Private insurance is one strategy for financing the large and growing cost of long-term care.
Currently, insurance premiums are based on individuals considered to be average risks, and medical underwriting is used to reject those insurers fear may represent above-average risks. New research from the Agency for Health Care Policy and Research indicates that under current medical underwriting practices, between 12 percent and 23 percent of Americans would be rejected if they applied for this insurance at age 65. They arrived at these conclusions by simulating underwriting criteria using a nationally representative sample of elderly decedents. Underwriters possibly also would exclude persons who are obese or heavy drinkers and those who have had a stroke or recent heart attack with complications. These criteria successfully identify persons who represent poor financial risks to insurers, although the extent to which that is true depends on policy characteristics.