Health Insurance Application Rejection Rates Rising?
A state-by-state look at health insurance declination rates
From HealthPocket.com
Health insurance declination rates, i.e. the percentage of applications rejected by insurers, remain a serious issue for U.S. consumers until 2014 when guaranteed issue protections are fully enacted. Hundreds of thousands of consumers have their health insurance applications declined each year according to a 2010 congressional study.1 A health insurance application rejection from one company can negatively affect applications with other companies since insurers typically ask about previous denials and take this information into consideration when evaluating the application.
Given that the criteria for declining applicants varies among insurers, HealthPocket analyzed more than 9,000 plans across the United States to determine the average declination rate of health insurance applications and compared this average to the declination rate of individual insurers. The results of this analysis demonstrated that there is little uniformity among insurance companies. Some insurance companies had state-level declination rates over 70% for the plans examined while other companies declined no applicants.2 Moreover, HealthPocket’s analysis revealed a nationwide application rejection rate exceeding one in five within the individual and family insurance market.3 This ratio is significantly higher than the findings of a 2010 congressional examination of the four largest for-profit health insurers where the rejection ratio was one in seven.4 What is unclear is whether some insurers have increased their declination rate to improve risk pool health and profitability prior to 2014 when insurance companies will no longer be permitted to deny health insurance on the basis of health status or pre-existing medical conditions. In this context it is important to note that there were also non-profit insurance companies with high declination rates. For example, Kaiser Permanente in Georgia had a declination rate of 34% while Humana, a large for-profit insurer in Georgia, had a declination rate of 23%. In Delaware, the non-profit Highmark had a declination rate of 42% for their individual and family health insurance plans.
The subject of individual insurance companies also raised the question of the consistency of declination rate within an insurance company. As mentioned earlier, Kaiser plans in Georgia had a declination rate of 34% but in Hawaii the same company had a much lower declination rate of 22%. This state-to-state variability in insurance company declination rates was seen across the market.
Focusing on declination averages within a state, the five insurance companies with the highest declination rates within the plans HealthPocket reviewed were as follows:
- John Alden Life Insurance Company (South Dakota): 73%
- Assurant Health (Utah): 71%
- Assurant Health (North Dakota): 58%
- Time Insurance Company (Kentucky): 56%
- Assurant Health (Idaho): 56%
All companies in the list above (Assurant Health, Time Insurance Company, John Alden Life Insurance Company) belong to the Assurant Health group of companies.
Another interesting finding from the study was the difference in average declination rates among states. While the nationwide average was 22%, the state with the highest declination rate, Montana, was over twice that rate at 45%. In sharp contrast to Montana are states, such as New Jersey and New York, that have guaranteed issue regulations resulting in 0% declination rates. The data also revealed health plans with 0% declination rates outside guaranteed issue states.
To review declination rates for individual plans available in your area, HealthPocket’s individual and family health insurance comparison tool lists the declination rate for each plan on its Plan Details page.
Total U.S. Average: 22% -- Based on average declination rates for all plans, not weighted by state or by application volume
State Declination Averages
| Alabama |
40% |
Kentucky |
24% |
North Dakota |
29% |
| Alaska |
34% |
Louisiana |
23% |
Ohio |
21% |
| Arizona |
18% |
Maine |
0% |
Oklahoma |
23% |
| Arkansas |
35% |
Maryland |
29% |
Oregon |
29% |
| California |
20% |
Massachusetts |
0% |
Pennsylvania |
27% |
| Colorado |
21% |
Michigan |
23% |
Rhode Island |
9% |
| Connecticut |
20% |
Minnesota |
14% |
South Carolina |
20% |
| Delaware |
27% |
Mississippi |
26% |
South Dakota |
18% |
| D.C. |
37% |
Missouri |
21% |
Tennessee |
25% |
| Florida |
16% |
Montana |
45% |
Texas |
25% |
| Georgia |
21% |
Nebraska |
20% |
Utah |
19% |
| Hawaii |
5% |
Nevada |
19% |
Vermont |
0% |
| Idaho |
19% |
New Hampshire |
22% |
Virginia |
21% |
| Illinois |
16% |
New Jersey |
0% |
Washington |
6% |
| Indiana |
25% |
New Mexico |
30% |
West Virginia |
27% |
| Iowa |
21% |
New York |
0% |
Wisconsin |
19% |
| Kansas |
25% |
North Carolina |
25% |
Wyoming |
24% |
State with Highest Declination Rate: Montana 45%
States with 0% Declination Rates: Maine, Massachusetts, New Jersey, New York, and Vermont