Kaiser Health News’ Phil Galewitz examines the denial rates for insurance policies purchased in the individual market — published for the first time as a result of the provisions in the Affordable Care Act — and finds that insurers turn down applicants for coverage at different rates depending on geographical location and for almost any reason. For instance, a review of the 20 most populous states find that “denial rates routinely exceed 20 percent and often are much higher” and seem to contradict industry claims to the contrary:
The information provides fresh evidence of the challenges facing people buying individual health insurance. It also shows the likelihood of whether consumers are approved for a policy depends on which state they live in and the insurer they choose.
Denial rates can vary widely within individual states. In Georgia, for example, Aetna’s denial rate is 15 percent compared with 47percent for Kaiser Permanente and 67 percent for John Alden Life Insurance. [...]
Using the data from the website, a Government Accountability Office study of 459 insurers published earlier this year found an average of 19 percent 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 percent or below and a quarter had rates of 40 percent or higher.
A recent government analysis found that “50 to 129 million (19 to 50 percent of) non-elderly Americans have some type of pre-existing health condition” and would have a hard time enrolling in individual insurance or finding an affordable coverage option. Under the new health law, insurers will be prohibited from denying coverage due to pre-existing conditions or imposing waiting limits on less profitable applicants. Still enterprising issuers will engineer new ways to avoid taking on less healthy patients who spend more on care than they contribute through premium dollars, meaning that regulators and lawmakers have to remain vigilant of industry cherry picking if the sickest Americans are to have access to the coverage they need.