177:, protects insurers from intentional fraud and affects only about 1% of individual policyholders but appears to be on the increase. Rescission practices by several large insurers have attracted media attention, class-action lawsuits, and regulatory attention in several states. In 2007, California passed legislation to tighten the rules governing rescissions. In December 2007, a California appeals court ruled that a health insurer could not rescind coverage without showing that either the policyholder willfully misrepresented health or that the insurer had investigated the application before issuing coverage.
107:
Conversely, if they apply with multiple insurers in hopes of finding one that will issue them a policy, they will be overrepresented in the declination rate. The 2001 Commonwealth Fund study found that a majority of adults reported that it was at least somewhat difficult to find an affordable health insurance policy. Among adults over 30, the percentage reporting difficulty did not vary significantly by age. Those with health problems were somewhat more likely to report having difficulty obtaining affordable health insurance (77% versus 64% of those in good health).
98:
individuals to 64. The same study found that among those who received offers for coverage, 76% received offers at standard rates 22% were quoted higher rates. The frequency of increased premiums also increased with age so for applicants over 40, roughly half were affected by medical underwriting, either in the form of denial or increased premiums. The study did not address how many applicants offered coverage at higher premiums decided to decline the policy. A study conducted by the
152:
with a particular product deteriorated, as often happened when rising premiums drove healthier individuals (who were able to buy other policies on more favorable terms) out of the product, leaving those who were relatively less healthy. One factor that drove that is the increase in costs, as individuals who initially pass underwriting develop health problems. In general, claim costs rose significantly over the first five years that an individual health insurance policy is in force.
69:
or needed medical care. Waiting to obtain health insurance coverage until one needs coverage then creates a pool of insureds with "high use," which then increases the premiums that insurance companies must charge to pay for the claims incurred. In turn, high premiums further discourage healthy people from obtaining coverage, particularly when they realize that they will be able to obtain coverage when they need medical care.
36:
underwriting, a more indepth analysis of a client's health information. The use of medical underwriting may be restricted by law in certain insurance markets. If allowed, the criteria used should be objective, clearly related to the likely cost of providing coverage, practical to administer, consistent with applicable law, and designed to protect the long-term viability of the insurance system.
144:
There had been instances in which insurers increased premiums at annual renewals based on an individual's claim history or changes in their health status. That was possible when coverage was marketed to individuals by discretionary group trusts, escaping some states' rules governing the individual health insurance market. The insurer that was first identified by
68:
is a system that attracts high-users and discourages low-users from participating. Proponents of underwriting believe that if given the ability to purchase coverage without regard for pre-existing medical conditions (no underwriting), people would wait to purchase health insurance until they got sick
51:
To search the medical underwriting, an insurer asks people who apply for coverage (typically people applying for individual or family coverage) about pre-existing medical conditions. In most US states, insurance companies are allowed to ask questions about a person's medical history to decide whom to
151:
However, in most cases, an insurer's ability to "re-underwrite" an existing guaranteed renewable policy is limited by contract provisions and the
Affordable Care Act (previously by state law). Even so, premiums fluctuated significantly for existing policies if the average health of the policyholders
155:
Several solutions were proposed for the "closed block" problem, including requiring insurers to "pre-fund" for cost increases over the lifetime of a product, providing cross-subsidies between blocks of products by pooling products across durations, providing cross-subsidies by placing limits on the
106:
Measuring the percentage of applicants who were denied coverage does not capture any effect that occurs before an application is submitted. If individuals with serious health conditions never apply because they expect that they will be denied coverage, they will not show up in the declination rate.
200:
Moratorium underwriting is an alternative method of health insurance which primarily allows for applicants to receive cover without disclosing their entire medical history. Instead, individuals will typically have any pre-existing medical conditions excluded if those have developed within the past
102:
in 2001 found that, among those 19 to 64 who sought individual health insurance during the previous three years, the majority found it expensive, and less than a third ended up purchasing insurance. However, the study did not distinguish between consumers who were quoted increased rates by medical
77:
Proponents of medical underwriting thus argue that it ensures that individual health insurance premiums are kept as low as possible. Critics of medical underwriting believe that it unfairly prevents people with relatively minor and treatable pre-existing conditions from obtaining health insurance.
143:
in 2010, health insurance was primarily regulated by the states. Some states mandated individual health insurance policies as "guaranteed renewable:" once a policy had been issued, the policyholder could keep it forever regardless of medical conditions as long as the required premiums were paid.
39:
It is the process in which an underwriter considers the health conditions of the person who is applying for the insurance, keeping in mind certain factors like health condition, age, nature of work, and geographical zone. After looking at all the factors, an underwriter suggests whether a policy
97:
One large industry survey, from 2004, found that roughly 13% of those who applied for individual health insurance were denied coverage after undergoing medical underwriting. Declination rates increased significantly with age, rising from 5% for individuals 18 and under to just under a third for
35:
process, an individual's health information may be used in making two decisions: whether to offer or deny coverage and what premium rate to set for the policy. The two most common methods of medical underwriting are known as moratorium underwriting, a relatively simple process, and full medical
191:
A distinction between underwriting of individually purchased life insurance and the underwriting of health insurance is generally recognized in US state-specific regulation of insurance. The general legal posture is for states to view life insurance as less of a necessity than health coverage.
212:
Full medical underwriting requires that applicants disclose their entire medical histories to the insurer. This then allows the insurer to provide the applicants with lists of specific exclusions based on their disclosed pre-existing medical conditions.
55:
While most discussions of medical underwriting in health insurance are about medical expense insurance, similar considerations apply for other forms of individually-purchased health insurance, such as disability income and longterm care insurance.
172:
Insurers have the right to cancel individually purchased insurance if the insurer finds that the applicant provided incomplete or inaccurate information on the application, thereby affecting the medical underwriting process. The practice, called
110:
Some
American states have made medical underwriting illegal as a prerequisite for health coverage, which means anyone who asks for health insurance and pays for it will get it. States that have outlawed medical underwriting include
94:, being 20 lb. over or under the ideal weight, and old sports injuries. An estimated 5 million of those without health insurance are considered "uninsurable" because of pre-existing conditions.
501:
Mark V. Pauly and Len M. Nichols,"The
Nongroup Health Insurance Market: Short On Facts, Long On Opinions And Policy Disputes," Health Affairs - Web Exclusive, October 23, 2002, note 27
64:
From the insurers' point of view, medical underwriting is necessary to prevent people from purchasing health insurance coverage only when they are sick, pregnant or need medical care.
698:
48:
Underwriting is the process that a health insurer uses to weigh potential health risks in its pool of insured people against potential costs of providing coverage.
558:
525:
473:
443:
687:
389:
697:, October 3, 2006. A similar occurrence had been observed in the small group health insurance market. Stephen Brink, James Modaff and Steven Sherman,
582:
648:
164:
and modeled the likely impact of each. All of the solutions would increase the initial cost of a new policy and reduce cost increases over time.
161:
845:
618:
156:
allowed variation in premiums between products, or creating state-sponsored risk pools for individuals trapped in a closed block. The
247:
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Moratorium underwriting is, therefore, best suited for healthy individuals who don't foresee any medical difficulties developing.
786:
774:
649:"Health Care Marketplace | American Medical Security Group Says It Will Cease 'Reunderwriting' Practices - Kaisernetwork.org"
590:
566:
814:
454:, August 2005. A prior industry survey, conducted in 2002, had similar results: Thomas D. Musco and Thomas F. Wildsmith,
451:
23:
term referring to the use of medical or health information in the evaluation of an applicant for coverage, typically for
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440:
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five years. If related symptoms occur within a set period of time, then this will affect the final policy.
52:
offer coverage, whom to deny and if additional charges should apply to individually-purchased coverage.
850:
652:
282:
174:
615:
283:"Dating Death: An Empirical Comparison of Medical Underwriters in the U.S. Life Settlements Market"
268:
855:
672:
580:"The Impact of Guaranteed Issue and Community Rating Reforms on Individual Insurance Markets,"
860:
327:
556:"Individual Health Insurance: a Comprehensive Survey of Affordability, Access, and Benefits"
441:"Individual Health Insurance: A Comprehensive Survey of Affordability, Access, and Benefits"
328:"Risk Classification in Voluntary Individual Disability Income and Long-Term Care Insurance"
148:
as reunderwriting policyholders has since publicly stated it will discontinue the practice.
694:
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140:
756:
310:
802:
760:
748:
302:
228:
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Diseases that can make an individual uninsurable include serious conditions, such as
65:
314:
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347:"Risk Classification in Individually Purchased Voluntary Medical Expense Insurance"
294:
112:
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298:
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586:
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447:
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222:
728:
710:
271:
Actuarial
Standard of Practice No. 12, Actuarial Standards Board, December 2005
186:
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839:
827:"What is Medical Underwriting in Health Insurance? | Healthcare Clarity"
752:
346:
306:
124:
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underwriting and those who qualified for standard or preferred premiums.
604:"Health Insurer's Premium Practices Add to Profit Surge, Roil Customers"
131:, which also have the highest premiums for individual health insurance.
116:
685:"Variation by Duration in Individual Health Medical Insurance Claims,"
526:"Experiences of Working-Age Adults in the Individual Insurance Market"
474:"Experiences of Working-Age Adults in the Individual Insurance Market"
79:
616:"The Illusion of Group Health Insurance: Discretionary Associations"
787:
California
Legislative database: AB1324, chaptered October 14, 2007
636:"Insurers Avoid State Regulations By Selling Via Groups Elsewhere"
420:"Baby Kendra's $ 300,000 Bill Pains Insurers, Inspires Candidates"
128:
83:
120:
40:
should be given to the person and at what price, or premium.
799:"Court curbs insurers' ability to rescind medical policies,"
91:
458:, Health Insurance Association of America, October 2002.
523:
514:, Health Insurance Association of America, October 2002
512:"Individual Health Insurance: Access and Affordability"
467:
456:"Individual Health Insurance: Access and Affordability"
729:"Fair Value Measurement in the Life Settlement Market"
248:"Medical Underwriting – Health Insurance Underwriting"
711:"Individual health insurance: Closed block solutions"
699:"Variation by Duration in Small Group Medical Claims
160:
performed a study of the proposed solutions for the
207:
837:
589:report prepared by Milliman, Inc. on behalf of
269:"Risk Classification (for All Practice Areas),"
162:National Association of Insurance Commissioners
396:. U.S. News & World Report. Archived from
180:
554:Teresa Chovan, Hannah Yoo and Tom Wildsmith,
439:Teresa Chovan, Hannah Yoo and Tom Wildsmith,
727:Braun, Alexander; Xu, Jiahua (2020-03-31).
342:
340:
195:
510:Thomas D. Musco and Thomas F. Wildsmith,
701:, Transactions of the , 1991-92 Reports.
638:, The Wall Street Journal, April 9, 2002
606:, The Wall Street Journal, April 9, 2002
524:Lisa Duchon; Cathy Schoen (2001-12-01).
411:
387:
726:
337:
838:
775:"The neutron bomb of health insurance"
417:
846:Health insurance in the United States
773:Updegrave, Walter and Ashford, Kate
532:. Commonwealth Fund. Archived from
480:. Commonwealth Fund. Archived from
43:
13:
280:
14:
872:
777:Money Magazine, February 13, 2007
578:Leigh Wachenheim and Hans Leida,
90:but also such common ailments as
591:America’s Health Insurance Plans
567:America’s Health Insurance Plans
452:America's Health Insurance Plans
388:Michelle, Andrews (2007-08-07).
287:North American Actuarial Journal
819:
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250:. Health 401k. 23 December 2011
208:Full medical underwriting (FMU)
433:
381:
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274:
262:
240:
167:
1:
715:American Academy of Actuaries
351:American Academy of Actuaries
332:American Academy of Actuaries
299:10.1080/10920277.2019.1585881
234:
158:American Academy of Actuaries
418:Marcus, Aliza (2008-05-07).
139:Prior to the passage of the
7:
733:The Journal of Fixed Income
216:
181:Life insurance underwriting
134:
10:
877:
184:
72:
59:
625:, FamiliesUSA, March 2004
281:Xu, Jiahua (2020-01-02).
196:Moratorium underwriting
146:The Wall Street Journal
745:10.3905/jfi.2020.1.084
565:, see Tables 2 and 3.
815:General & Medical
185:Further information:
695:Society of Actuaries
364:"The "Uninsurables""
17:Medical underwriting
805:, December 25, 2007
141:Affordable Care Act
690:2007-11-29 at the
683:Leigh Wachenheim,
673:WSJ Reunderwriting
621:2012-02-06 at the
585:2010-10-17 at the
561:2007-11-27 at the
446:2007-11-27 at the
390:"The Untouchables"
851:Actuarial science
803:Los Angeles Times
100:Commonwealth Fund
66:Adverse selection
31:. As part of the
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623:Wayback Machine
614:
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602:Terhune, Chad
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563:Wayback Machine
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353:, February 1999
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253:
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246:
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223:Body mass index
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198:
189:
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11:
5:
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864:
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856:Life insurance
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829:. 13 May 2024.
818:
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739:(4): 100–123.
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634:Terhune, Chad
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460:
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238:
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233:
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229:Rohrer's index
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187:life insurance
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655:on 2010-01-18
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593:, August 2007
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569:, August 2005
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536:on 2008-05-18
535:
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484:on 2008-05-18
483:
479:
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468:Lisa Duchon;
464:
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453:
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421:
414:
400:on 2007-10-12
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334:, Winter 2001
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125:Massachusetts
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118:
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88:heart disease
85:
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861:Underwriting
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657:. Retrieved
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538:. Retrieved
534:the original
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482:the original
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470:Cathy Schoen
463:
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398:the original
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370:. 2007-05-23
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252:. Retrieved
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530:Issue Brief
478:Issue Brief
168:Rescissions
840:Categories
717:, May 2004
659:2007-11-09
545:, Figure 1
540:2007-10-27
488:2007-10-27
426:2008-05-10
404:2007-10-27
374:2007-06-27
254:19 January
235:References
175:rescission
117:New Jersey
761:213644296
753:1059-8596
307:1092-0277
80:arthritis
688:Archived
619:Archived
583:Archived
559:Archived
444:Archived
368:CBS News
315:59483358
217:See also
135:Renewals
113:New York
129:Vermont
73:Effects
60:Purpose
759:
751:
394:Health
313:
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127:, and
86:, and
84:cancer
757:S2CID
311:S2CID
225:(BMI)
121:Maine
19:is a
801:The
749:ISSN
303:ISSN
256:2012
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741:doi
295:doi
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