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Gender-based premiums eyed in individual market

Publish date: JUL 01, 2009



(PhotoAlto/Odilon Dimier/Getty Images)
JUST THE IDEA OF healthcare reform has everyone sitting on the edge of their seats—hoping that their private agendas will be met, along with finding a solution to an unaffordable system.

Sarah Eder, 36, a public relations professional in Littleton, Colo., pays $7 a month more for her insurance than her husband who is five years older and has more health issues. This is a predicament many in the individual insurance market face.

"That's an extra $84 a year," Eder says, regretting that she never called the insurance company about the discrepancy.

The National Women's Law Center (NWLC), an advocacy group based in Washington, D.C., recently studied the "gender gap" in premiums for individual insurance charged to men and women of the same age and health status. Not only are the differences acute when states are compared, but costs also vary within the same state among plans.

Excluding the 10 states banning gender rating, 25-year-old women paid 6% to 45% more than men, and 40-year-old women paid 4% to 48% more for their premiums. The plans in a majority of states charged men more at 55 years of age, but the gap ranges from 22% less for women to 37% more. Two states, Vermont and New Mexico, use rate bands—a range of how much premium costs can vary depending on gender—which helps limit gender discrimination.

"We feel like our report has opened up peoples' eyes; many consumers have no idea that there is a discrepancy among genders," says Lisa Codispoti, senior counsel for the NWLC. "There are so few rules in the individual market that insurers have complete freedom do charge what they want. We thought there would be a common range of premium costs based on gender and have found the results are all over the map."

Insurance for individuals is not governed by the same laws as group insurance currently, but some believe that could change under new health reforms. For example, HIPAA prohibits insurers in the group market from charging different premiums or denying coverage based on individuals' specific health status.

According to HHS, more than half of the 8 million, middle-income, non-elderly women without employer-sponsored coverage are uninsured, and 20% receive insurance through the individual market. The Commonwealth Fund reports that 69% of underinsured women have trouble accessing healthcare based on costs as compared with half of underinsured men.

What makes it so difficult for women is that they have greater health needs than men and are more likely to have a chronic condition requiring ongoing treatment, according to the Kaiser Family Foundation. Healthcare services during child-bearing years also play a role in estimated costs.

The NWLC challenges the higher premiums based on generalizations because some of the general characteristics are not applicable to all the individual women requesting insurance.

Codispoti believes that gender rating should be eliminated in the individual market and instead, pools of individuals that help spread risk across the group for more predictable rates, should be created.

Ron Buffum, president, Texas Association of Health Underwriters, a professional organization of independent agents across Texas, doesn't consider gender rating to be prejudicial.


MHE EXECUTIVE VIEW
"We determine rates based on anticipated use of healthcare services," he says. "Males and females up to 18 years old pay about the same. Women then pay more during their childbearing years even if they do not have a baby. Between ages 50 and 54, premiums are about the same for both, and then become more for men at that age. Cost is based on utilization and access. Gender plays no part."


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