A Report on the Actuarial, Marketing, and Legal Analyses of the CLASS Program. D. Profile of Declines by Medical Diagnoses

10/14/2011

In explaining to applicants why they may have been declined from insurance, almost all companies point to the presence of specific medical diagnoses. This is the case even when such diagnoses may not have yet manifested themselves into functional or cognitive decline. It is enough for an underwriter to know that such diagnoses will likely lead to dependency in ADLs to screen the individual out of the risk pool. The analysis of diagnostic information highlights the fact that the diagnoses that are recorded in the case files of applicants are many and varied. In order to assure that a profile could be developed, clinical underwriters reviewed the diagnostic information provided by companies and developed a common basis for coding diagnoses into any one of thirteen primary categories. Figure 5 shows the distribution of the declined applicants by these primary categories.


FIGURE 5: Distribution of Underwriting Declines by Medical Diagnosis

Bar Chart: Neuro Disorders (14%); Other Diagnoses (13%); Fractures/Bone/Musculoskeletal (12%); Diabetes/Endocrine (11%); Cardiac (11%); Multiple Conditions (9%); Stroke/CVA/Circulatory (7%); Cancer (6%); Mental Health (6%); Respiratory (4%); Liver/Kidney (4%); Abnoral Labs (2%); Auto-Immune (2%).

Note: “Other” is comprised of Dementia, Parkinson’s disease, current use of Durable Medical Equipment, ADL or IADL impairments, use of specific excluded drugs, soft-tissue issues.


As shown, there is a wide distribution of diagnoses that can lead to an underwriting decline. No single diagnostic category accounts for more than 15% of declines. The most prevalent categories include neurological issues, fractures, bones and musculoskeletal issues, cardiac problems and individuals presenting with multiple conditions. Roughly 6% of declines are comprised of individuals with mental health issues, the most common being depression.

Table 4 highlights the relationship between medical diagnoses and age. Key findings from this table include:

  • Individuals age 70 and over are most likely to be declined because of neurological problems other than Parkinson’s and the presence of multiple conditions.

  • Diabetes, Endocrine, Cancer and Cardiac problems are the most prevalent reasons for declines for individuals in the age 60-69 age group.

  • Fractures, bone issues and other musculoskeletal problems, as well as mental health, auto-immune and other diagnoses not captured by these other major categories are most prevalent in the under age 60 declines.

TABLE 4: Distribution of Declines by Medical Diagnosis by Age and Gender
  Age Category
Less Than Age 60 (A) Age 60-69 (B) Age 70 or Above (C)
  Count     Column  
N %
  Count     Column  
N %
  Count     Column  
N %
Primary   Diabetes/ Endocrine 1751 11.9%C   3348     13.0%AC   933 7.2%
Cancer 901 6.1%C 1810 7.1%AC 616 4.7%
Stroke/ CVA/ Circulatory 779 5.3% 2056 8.0%A 959 7.4%A
Fractures/ Bone Problems/ Musculoskeletal   2156     14.6%BC   3199 12.5%C 1053 8.1%
Neurological Issues (excluding Parkinson’s)   1182 8.0% 2593 10.1%A   3717     28.5%AB  
Cardiac Problems 1376 9.3% 3156 12.3%AC 1158 8.9%
Respiratory 512 3.5%C 970 3.8%C 359 2.8%
Mental Health 1445 9.8%BC 1337 5.2%C 254 1.9%
Abnormal Labs/ Unstable Condition 424 2.9% 592 2.3% 242 1.9%
Other 2692 18.3%BC 3271 12.7%C 898 6.9%
Auto-Immune 533 3.6%BC 594 2.3%C 135 1.0%
Liver/ Kidney 557 3.8%C 921 3.6%C 399 3.1%
Multiple Conditions 417 2.8% 1819 7.1%A 2322 17.8%AB
Note: The letters in specific cells designate that the proportion is significantly different than that found in the identified columns. Thus, for example, the proportion of individuals under age 60 declined due to Diabetes/Endocrine issues is higher than the corresponding percentage of declines for the over age 70 group.

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