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What If Medical Underwriting Returned?

If you purchased health insurance in the individual marketplace before implementation of the Patient Protection and Affordable Care Act of 2010 (ACA), then you’re aware of the challenges that came with that process. Applicants had to complete lengthy questionnaires detailing current conditions and all diagnoses and treatments (including history of prescription drug use) from their past. This was called medical underwriting, and it was designed to measure how much risk the health insurer would have to accept to cover you, based on the likelihood of your needing coverage for expensive medical bills.

Part of the underwriting process included accessing and reviewing all medical records, so if you left out a condition, it would be discovered. Some conditions, even if the patient were fully recovered, could trigger an automatic denial. Back then, nearly one in five applications (18 percent) was declined as a result of medical underwriting.

Other conditions would trigger higher premiums and/or limits to coverage. Health insurance in the individual market was just that: Individual. Medical underwriting tailored the policy and premiums for each person’s medical history and likelihood of getting sick, which is why premiums were so much higher than in the employer group market. In the group market, the entire population is lumped into one insurance pool regardless of health, and no one is denied coverage.

It’s important to recognize that even before ACA, health insurance premiums were rising exponentially in the individual market and in the employer group market. One of the primary aims of the ACA was to cover as many Americans as possible, and by adding more people to the individual insurance pool, it was projected that premiums could be reduced. However, rates still rose, with costs averaging 22 percent more for the most popular ACA plan in 2017 over the 2016 rates.

Experts project that if medical underwriting was reintroduced to the individual market, more than one in four (27 percent) of non-elderly adult applicants would be denied coverage. However, most of the discussion about a replacement for the ACA includes protections for those with pre-existing conditions.

No matter what happens, though, many Americans, even those with coverage through their employers, remain concerned about health care costs. A recent study showed that 25 percent of Americans are “very worried” about being able to afford health care, and more than half are at least somewhat worried.

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