extreme’ marketing approach. But we were able to reach this group through word of mouth from the early adopters.”
The story of Karlene Medina, a Tonik member in Los Angeles, illustrates one Millennial’s experience:
“When Karlene Medina, 28, left her job in mid-2007 to start her own recruiting company for technical professionals, she faced a daunting choice: continue with her current health plan using COBRA coverage, or seek out a new plan better suited to her needs.
“Karlene researched plans and ultimately chose a Tonik plan offered by Anthem Blue Cross of California.
“‘I did some homework, and it was a nightmare looking for different plans,’ Karlene said. ‘Tonik individual plans are simple and straightforward. I especially liked that there was all-in-one coverage, which included medical, dental and vision benefits. Good coverage plus a good price equals good value.
“‘I was relieved to find the search worth my time,’ Karlene said. ‘Anthem Blue Cross is ahead of the other insurance companies when it comes to targeting young adults who need health coverage.’”
Anthem Blue Cross Blue Shield has continued offering Tonik plans after the enactment of the Affordable Care Act, even though adult children up to age 26 can still be considered dependents on their parents’ plan. Although this provision has affected Tonik, Mihm still finds the product to be a valuable offering for older Millennials:
“For this demographic, it’s extremely popular. We spend a lot of time educating young people who think they might not even need insurance under Obamacare—but most provisions won’t take effect until 2014. Starting in 2014, there will be regulated plans sold on the exchanges. The future of Tonik for new members is uncertain, but if you already have it, you can keep it.”
Although Tonik for new members might not survive the enactment of the Affordable Care Act, the product’s development is still a valuable lesson for established brands seeking to appeal to younger markets. Conducting research to learn how best to tweak a product offering, communicating with early adopters and facilitating word-of-mouth are all important steps. There’s no more traditional and established market than health insurance—if Anthem Blue Cross Blue Shield can find a way to innovate, any brand can.