title: Medical Underwriting In Long-Term Care Insurance: Market Conditions Limit Options For Higher-Risk Consumers.
abstract: A key feature of private long-term care insurance is that medical underwriters screen out would-be buyers who have health conditions that portend near-term physical or cognitive disability. We applied common underwriting criteria based on data from two long-term care insurers to a nationally representative sample of individuals in the target age range (50-71 years) for long-term care insurance. The screening criteria put upper bounds on the current proportion of Americans who could gain coverage in the individual market without changes to medical underwriting practice. Specifically, our simulations show that in the target age range, approximately 30 percent of those whose wealth meets minimum industry standards for suitability for long-term care insurance would have their application for such insurance rejected at the underwriting stage. Among the general population-without considering financial suitability-we estimated that 40 percent would have their applications rejected. The predicted rejection rates are substantially higher than the rejection rates of about 20-25 percent of applicants in the actual market. In evaluating reforms for long-term care financing and their potential to increase private insurance rates, as well as to reduce financial pressure on public safety-net programs, policy makers need to consider the role of underwriting in the market for long-term care insurance.
authors: Portia Y. Cornell (pcornell@fas.harvard.edu) is a PhD candidate in the Program in Health Policy at Harvard University, in Cambridge, Massachusetts.
authors: Portia Y
authors: PY
authors: Cornell
authors: David C. Grabowski is a professor in the Department of Health Care Policy at Harvard Medical School, in Boston, Massachusetts.
authors: David C
authors: DC
authors: Grabowski
authors: Marc Cohen is chief research and development officer at LifePlans Inc., in Waltham, Massachusetts.
authors: Marc
authors: M
authors: Cohen
authors: Xiaomei Shi is a senior statistician at LifePlans Inc.
authors: Xiaomei
authors: X
authors: Shi
authors: David G. Stevenson is an associate professor in the Department of Health Policy at the Vanderbilt University School of Medicine, in Nashville, Tennessee.
authors: David G
authors: DG
authors: Stevenson
mesh_terms: D000328:Adult; D000368:Aged; D016208:Databases, Factual; D005260:Female; D018166:Health Care Reform; D006801:Humans; D007343:Insurance Carriers / Q000191:economics*; D019458:Insurance Coverage / Q000191:economics / Q000706:statistics & numerical data; D015273:Insurance Selection Bias; D007353:Insurance, Long-Term Care / Q000191:economics* / Q000706:statistics & numerical data; D008134:Long-Term Care / Q000191:economics*; D008297:Male; D008389:Marketing of Health Services / Q000639:trends*; D008875:Middle Aged; D018803:Models, Economic; D017063:Outcome Assessment, Health Care; D017149:Private Sector / Q000191:economics*; D018570:Risk Assessment; D014481:United States
keywords: Elderly; Financing Health Care; Insurance Coverage < Insurance; Insurance Market < Insurance; Long-Term Care