What is the future of health insurance for young people?

Traditionally seen as discretionary, complex and uninteresting health insurance, especially among young people, is poised for a radical transformation. We are witnessing a tectonic generational shift – increasingly young individuals are turning away from conventional state-funded health systems (such as the NHS in the UK), opting instead for faster, more effective, high-quality healthcare solutions.

This behavioural pivot has triggered a necessity for health insurers to revamp their strategies aimed at this demographic, ensuring their offerings are straightforward, affordable, and attractive. This transformation isn't just critical – it's inescapable and will shape the future of health insurance as we know it.

The projection of a 99.5% increase in chronic health diseases by 2050 paints a grim picture. Without proactive measures, this will place an enormous strain on health insurance companies as they struggle with the escalating costs of reactive treatments. A proactive approach, focusing on younger, healthier individuals and promoting healthier lifestyles, could be instrumental in preventing this statistic from becoming a reality. Concerningly, 48% of those aged 16-24 years have expressed dissatisfaction with their current health status, according to the Office for National Statistics.

High costs, unfortunately, serve as the primary deterrent for young people in acquiring health insurance. As many as 25% contemplated private health insurance for themselves or family but were ultimately dissuaded by the financial burden. Despite this, the appeal of health insurance has never been stronger. The UK in particular has witnessed an impressive 83% growth in the number of insured individuals from 2021-2022, bringing the total to 11.7 million. While many people secure health insurance through workplace schemes, a growing number are investing their disposable income in health insurance, underscoring its perceived value.

The term "young invincible" commonly refers to individuals under 35 who choose to forego health insurance, believing they are unlikely to need it. However, this demographic is gradually shifting its perspective on health insurance. Even in countries offering free healthcare, lack of health insurance can result in extended waiting periods for non-emergency procedures, limiting access to prompt, comprehensive care.

Health insurance typically extends beyond public healthcare to cover additional services like prescription drugs, dental care, vision care, and mental health support. A growing number of young people are recognising that investing in health insurance isn't just about protecting their physical health but also safeguarding their mental well-being and financial stability.

This is especially so given the rise of mental health challenges reported by young people. According to the WHO, one in seven 10-19-year-olds now experiences a mental disorder, accounting for 13% of the global burden of disease in this age group, further highlighting its importance.

A crucial component often overlooked in the conversation about health insurance for young people is education. The process of justifying the cost, necessity, and more importantly understand the complexities of health insurance can be overwhelming, especially for those not accustomed to health insurance.

Educational initiatives tailored to meet this demographic's unique needs and concerns can effectively dispel prevalent myths and misconceptions. By doing so, these initiatives can cultivate a more informed understanding and foster a more positive outlook towards health insurance. Therefore, education should not be considered a supplementary tool but a cornerstone in bridging the gap between young individuals and their perception of health insurance.

More progressive health insurance firms will pivot towards the integration of connected devices. These technologically advanced solutions will be specifically curated with the preferences of the younger demographic in mind, thereby reaching far beyond just a few industry stalwarts.

Industry experts predict there could be up to 1 trillion connected devices by 2025. The deluge of data generated by these devices will enable insurance carriers to gain a deeper understanding of their customers. This will lead to the emergence of new product categories, more personalised pricing models, and increasingly real-time service delivery for young people. This will help transform the image of the health insurance sector from being perceived as "boring" to something that is modern, engaging, and "cool”.

Artificial Intelligence (AI) and its associated technologies are poised to cause a profound transformation in the insurance industry, influencing every facet from distribution to underwriting, pricing, and claim processing. This change will be especially felt by younger demographics already accustomed to digital-first experiences. According to McKinsey, the traditional approach to underwriting is predicted to become obsolete by 2030. This transformation could mean a more personalised and streamlined insurance experience for younger generations.

As employers harness AI's power, employees may receive personalised health insights tailored to their unique needs. For the younger workforce, this could translate into financial incentives. By sharing their health insights and demonstrating measurable wellness improvements, they could contribute to reducing their employers' overall health insurance premiums. A crucial part of this process will be gamification. Employees are more likely to participate and stay committed to their wellness goals by making health tracking and improvement fun and engaging. However, this system's success heavily relies on trust and the willingness of the workforce to share personal data. Employers must ensure robust privacy measures are in place to protect this sensitive information and maintain the trust of their employees.

In conclusion, the health insurance landscape for young people is poised for a significant transformation. The growing interest in private health insurance among this demographic indicates a shift in attitudes, challenging the “young invincible” myth that young people don't need (or want) health coverage. A critical factor driving this change is the role of education. By enhancing understanding and awareness of the value of health insurance, this sector will begin to realise dramatic uptake in policies amongst younger individuals.