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Health Insurers Deny Coverage to Many Who Apply for Individual Policies

Denial rates of 20 percent or more are common

Health care overhaul offers help

The difficulty of buying individual coverage was a big reason behind the 2010 federal health overhaul, which will ban insurers starting in 2014 from denying individual policies based on health status.

In the past, most consumers haven't been able to look up insurers' denial rates before sending in a check to apply for coverage. Maryland is the only state that requires insurers to report information on denial rates.

But as part of the federal health law, HHS last November started posting the coverage-denial rates, which can be searched by ZIP code at www.healthcare.gov.

Using the data from the website, a Government Accountability Office study of 459 insurers published earlier this year found an average of 19% of applicants nationally were denied coverage. But the study showed a wide range of denial rates. A quarter of insurers had denial rates of 15% or below and a quarter had rates of 40% or higher.

A House Energy and Commerce Committee investigation into four large for-profit insurers last year found that the denial rates have steadily increased from 11.9% in 2007 to 15.3% in 2009. The companies reviewed were Aetna, Humana, UnitedHealthcare and WellPoint.

The denial rates are an important tool for helping consumers select an insurer, said Deborah Chollet, a senior fellow with Mathematica, a non-partisan think tank. That's because the application process can take a month or more, and carriers typically require the first month's premium with the application.

Sara Collins, vice president of the non-partisan Commonwealth Fund, said the denial data underscore the need for the industry changes that will occur in 2014. "It's not surprising that denial rates are high, because insurers have an incentive to only enroll the healthy risks," she said. "If a person comes in with a health problem that will potentially cost (the insurer) money, they are probably not going to cover them."

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a non-profit, non-partisan health policy research and communication organization not affiliated with Kaiser Permanente. This article was produced in collaboration with USA Today.

You may also like: Health care law: Today and to come. >>

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