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Life Health > Health Insurance > Life Insurance Strategies

Classifying Risk For The Working Uninsured

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The latest government statistics estimate that 47 million Americans do not have health insurance coverage. According to the Kaiser Family Foundation, 54% of those Americans are in working families.

These are the working uninsured and are often in part-time and hourly jobs where they don’t have access to a major medical plan through their employer or spouse. Many are employed in high-turnover industries such as restaurants, retail and hospitality.

Numerous employers are turning to limited-benefit health plans, typically 100% employee-paid, to provide affordable health insurance to their uninsured workers. Premiums for such a plan often start at one or two hours’ pay per week, making access to health insurance a reality for part-time employees making $8 to $12 per hour.

Producers selling these limited-benefit plans need to understand how underwriters assess the risk for working uninsured in a group. These attributes are typically completely different from the population that has access to traditional major medical coverage. For underwriters, it is important to identify these risks so that the group can be assigned the best classification possible.

A matter of priority

The health insurance industry often makes an incorrect assumption that everyone knows the importance of healthy living and the consequences of poor lifestyle choices. This may be true for those with traditional major medical coverage, who have had ready access to the health care system. However, for the working uninsured, even if their employer offers a limited-benefit plan, their ability to get access to health care often ends up being a matter of what they can afford.

CIGNA market research completed in 2008 found 82% of the working uninsured felt that good health insurance is too expensive. More than half of that 82% had a household income of $25,000 or below.

A significant finding for underwriting such groups is that this same study found 71% of the working uninsured often skipped routine doctor visits because of the cost, even though 61% of the population admitted they frequently worry that an accident or illness could cause major financial trouble. This situation obviously leads to a higher health risk classification.

Often, enrolling in a health insurance plan is not as high a priority for the working uninsured as it is for the working population in general. It is key for underwriters to remember that unlike salaried or more highly compensated employees with traditional major medical coverage, the working uninsured are making only $8 to $12 per hour. This income range means that other pressing financial obligations are a higher priority than “optional” expenses like health insurance. CIGNA research found that health insurance was 8th on the list of financial priorities among the working uninsured, ranking behind rent-mortgage, groceries, utilities, gas, car insurance and vehicle maintenance.

What can this tell us about the working uninsured? By placing health insurance further down their list of financial priorities, their ability to receive regular health care is impaired. Access to regular health care could help them take the steps necessary to lead a healthy life and avoid catastrophic illnesses in the future.

A chronic characteristic

The working uninsured population is often painted as young, active and indifferent to medical care. A recent study published in the Annals of Internal Medicine, however, found that the U.S. working age population who do not have insurance coverage often suffer from chronic health conditions yet have less access to health care than their insured counterparts.

Using data from the National Health and Nutritional Examination Survey conducted by the Centers for Disease Control and Prevention, the study estimated that 11.4 million working age uninsured have been diagnosed with a chronic disease. These illnesses include asthma, previous cancer, cardiovascular disease, diabetes, hypertension and obstructive lung disease. The study did not cover those with multiple chronic illnesses but did find that those who were chronically ill but not insured were more than three times more likely not to have consulted a health professional–22.6% against 6.2% of the insured population. They were also more than four times more likely not to have had a regular site for medical care in the past 12 months, compared to those with insurance coverage–26.1% against 6.2%. Finally, they were also a lot more likely to use an emergency room as a standard place of medical care–7.1% against 1.1%.

With these findings, it is fair to conclude that many of the working uninsured may already suffer from a chronic condition that has not been diagnosed.

Learning the lifestyle

A complete understanding of the working uninsured’s lifestyle is vital for the most accurate risk rating.

Working uninsured in the service and hospitality industries often endure nontraditional work schedules during the evenings, weekends and third shift. Studies have shown that working these shifts leads to poor diet, obesity and diabetes. A 2009 study by Harvard/Brigham and Women’s Hospital researcher Frank A.J.L. Scheer has found that the risky behaviors of working against the natural body clock, eating meals immediately before bed and lacking time to prepare meals contribute directly to these health issues.

This is added to the fact that the working uninsured often do not have the disposable income needed to cover the high cost of eating healthy. Fresh fruits and vegetables, whole grains, lean meats, fresh fish and low-fat dairy products are often replaced in their diet by fast-food staples such as hamburgers, tacos, fried foods and milkshakes. These food items are cheaper on their wallets in the short-term but make them long-term underwriting risks.

The preventive services offered by a quality limited-benefit health plan lowers risk once the working uninsured become regular health care customers. During the risk assessment, however, it is important to remember the variety of health issues that preventive care may not have addressed. Tobacco cessation, information about alcohol use, chiropractic issues as well as hearing and vision exams all probably have been neglected–meaning more risk.

Female members of the working uninsured are at relatively higher risk due to a lack of annual mammogram and pap smear exams. And because of regular financial concerns, all members of the working uninsured are subject to poorly managed stress.

The number of employees at risk of becoming part of the working uninsured will continue to expand as businesses align the benefits of their employees to new economic realities. As the working uninsured receive more attention from the public and private sector, companies underwriting their plans must identify all of the risk factors to create an accurately priced plan.

Curt A. Wieden is vice president of product and marketing for CIGNA Voluntary, Phoenix, a division of CIGNA Corp., Philadelphia. He can be reached at [email protected].


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