A Report on the Actuarial, Marketing, and Legal Analyses of the CLASS Program. Conclusions

10/14/2011

Information from this analysis has clearly demonstrated that individuals who are unable to purchase private LTC insurance due to the medical underwriting process tend to be somewhat older, male and less likely to be employed than the total applicant pool. While few exhibit outward signs of functional impairment or dementia, this is likely the result of agents pre-screening activities. Thus, the pool of applicant declinations is more representative of individuals who are at risk for near term need rather than immediate need. For that reason, the roughly 8% of individuals who are declined for not passing a cognitive screen are likely at the early stages of cognitive decline and for the most part do not have dementia at the time of application.

The distribution of the sample by medical diagnosis suggests that there are a variety of reasons why someone may not be accepted into the risk pool. No single diagnostic category accounts for more than 15% of the declinations and there are clear patterns across age, gender and employment status. Estimating the prevalence of these diagnoses in the general target population for the CLASS Program is an important next step, as it will enable policymakers to begin to characterize with more precision the risk profile of enrollees. As such, this will enable more accurate pricing so that the premiums adequately reflect underlying risk and support ongoing program financial solvency.

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