A Report from Families USA, June 2008
In the vast majority of states, insurance companies are permitted to reject individuals for coverage based on their health status, occupation, or even their recreational activities.
- Only five states prohibit all insurance companies from cherry-picking the healthiest consumers and excluding everyone else.
If an insurance company does accept an individual’s application for coverage, few states significantly limit how much an insurer can increase an individual’s premiums based on what the insurer deems to be health risks (which can include anything from cold sores to hobbies to below average height).
- In 35 states and the District of Columbia, there are no limits on how much insurers can vary premiums based on health status. An additional six states have limits that still allow dramatic variations in premiums.
Insurance companies will not necessarily provide coverage for the very health services individuals need when they sign up for a policy. In all states, insurance companies are not obligated to cover pre-existing conditions for most people for at least the first six months that an individual has a policy.
- In 21 states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for more than one year.
In eight of those states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for the duration of an individual’s policy.
- In eight of those states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for the duration of an individual’s policy.
Not every state ensures that premiums are reasonable by reviewing premium rate increases before insurers impose them. And few states require that at least 75 cents of every dollar collected in premiums be spent on medical services rather than administration and profit.
- In 20 states and the District of Columbia, insurers can set and raise premiums without adequate oversight.
- In 45 states and the District of Columbia, insurers can spend less than 75 cents of every premium dollar on medical services.
In the majority of states, insurance companies can move to limit or revoke an individual’s policy long after it was purchased by claiming that the policyholder did not adequately reflect his/her medical history on the application. Oftentimes, this leaves individuals with huge medical bills that must be paid out of pocket and no recourse.
- Insurers in 29 states and the District of Columbia are allowed to look at a policyholder’s medical history and perform medical underwriting months, or even years, after they issued the policy.
- In 44 states and the District of Columbia, insurers can revoke an individual’s health insurance policy without advance review by the state.