High health insurance denial rate in some states

Posted on: Monday, February 04, 2013

A new report shows that a considerable percentage of insurance customers are denied health coverage, something that many insurers will be prevented from doing when the Patient Protection and Affordable Care Act goes fully into effect.

According to a new poll from insurance research website HealthPocket, roughly one in every five health insurance applications submitted by consumers is turned down by insurers, with some of the biggest denial rates occurring in Montana at 45 percent, Alabama at 40 percent, the District Columbia at 37 percent and Arkansas at 35 percent.

This contrasts sharply with the ratio of acceptance to denial in other parts of the country. For example, the report notes that in places like Maine, Massachusetts, New York, New Jersey and Vermont, denial rates are virtually zero.

Kev Coleman, head of research and data at HealthPocket, noted that this is an indication as to how variegated the insurance marketplace is.

"Clearly there is great variability across states and within states in terms of how frequently an insurer rejects a health insurance application, but nationally it seems to be occurring more frequently than industry analysts had assumed," said Coleman. "What is unclear is whether some insurers have increased their declination rate in order to improve risk pool health and profitability prior to 2014, when insurance companies can no longer reject applications based upon health status or pre-existing medical condition."

Even though the ban on denying coverage for prior health conditions does not become mandatory until next year, several states have implemented the rule. In fact, according to the Commonwealth Fund, nine states have passed at least some of the laws pertaining to the reforms, including Connecticut, California, New York, Rhode Island and Oregon.

Posted In: Insurance News, Health Insurance

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