The morbidity rate measures the portion of people in a specific geographical location who contracted a particular disease during a specific period of time. It indicates the frequency of the disease appearing in a population.
Morbidity refers to the status of being ill or unhealthy. It includes the conditions of injury, disease, and disability. The disease can either be acute (such as a heart attack) or chronic (such as cancer).
Calculating Morbidity Rates
The morbidity rate is shown as a percentage. It is calculated by dividing the number of cases of a disease, injury, or disability by the total population during a specific time period, as shown below:
For example, in a city with a population of 2 million in one year, 10,000 people are suffering from a particular disease. The morbidity rate of the disease in that year is, therefore, 0.5% (10,000/2,000,000).
Sanitary conditions, healthcare costs, climate conditions, and many other factors can impact morbidity rates. Hence, the morbidity rate of a certain disease varies in different geographical areas during different time periods.
The U.S. Centers for Disease Control and Prevention (CDC) collects data and reports morbidity rate on its Morbidity and Mortality Weekly Report (MMWR). As a U.S. federal agency, the CDC is under the Department of Health and Human Services. It aims to control and prevent injury, diseases, and disability to protect public health and safety.
Morbidity Rate and the Insurance Industry
The morbidity rate is used not only for healthcare purposes but also employed in the insurance industry by actuarial professionals. It is one of the important factors that is used to determine the premiums for long-term care (LTC) insurance, health insurance, and life insurance. The insurance providers will need to reimburse the insurees’ medical costs for certain diseases and injuries fully or partially according to the insurance policy.
Based on morbidity rates, an insurer can reasonably predict the probability that its insurees will contract certain diseases. It helps the insurer to determine the proper premium and insurance policy so that the terms are competitive enough and also allow the insurer to hold sufficient funds to cover the claims from insurees. In addition to the morbidity rate, the mortality rate is another major factor that LTC, health, and life insurance providers keep an eye on.
Incidence Rate and Prevalence Rate of Morbidity
Morbidity rates can be further interpreted through incidence rates and prevalence rates. The incidence rate counts the newly diagnosed cases of a certain disease during a specific time period. It indicates the rapidity of the spread of that disease.
The higher the incidence rate, the quicker the disease spreads. The incidence rate is calculated by dividing the number of initial cases by a population. In the example discussed above, if 2,000 individuals contracted or developed the disease during that year, the incidence rate is 0.1% (2,000/2,000,000). The population at risk is often used as the denominator for certain research purposes.
Unlike the incidence rate, which only counts the initial cases, the prevalence rate takes both initial and existing cases into account. The higher the prevalence rate, the more common the disease appears in a population, and vice versa.
Morbidity Rate vs. Mortality Rate
Although both rates are used in the insurance industry, morbidity rates should not be confused with mortality rates. The morbidity rate indicates the portion of a population that is unhealthy.
Also known as the death rate, the mortality rate refers to the portion of a population being dead. It is often expressed in the unit of per thousand individuals per year. Life insurance providers, who pay death benefits when the insured dies, focus more on mortality rates.
There are several types of mortality rates:
1. Crude Death Rate
The crude death rate is one example, which measures the death from all causes in a population during a specific time period. The rate is often paired with the birth rate during the same time period to conduct analysis.
2. Case-Fatality Rate (CFR)
The case-fatality rate (CFR), which measures the number of deaths from a certain cause to the population with that cause. For example, the CFR of a heart attack can be calculated by dividing the number of people who died due to heart attacks in a year by the number of individuals who suffered heart attacks in that year.
CFI is the official provider of the global Commercial Banking & Credit Analyst (CBCA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful: