Underwriting tactics limit access to long term care insurance

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Four in ten older Americans would be unable to purchase long term care insurance thanks to heavy-handed underwriting tactics that exclude individuals based on chronic illness, financial stability, and even race, according to a new study published in Health Affairs.

Although long term care insurance has emerged as a way for today’s aging population to afford the growing expense of nursing home care, health policy researchers from Harvard University, Vanderbilt University, and LifePlans Inc., found that 40 percent of Americans between the ages of 50-71 would be denied a long term care insurance policy because of stringent underwriting policies.

These underwriting tactics made it significantly less likely for people living with relatively common chronic conditions such as diabetes, history of stroke, and obesity, to be approved for a long term care policy. Financial solvency was also a factor, and those with assets between $30,000 and $250,000—many of whom may be eager to protect their assets—were less likely to obtain insurance.

Even though nonwhite Americans were more likely to enter a nursing home, 60 percent of whites were likely to be approved for long term care insurance compared to 45 percent of blacks, which the researchers attributed to “disparities in health status for racial and ethnic minorities.”

Previous efforts to enroll younger, healthier individuals in long term care plans have fallen flat, including a defunct provision of the Affordable Care Act that created a voluntary public program. Researchers warn simply subsidizing long term plans “without addressing the market conditions that necessitate underwriting will provide protection only to people with the lowest risk for long-term care.”

Health policy researchers and experts have previously highlighted the “decades-long policy challenge” of long-term care insurance, and some have said coverage subsidies could help reduce costs within the Medicaid program.

- read the Health Affairs study