Wow..+20% of Applicants Are Declined Nationally.

[AllenChicago]

I know from personal experience that a few health insurance applications get declined, but had no idea that the national average was so high.. 1 out of every 5 apps (22%) are declined nationwide, according to the latest study.

Story: One in five health insurance apps rejected | BenefitsPro

I wonder how many healthy people have to be enrolled in 2014 by a given carrier to offset the expenses of just one person with ongoing chronic medical needs? Is there a way to broadly estimate this ratio?

There's no way carriers will be able to survive taking on all these guaranteed additional expenses without MASSIVE increases in premiums across the board.
-Allen

 

[djs]

Interesting....
I wonder how many of these are re-declines vs new app declines.

Person applies to carrier A, gets declined, then applies to carrier B, declined, then carrier C, declined. Statistically, that is 3 declines, but actually only 1 person.

Since people tend to apply for health insurance when they need it, the decline rate doesn't surprise me a lot. Take out the pregnant couples, the duplicate declines, the 21 year old with a sinus infection who wants insurance just to pay for his doctor visit and whats the real decline number?

Dan

 

[somarco]

The rate of declines has dramatically increased in the last few years. Much is due to the economy.

Layoffs, company bankruptcies, business closings, dropping employer coverage.

We had a lull in the IFP market when COBRA was heavily subsidized. When COBRA expires (or the subsidy dropped off) they apply for health insurance.

I higher percentage (anecdotal) of folks coming off group can't meet underwriting standards. Add in the Alibamacare effect with (most) carriers no longer using riders and you get an increase in declines.

Also factor in the number of states that no longer write child only and the folks who apply for insurance AFTER they get pregnant and you have more reasons for a spike in declines.

Just a few years ago a couple of carriers shared numbers with me. One boasted of making offers on 96% of applications, another simply said they decline about 8%.

 

[taterpeeler]

The rate of declines has dramatically increased in the last few years. Much is due to the economy.

Layoffs, company bankruptcies, business closings, dropping employer coverage.

We had a lull in the IFP market when COBRA was heavily subsidized. When COBRA expires (or the subsidy dropped off) they apply for health insurance.

I higher percentage (anecdotal) of folks coming off group can't meet underwriting standards. Add in the Alibamacare effect with (most) carriers no longer using riders and you get an increase in declines.

Also factor in the number of states that no longer write child only and the folks who apply for insurance AFTER they get pregnant and you have more reasons for a spike in declines.

Just a few years ago a couple of carriers shared numbers with me. One boasted of making offers on 96% of applications, another simply said they decline about 8%.

I agree.... like I have been saying its easier to thread a needle with a camel than get tru..... underwriting

 

[DS4]

I was at a carrier meeting several months ago and the senior underwriter was bragging about their low decline ratio.
Most of the agents in attendance were like myself, seasoned, large producers.
I raised my hand to comment on the underwriters "low decline" statement.
"Most of us in this room pre screen every lead. The apps we submit are apps we consider have a decent chance of approval.
I can't speak for everyone in this room, but, if I were to submit every lead, I would probably see about a 50% decline ratio".

 

[Ann H]

If I were to submit every lead, I would probably see about a 50% decline ratio".

Yes. That's why carriers who receive applications direct, instead of through a broker, find a much higher decline rate.

I write quite a few groups simply because it is GI. It's usually the owner (or the owner's wife) who would be declined on IFP.

In AZ, for groups of under 25 employees, employees must complete the AZ universal health questionnaire (which has a look-back of only 5 years). I would say that 25% would have been declined for IFP, and another 25% would have a rate-up or rider on IFP.

 

[ABC]

One of the national carrier told me that they have a high decline rate because they are very good at paying claims. SO rather than take on the risk they just decline it.

I don't see how the carriers will survive without increase the individual market premium up to that of GI group. They are going to have to. Without subsidies the system could impload.

 

[Ann H]

I don't see how the carriers will survive without increase the individual market premium up to that of GI group. They are going to have to. Without subsidies the system could impload.

Actually, the rate increase attributable to GI rules in Obamacare is worse than GI rules in group insurance. With group insurance, you have some built in measures against adverse selection. First, you have to be employed to get on the group plan. With Obamacare you just need a pulse. Second, the employer picks your plan, maybe with a dual choice or in a very large group triple choice. In Obamacare, each family picks the metal tier that's best for them, and spouses can even apply separately from each other, choosing the metal tier that's best for each one. Those situations add to the adverse selection risk in Obamacare.

 

[somarco]

if I were to submit every lead, I would probably see about a 50% decline ratio".

Yup.

Folks that go to my site, click and apply (usually in 10 minutes or less) are usually declined in short order. My guess is maybe 10% of apps started through my site are issued.

Of course some of that is because they neglected to follow through and actually submit them, but a very high number are declined.

the rate increase attributable to GI rules in Obamacare is worse than GI rules in group insurance.

Yes, and a lot of folks are going to find that out in a few months.

BOOM!