Health market needs medical underwriting, analyst says

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.