Disability, chronic illness, and risk selection

As high-cost users of health care, people with disabilities or chronic conditions are particularly vulnerable to risk selection. Preferred risk selection, in which insurers avoid enrolling high-risk people, threatens their access to coverage. Adverse selection, in which high-risk people enroll in the most generous plans, compromises the financial viability of plans that are most responsive to their specific needs. The Americans with Disabilities Act prohibits some forms of risk selection, but does not prevent all disability-based distinctions in insurance practices. From a disability perspective, risk selection must be addressed in a manner that: (1) adequately reflects the health care costs of such individuals; (2) eliminates their need to engage in adverse selection; (3) does not stigmatize them; (4) preserves confidentiality of information; (5) uses substantial outcome measures to ensure quality; and (6) creates market conditions that discourage disability-based discrimination. A risk adjuster based on prior use/expenditures or on a diagnostic indicator sensitive to disability issues may be effective. Failure of reform to address risk selection may threaten the viability of a market-based health care system.