Analysis: Average Health Insurer Rejects More Than One In Five Applications
State-by-state analysis shows Montana insurers top list with 45% average rejection rate
HealthPocket looks at which health insurance companies reject applicants most frequently
SUNNYVALE, Calif., Jan. 24, 2013 /PRNewswire-USNewswire/ -- A new analysis from HealthPocket, Inc., shows that the health insurance industry averages an application rejection rate of 22 percent of submitted individual and family applications nationally. States with the highest percentage of area insurer rejections are Montana (45%), Alabama (40%), District of Columbia (37%), Arkansas (35%) and Alaska (34%).
The analysis shows wide variation across the country in how often applicants are rejected by health insurers. Some insurers have declination rates greater than 70 percent; others rarely decline applicants. There is also significant variability within insurance companies across different markets. Kaiser Permanente plans in Georgia have a declination rate of 34 percent, but in Hawaii the same company has a much lower rate of 22 percent. Nationwide, insurers' average rejection rate exceeds one in five applications within the individual and family insurance markets—significantly higher than findings from a 2010 congressional study of the largest for-profit insurers, which found a declination rate of one in seven applications.
"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 Kev Coleman, head of research & data at HealthPocket. "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 conditions."
Experts say that health insurance declination rates are a serious issue for consumers, with hundreds of thousands of people being rejected for coverage each year. A health insurance application rejection from one company can negatively affect applications from other companies since insurers typically ask about previous denials when evaluating an application.
The analysis also shows:
- Plans with the five highest declination rates include South Dakota's John Alden Life Insurance Company (73%), Utah's Assurant Health (71%), North Dakota's Assurant Health (58%), Kentucky's Time Insurance Company (56%), and Idaho's Assurant Health (56%).
- States whose insurers have the highest declination rates include Montana (45%), Alabama (40%), D.C. (37%), Arkansas (35%) and Alaska (34%); Maine, Massachusetts, New Jersey, New York, and Vermont have a zero rating.
- Some non-profit insurance companies have higher declination rates than for-profit insurers. Kaiser Permanente in Georgia, for example, has a declination rate of 34 percent while Humana, a large for-profit insurer in Georgia, has a declination rate of 23 percent.
HealthPocket analyzed publicly available insurance records of 9,450 plans for individuals and families under the age of 65 to determine the average declination rate of health insurance applications, and compared this average to the declination rate of individual insurers. HealthPocket.com is a free website that compares and ranks all health plans available to an individual, family, or employer in a given area, all at once. HealthPocket uses only objective data from government, non-profit, and private sources that carry no conditions that might restrict the site from serving as an unbiased resource for consumers. The founders of HealthPocket.com spent decades pioneering online access to health insurance information and launched the company in late 2012.
The HealthPocket InfoStat is one of its ongoing efforts to use health plan data to produce objective, meaningful, and clarifying information and guidance for consumers. To review declination rates for individual plans available in a given geographic area, visit HealthPocket's individual and family health insurance comparison tool, which lists the rate for each plan on its Plan Details page.
HealthPocket.com is a free website that compares and ranks all health plans available to an individual, family, or employer in a given area, all at once. The Company uses only objective data from government, non-profit, and private sources that carry no conditions that might restrict the site from serving as an unbiased resource for consumers. The founders of HealthPocket.com spent decades pioneering online access to health insurance information and knew they could offer something different that can positively change how people buy and use healthcare in the U.S. Learn more at www.HealthPocket.com.