Health market needs medical underwriting, analyst says

Merrill Matthews says efforts to save the current guaranteed-issue rules are misguided

Merrill Matthews, an Affordable Care Act opponent, argues that forcing insurers to take applicants with serious health problems on the same basis as other applicants will backfire. (Image: Thinkstock) Merrill Matthews, an Affordable Care Act opponent, argues that forcing insurers to take applicants with serious health problems on the same basis as other applicants will backfire. (Image: Thinkstock)

Merrill Matthews Jr., a health policy analyst, says one key to reviving the U.S. individual major medical market is bringing back medical underwriting.

The Affordable Care Act now blocks insurers from using information about people's health problems when deciding whether to sell them individual major medical coverage. The only health information insurers can use when pricing the coverage is location, age and tobacco use.

Many insurers, agents, brokers and web brokers like how restrictions on medical underwriting simplify the major medical sales process, and many Republican proposals for replacing the ACA call for keeping some kind of restrictions on health insurers' use of personal health information in the underwriting process.

Matthews, who is affiliated with the Institute for Policy Innovation, a Dallas-based organization that promotes market-based approaches to resolving health policy problems, says the current ACA restrictions on underwriting are crippling the individual major medical market.

Related: CAHI Defends Underwriting

The ban gives people an obvious, irresistible incentive to wait until they get sick to pay for coverage, Matthews writes in an analysis published in Forbes.

Replacing the current ban on medical underwriting with high risk pools, or special coverage for people with health problems, could provide some kind of insurance for those people while putting the individual commercial health market back on its feet, Matthews writes.

The risk pools in effect before the ACA came along provided coverage for about 225,000 people, and some estimates suggest that a total of 4 million people might be the kind who should have risk pool coverage, Matthews says.

Adequately subsidizing and regulating risk pools for those people would be better than the current system, Matthews says. 

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