Scope and Incentives for Risk Selection in Health Insurance Markets With Regulated Competition: A Conceptual Framework and International Comparison.

In health insurance markets with regulated competition, regulators face the challenge of preventing risk selection. This paper provides a framework for analyzing the scope (i.e., potential actions by insurers and consumers) and incentives for risk selection in such markets. Our approach consists of three steps. First, we describe four types of risk selection: (a) selection by consumers in and out of the market, (b) selection by consumers between high- and low-value plans, (c) selection by insurers via plan design, and (d) selection by insurers via other channels such as marketing, customer service, and supplementary insurance. In a second step, we develop a conceptual framework of how regulation and features of health insurance markets affect the scope and incentives for risk selection along these four dimensions. In a third step, we use this framework to compare nine health insurance markets with regulated competition in Australia, Europe, Israel, and the United States.

Community concerns about genetic discrimination in life insurance persist in Australia: A survey of consumers offered genetic testing.

Fears of genetic discrimination in life insurance continue to deter some Australians from genetic testing. In July 2019, the life insurance industry introduced a partial, self-regulated moratorium restricting the use of genetic results in underwriting, applicable to policies up to certain limits (eg AUD$500,000 for death cover).We administered an online survey to consumers who had taken, or been offered, clinical genetic testing for adult-onset conditions, to gather views and experiences about the moratorium and the use of genetic results in life insurance, including its regulation.Most respondents (n = 367) had undertaken a genetic test (89%), and had a positive test result (76%; n = 243/321). Almost 30% (n = 94/326) reported testing after 1 July 2019. Relatively few respondents reported knowing about the moratorium (16%; n = 54/340) or that use of genetic results in life insurance underwriting is legal (17%; n = 60/348). Only 4% (n = 14/350) consider this practice should be allowed. Some respondents reported ongoing difficulties accessing life insurance products, even after the moratorium. Further, discrimination concerns continue to affect some consumers' decision-making about having clinical testing and applying for life insurance products, despite the Moratorium being in place. Most respondents (88%; n = 298/340) support the introduction of legislation by the Australian government to regulate this issue.Despite the introduction of a partial moratorium in Australia, fears of genetic discrimination persist, and continue to deter people from genetic testing. Consumers overwhelmingly consider life insurers should not be allowed to use genetic results in underwriting, and that federal legislation is required to regulate this area.

Genetic discrimination by insurance companies in Aotearoa New Zealand: experiences and views of health professionals.

AIMS: Genetic discrimination in insurance is a significant clinical, research and consumer issue. Recently, the Australian life insurance industry introduced a partial moratorium on the use of genetic test results. However, in Aotearoa New Zealand, both life and health insurers can still use genetic results legally to discriminate against applicants. We aimed to document experiences and concerns of New Zealand-based health professionals (HPs) around the potential misuse of genetic test results for insurance purposes. METHODS: We administered an online survey to New Zealand HPs who discuss genetic testing with patients, their experiences regarding the use of genetic test results in insurance and views on regulation. RESULTS: Twenty-three New Zealand HPs responded, 15 of whom worked in genetics clinics, representing >60% of the total New Zealand clinical genetics workforce. Eleven respondents reported having patients who experienced adverse outcomes related to insurance based on genetic results. Respondents reported patients sometimes/often delayed (n=11) or refused (n=4) genetic testing due to insurance concerns. Over 80% of those who answered (n=17/21) believe insurers' use of genetic results should be legally regulated. CONCLUSION: New Zealand HPs have concerns about insurance companies using genetic test results in underwriting, including the effect on patients, and strongly believe government legislation is required.

Human Genetics Society of Australasia Position Statement: Genetic Testing and Personal Insurance Products in Australia.

The expansion of genetic and genomic testing in clinical practice and research, and the growing market for direct-to-consumer genomic testing has led to increased awareness about the impact of this form of testing on insurance. Genetic or genomic information can be requested by providers of mutually rated insurance products, who may then use it when setting premiums or determining eligibility for cover under a particular product. Australian insurers are subject to relevant legislation and an industry led standard that was updated in 2019 to introduce a moratorium on the use of genetic test results in life insurance underwriting for policies

Health and life insurance-related problems in very long-term cancer survivors in Germany: a population-based study.

PURPOSE: Limited research suggests that cancer survivors have problems with insurance. Our study aimed to gain insight into the proportion of very long-term (14-24 years post-diagnosis) survivors of breast, colorectal, and prostate cancers who had problems with health (HI) and life (LI) insurance. METHODS: We used data from CAESAR (CAncEr Survivorship-A multi-Regional population-based study). Participants completed questions on change in insurance providers since cancer diagnosis, problems with requesting (additional) HI or LI, and how potential problems were resolved. We conducted logistic regression to determine factors associated with change in statutory HI. RESULTS: Of the 2714 respondents, 174 (6%) reported having changed HI providers. Most switched between different statutory HI providers (86%), 9% from statutory to private, and 5% from private to statutory. Respondents who changed statutory HI providers were more likely to be prostate cancer survivors (OR 2.79, 95% CI 1.01-7.68) while being ≥ 65 years at time of diagnosis (OR 0.58, 95% CI 0.35-0.96) and having ≥ 2 comorbid conditions (OR 0.61, 95% CI 0.40-0.92) were associated with reduced odds for change. Problems in changing HI were minimal and were resolved with additional contribution. Of the 310 respondents who tried to get LI, 25 respondents reported having difficulties, of whom the majority had their request rejected. CONCLUSION: Most cancer survivors did not change their HI nor tried to buy LI after cancer diagnosis. Problems with changing statutory HI were generally resolved with additional contribution while the main problem encountered when buying LI was rejection of request.

Study protocol: the Australian genetics and life insurance moratorium-monitoring the effectiveness and response (A-GLIMMER) project.

BACKGROUND: The use of genetic test results in risk-rated insurance is a significant concern internationally, with many countries banning or restricting the use of genetic test results in underwriting. In Australia, life insurers' use of genetic test results is legal and self-regulated by the insurance industry (Financial Services Council (FSC)). In 2018, an Australian Parliamentary Inquiry recommended that insurers' use of genetic test results in underwriting should be prohibited. In 2019, the FSC introduced an industry self-regulated moratorium on the use of genetic test results. In the absence of government oversight, it is critical that the impact, effectiveness and appropriateness of the moratorium is monitored. Here we describe the protocol of our government-funded research project, which will serve that critical function between 2020 and 2023. METHODS: A realist evaluation framework was developed for the project, using a context-mechanism-outcome (CMO) approach, to systematically assess the impact of the moratorium for a range of stakeholders. Outcomes which need to be achieved for the moratorium to accomplish its intended aims were identified, and specific data collection measures methods were developed to gather the evidence from relevant stakeholder groups (consumers, health professionals, financial industry and genetic research community) to determine if aims are achieved. Results from each arm of the study will be analysed and published in peer-reviewed journals as they become available. DISCUSSION: The A-GLIMMER project will provide essential monitoring of the impact and effectiveness of the self-regulated insurance moratorium. On completion of the study (3 years) a Stakeholder Report will be compiled. The Stakeholder Report will synthesise the evidence gathered in each arm of the study and use the CMO framework to evaluate the extent to which each of the outcomes have been achieved, and make evidence-based recommendations to the Australian federal government, life insurance industry and other stakeholders.

Genetic testing and genetic discrimination: Public policy when insurance becomes "too expensive".

We examine public policy toward the use of genetic tests by insurers when a positive test makes actuarially fair insurance too expensive for some consumers. With state-dependent utility, consumers may decline actuarially fair insurance if the probability of becoming ill exceeds a threshold. In markets with adverse selection, a positive genetic test may cause all or some high risks to drop out of the market (complete and partial genetic discrimination, respectively). Full participation in the market by all consumers requires cross-subsidization. We show that the consent law and mandatory testing are equivalent. Under complete genetic discrimination, the duty to disclose is never Pareto dominated, but either the code of conduct or consent law can yield the same outcome. Under partial genetic discrimination, the duty to disclose is never Pareto dominated. However, partial genetic discrimination and cross-subsidization imply the information ban is noncomparable to the other policy alternatives.

Financial incentives and patient selection: Hospital physicians' views on cream skimming and economic management focus in Norway.

This paper uses survey data to analyse physician views on the risk of cream skimming under a system with activity based financing (ABF) for hospital services. We used data from two nation-wide physician surveys. A survey undertaken in 2006 captures views following a large NPM-inspired structural reform in 2002. In contrast, a survey undertaken in 2016 captures views after a period of a higher degree of institutional and financial stability. We find that the majority of physicians believed that the 2002 reform both provided incentives for and led to more cream skimming. In 2016, however there is less consensus among physicians about the extent of cream skimming. Looking at different types of physicians we find some indications that physicians in leading positions are less likely to view cream skimming as a problem. However, there is concern that hospital management in general puts too much emphasis on economic issues.

Japanese insurers' attitudes toward adverse selection and genetic discrimination: a questionnaire survey and interviews with employees about using genetic test results.

Since the 1990s, insurance has been the primary field focused on the social disadvantages of using genetic test results because of the concerns related to adverse selection. Although life insurance is popular in Japan, Japan does not currently have any regulations on the use of genetic information and insurers have largely kept silent for decades. To reveal insurers' attitudes on the topic, we conducted an anonymous questionnaire survey with 100 insurance company employees and recruited nine interviewees from the survey respondents. We found that genetic discrimination is not generally considered as a topic of human rights. We also found that insurers have uncertain fears and concerns about adverse selection in terms of actuarial fairness but not regarding profits. When it comes to preparing guidelines on the use of genetic information by Japanese insurers, we believe that public dialog and consultation are necessary to gain understanding of the people.

Genetic discrimination by Australian insurance companies: a survey of consumer experiences.

We report previously undocumented evidence of genetic discrimination by Australian insurance companies, obtained through direct consumer reports. We surveyed 174 consumers with cancer-predisposing variants, recruited by cancer organisations Lynch Syndrome Australia and Pink Hope. Questions related to experiences accessing risk-rated insurance after genetic testing. Results indicate that both legal (permitted under current regulation) and illegal discrimination is occurring. Although some respondents had not applied for risk-rated insurance, or had insurance in place before genetic testing (n = 100), those seeking new policies (n = 74) commonly experienced difficulties obtaining insurance (86%, 64/74). Of those experiencing difficulties, 50% (32/64) had no prior history or symptoms of cancer, and had undertaken risk reduction through surveillance and/or preventative surgery. Seventy-seven percent (49/64) reported difficulties related to life insurance. Follow-up telephone interviews with four respondents further described cases of apparent illegal breaches. All reports of discrimination identified were, to our knowledge, previously unreported in the literature. The number of cases suggests a systemic problem with the Australian life insurance industry. We support calls for government oversight of the inherently conflicted model of industry self-regulation in Australia, and an immediate ban on the use of genetic test results in insurance underwriting.

How Do Race and Insurance Status Affect the Care of Pediatric Anterior Cruciate Ligament Injuries?

OBJECTIVE: To identify associations between race or insurance status and preoperative, intraoperative, and postoperative findings in a large cohort of pediatric anterior cruciate ligament (ACL) reconstructions. DESIGN: Retrospective cohort study. SETTING: Division of Orthopaedics at an urban tertiary care children's hospital. PATIENTS: 915 pediatric (<21) patients undergoing primary ACL reconstruction between January 2009 and May 2016. INDEPENDENT VARIABLES: Insurance status and race. MAIN OUTCOME MEASURES: Delay to surgery, concurrent meniscal injury, sports clearance, postoperative complications, physical therapy, range of motion, and isokinetic strength reduction. RESULTS: Multivariate analysis revealed a significantly longer delay to surgery for black/Hispanic and publicly insured children compared to their counterparts (P = 0.02 and P = 0.001, respectively). Black/Hispanic patients were more likely to sustain irreparable meniscus tears resulting in meniscectomy than white/Asian patients (odds ratio 2.16, 95% confidence interval, 1.10-2.29, P = 0.01). Black/Hispanic and publicly insured children averaged fewer physical therapy (PT) visits (P < 0.001 for both). Nine months after surgery, black/Hispanic patients had significantly greater strength reduction than white/Asian patients. There were no differences in postoperative complications, including graft rupture, contralateral ACL injury, or new meniscus tear along the lines of race, although privately insured patients were more likely to suffer a graft rupture than publicly insured patients (P = 0.006). CONCLUSIONS: After ACL rupture, black/Hispanic children and publicly insured children experience a greater delay to surgery. Black/Hispanic patients have more irreparable meniscus tears and less PT visits. Black/Hispanic patients have greater residual hamstrings and quadriceps weakness 9 months after surgery.

Adjusting selection bias in German health insurance records for regional prevalence estimation.

BACKGROUND: Regional prevalence estimation requires epidemiologic data with substantial local detail. National health surveys may lack in sufficient local observations due to limited resources. Therefore, corresponding prevalence estimates may not capture regional morbidity patterns with the necessary accuracy. Health insurance records represent alternative data sources for this purpose. Fund-specific member populations have more local observations than surveys, which benefits regional prevalence estimation. However, due to national insurance market regulations, insurance membership can be informative for morbidity. Regional fund-specific prevalence proportions are selective in the sense that the morbidity structure of a fund's member population cannot be extrapolated to the national population. This implies a selection bias that marks a major obstacle for statistical inference. We provide a methodology to adjust fund-specific selectivity and perform regional prevalence estimation from health insurance records. The methodology is applied to estimate regional cohort-referenced diabetes mellitus type 2 prevalence in Germany. METHODS: Records of the German Public Health Insurance Company from 2014 and Diagnosis-Related Group Statistics data are combined within a benchmarked multi-level model. The fund-specific selectivity is adjusted in a two-step procedure. Firstly, the conditional expectation of the insurance company's regional prevalence given related inpatient diagnosis frequencies of its members is quantified. Secondly, the regional prevalence is estimated by extrapolating the conditional expectation using corresponding inpatient diagnosis frequencies of the Diagnosis-Related Group Statistics as benchmarks. Model assumptions are validated via Monte Carlo simulation. Variable selection is performed via multivariate methods. The optimal model fit is determined by analysis of variance. 95% confidence intervals for the estimates are constructed via semiparametric bootstrapping. RESULTS: The national diabetes mellitus type 2 prevalence is estimated at 8.70% with a 95% confidence interval of [8.48%, 9.35%]. This indicates an adjustment of the original fund-specific prevalence from - 32.79 to - 25.93%. The estimated disease distribution shows significant morbidity differences between regions, especially between eastern and western Germany. However, the cohort-referenced estimates suggest that these differences can be partially explained by regional demography. CONCLUSIONS: The proposed methodology allows regional prevalence estimation in remarkable detail despite fund-specific selectivity. This enhances and encourages the use of health insurance records for future epidemiologic studies.

Genetic testing and insurance in Australia.

BACKGROUND: Genetic testing offers great benefit for the diagnosis of genetic conditions and to identify and manage risk for conditions such as familial breast cancer. However, potential personal insurance implications exist for some patients who undergo genetic testing in Australia. Currently, insurance companies offering risk-rated products such as life insurance can use genetic test results to discriminate, which may adversely affect applicants' ability to secure a policy. Many comparable countries have banned or restricted life insurers' use of genetic results, while Australia still permits it. However, the industry proposes to introduce a moratorium limiting the use of genetic results for life insurance underwriting in mid-2019. OBJECTIVE: This paper explores the implications of genetic testing for risk-rated insurance for the general practice workforce in Australia. DISCUSSION: Advancements in technology and decreasing costs have resulted in rapid expansion in genetic/genomic testing, which is set to become part of mainstream healthcare. General practitioners (GPs) in Australia will have an increasingly significant part to play in the expanded use of this testing, and it is therefore important that GPs are aware of these issues.

Informative censoring by health plan disenrollment among commercially insured adults.

PURPOSE: Health plan disenrollment occurs frequently in commercial insurance claims databases. If individuals who disenroll are different from those who remain enrolled, informative censoring may bias descriptive statistics as well as estimates of causal effect. We explored whether patterns of disenrollment varied by patient or health plan characteristics. METHODS: In a large cohort of commercially insured adults (2007-2013), we examined two primary outcomes: (a) within-year disenrollment between January 1 and December 30, which was considered to occur due to patient disenrollment from the health plan, and (b) end-of-year disenrollment on December 31, which was considered to occur due to either patient disenrollment from the health plan or withdrawal of the entire health plan from the commercial insurance database. In yearly cohorts, we identified factors independently associated with disenrollment by using log-binomial regression models to estimate risk ratios (RR) and 95% confidence intervals (CI). RESULTS: Among 2 053 100 unique patient years, the annual proportion of within-year disenrollment remained steady across years (range, 13% to 14%) whereas the annual proportion of end-of-year disenrollment varied widely (range, 8% to 26%). Independent predictors of within-year disenrollment were related to health status, including age, comorbidities, frailty, hospitalization, emergency room visits, use of durable medical equipment, use of preventive care, and use of prescription medications. In contrast, independent predictors of end-of-year disenrollment were related to health plan characteristics including insurance plan type and geographic characteristics. CONCLUSIONS: Differential risk of disenrollment suggests that analytic approaches to address selection bias should be considered in studies using commercial insurance databases.

Human Genetics Society of Australasia Position Statement: Genetic Testing and Personal Insurance Products in Australia.

The expansion of genetic and genomic testing in clinical practice and research and the growing market for at home personal genome testing has led to increased awareness about the impact of this form of testing on insurance. Genetic or genomic information can be requested by providers of mutually rated insurance products, who may then use it when setting premiums or determining eligibility for cover under a particular product. Australian insurers are subject to relevant legislation and an industry standard that was updated in late 2016. In 2018, the Human Genetics Society of Australasia updated its position statement on genetic testing and life insurance to account for these changes and to increase the scope of the statement to include a wider scope of insurance products that are not rated according to community risk, such as life, critical care, and income protection products. Recommendations include that providers of professional education involving genetics should include ethical, legal, and social aspects of insurance discrimination in their curricula; that the Australian government take a more active role in regulating use of genetic information in personal insurance, including enacting a moratorium on use of genetic test results; that information obtained in the course of a research project be excluded; and that there is improved engagement between the insurance industry, regulators, and the genetics profession.

Advertising and Risk Selection in Health Insurance Markets.

This paper studies the impact of advertising as a channel for risk selection in Medicare Advantage. We provide evidence that insurer advertising is responsive to the gains from risk selection. Then we develop and estimate an equilibrium model of Medicare Advantage with advertising, allowing rich individual heterogeneity. Our estimates show that advertising is effective in attracting healthy individuals who are newly eligible for Medicare, contributing to advantageous selection into Medicare Advantage. Moreover, risk selection through advertising substantially lowers premiums by improving insurers' risk pools. The distributional implication is that unhealthy consumers may be better off through cross-subsidization from healthy individuals.

Health Care Sharing Ministries: What Are the Risks to Consumers and Insurance Markets?

Issue: Health care sharing ministries (HCSMs) are a form of health coverage in which members--who typically share a religious belief--make monthly payments to cover expenses of other members. HCSMs do not have to comply with the consumer protections of the Affordable Care Act and may provide value for some individuals, but pose risks for others. Although HCSMs are not insurance and do not guarantee payment of claims, their features closely mimic traditional insurance products, possibly confusing consumers. Because they are largely unregulated and provide limited benefits, HCSMs may be disproportionately attractive to healthy individuals, causing the broader insurance market to become smaller, sicker, and more expensive. Goal: To understand state regulator perspectives on regulation of HCSMs and the impact of these arrangements on consumers and markets. Methods: Analysis of state laws governing HCSMs in all states; interviews with officials in 13 states; and review of the membership requirements and benefits of five HCSMs. Findings and Conclusions: State regulators voiced concerns regarding the potential risks of HCSMs to consumers and their individual markets. However, in the absence of reliable data describing HCSM enrollment, regulators cannot adequately assess harm. Though limited resources and political constraints have made oversight difficult, all states, regardless of their regulatory approach to HCSMs, should obtain data to better understand the role of HCSMs in their markets.

Adverse Selection into and within the Individual Health Insurance Market in California in 2014.

OBJECTIVE: The Affordable Care Act (ACA) introduced reforms to mitigate adverse selection into and within the individual insurance market. We examined the traits and predicted medical spending of enrollees in California post-ACA. DATA SOURCES: Survey of 2,103 enrollees in individual market plans, on- and off-exchange, in 2014. STUDY DESIGN: We compared actual versus potential participants using data from the 2014 California Health Interview Survey on respondents who were individually insured or uninsured. We predicted annual medical spending for each group using age, sex, self-rated health, body mass index, smoking status, and income. PRINCIPAL FINDINGS: Average predicted spending was similar for actual ($3,377, 95 percent CI [$3,280-$3,474]) and potential participants ($3,257 [$3,060-$3,454]); however, some vulnerable subgroups were underrepresented. On- versus off-exchange enrollees differed in sociodemographic and health traits with modest differences in spending ($3,448 [$3,330-$3,565] vs. $3,175 [$3,012-$3,338]). CONCLUSIONS: We did not find evidence of selection into the overall insurance pool in 2014; however, differences by exchange status reflect the importance of including off-exchange enrollees in analyses and the pool for risk adjustment. California's post-ACA individual market has been a relative success, highlighting the importance of state policies and outreach efforts to encourage participation in the market.

The Impact of Policy Incentives on Long-Term Care Insurance and Medicaid Costs: Does Underwriting Matter?

OBJECTIVE: To test whether underwriting modifies the effect of state-based incentives on individuals' purchase of long-term care insurance. DATA SOURCE: Health and Retirement Study (HRS), 1996-2012. STUDY DESIGN: We estimated difference-in-difference regression models with an interaction of state policy indicators with individuals' probabilities of being approved for long-term care insurance. DATA EXTRACTION: We imputed probabilities of underwriting approval for respondents in the HRS using a model developed with underwriting decisions from two U.S. insurance firms. We measured the elasticity response to long-term care insurance price using changes in simulated after-tax price as an instrumental variable for premium price. PRINCIPAL FINDINGS: Tax incentives and Partnership programs increased insurance purchase by 3.62 percentage points and 1.8 percentage points, respectively, among those with the lowest risk (highest approval probability). Neither had any statistically significant effects among the highest risk individuals. CONCLUSIONS: We show that ignoring the effects of underwriting may lead to biased estimates of the potential state budget savings of long-term care insurance tax incentives. If the private market is to play a role in financing long-term care, policies need to address the underlying adverse selection problems.

Medicare Advantage Ratings And Voluntary Disenrollment Among Patients With End-Stage Renal Disease.

Populations with intensive health care needs and high care costs may be attracted to insurance plans that have high quality ratings, but patients may be likely to disenroll from a plan if their care needs are not met. We assessed the association between publicly reported Medicare Advantage plan star ratings and voluntary disenrollment of incident dialysis patients in the following year over the period 2007-13. We found that Medicare Advantage (MA) plans with lower star ratings had significantly higher rates of disenrollment by incident dialysis patients in the following year. Compared to MA plans with 4.0 or more stars, adjusted disenrollment rates were 3.9 percentage points higher for plans with 3.5 stars, 5.0 percentage points higher for those with 3.0 stars, and 12.1 percentage points higher for those with 2.5 or fewer stars. These findings suggest that low plan quality may lead to increased expenditures, as this high-cost population generally must shift from Medicare Advantage to traditional Medicare upon disenrollment.