Private Health Insurance: Access to Individual Market Coverage May Be Restricted for Applicants with Mental Disorders Page: 6 of 32
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Results in Brief
While in a minority of states health insurance carriers guarantee access to
coverage for individuals with mental disorders, in most states individuals
with mental disorders may face restrictions in purchasing health insurance
for themselves and their families in the individual insurance market.
Eleven states require carriers to accept all applicants regardless of health
status. Coverage options vary, however. Eight of these 11 states require all
carriers to guarantee access to coverage sold in this market. In 3 states,
laws apply only to certain carriers, such as Blue Cross and Blue Shield
plans, or certain periods of the year. Carriers in 9 of the 11 states are also
required to limit the extent to which premium rates may vary between
healthy and unhealthy individuals. The extent of premium rate regulation
varies, ranging from pure community rating-where everyone pays the
same premium-to rate bands that allow limited variation in rates for
differences in individuals' health status and other factors, such as age,
gender, or geography. In 6 additional states, carriers voluntarily guarantee
access to coverage in the individual market and 3 of these also use
community rating to establish premiums. In the remaining 34 states,
carriers are permitted to deny coverage to applicants with mental
disorders or other health conditions, and may deny coverage to applicants
that are at higher-than-average risk to minimize claims costs and keep
premiums more affordable for others.
In states without guaranteed coverage in the individual market, the seven
carriers we reviewed would likely deny coverage more frequently for
applicants with selected mental disorders than for applicants with other
selected chronic health conditions. Specifically, for six mental disorders of
generally moderate severity, carriers indicated that they would likely
decline applicants 52 percent of the time. While these carriers'
underwriting decisions varied depending on the mental disorder and
specific characteristics of the applicant, most of the carriers would likely
deny coverage to applicants with posttraumatic stress disorder,
schizophrenia, manic depressive and bipolar disorder, or obsessive-
compulsive disorder, and several would likely deny coverage to applicants
with chronic depression. In comparison, for 12 other chronic health
conditions of generally moderate severity-such as hypertension or
diabetes-carriers indicated that they would likely decline applicants 30
percent of the time. In most instances in which coverage would likely be
offered to applicants with either the selected mental disorders or other
chronic health conditions, premiums would be higher and/or benefits
would be restricted-for example, benefits specifically for treatment of
the disorders or conditions could be permanently excluded. Some carrier
officials said that mental disorders have greater variability and
unpredictability in their associated costs, contributing to the decision to
Page 3 GAO-02-339 Access to Health Insurance for Applicants with Mental Disorders
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United States. General Accounting Office. Private Health Insurance: Access to Individual Market Coverage May Be Restricted for Applicants with Mental Disorders, report, February 28, 2002; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc292222/m1/6/: accessed April 24, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.