Newsweek Examines Issue Of Gender Rating In Health Reform Debate

Newsweek's Sarah Kliff recently examined the health insurance industry practice known as gender rating and the issue's role in the health reform debate. Kliff reports that in the current individual insurance market, gender is among the many factors that health insurers "routinely use to predict a consumer's costs and thus the price of their premiums." While the insurance industry says the practice is "smart business," others call it "outright discrimination" that leaves many women unable to afford coverage, according to Kliff.

Federal law bans employers with more than 15 workers from charging different health insurance premiums based on gender and other factors, and 12 states either prohibit or limit gender rating. Advocates and policymakers opposed to the practice have called it a form of "gender discrimination," Kliff says. The issue "came to a head" in 2008 when the National Women's Law Center released a report showing widespread variation in insurers' gender rating practices, with premiums varying significantly between insurance companies and states. For example, the report found that a 25-year-old woman could be charged between 6% and 45% more than a man of the same age. The "huge variations in premiums charged to women and men for identical health plans highlight the arbitrariness of gender rating," the report said.

Insurance companies defend the practice, arguing that women should pay more in premiums because they cost more to insure. Ethan Slavin, a spokesperson for Aetna, said that "using gender as one factor in the rating process helps ensure that premiums fairly reflect each individual's expected costs and how they currently contribute to the overall pool of available insurance coverage." Research has found that, in addition to added maternity costs, women are more likely to visit their doctors and incur higher costs than men. This changes around age 50, when men usually require more health care and women are charged lower premiums, according to Kliff.

Supporters of gender rating also argue that if the practice were prohibited, "adverse selection" could occur, with men dropping out of the system because they feel that they are paying too much relative to the benefits they receive, Kliff says. For example, insurance rates for young women in 1994 in Kentucky were 150% of rates for young men, which prompted the state Legislature to pass a law limiting the ability of insurance companies to charge different premiums based on gender and other factors. Over the next decade, low-risk individuals, such as men who felt they were overcharged, opted out of the market. By 1998, about 40 insurance companies had left the market. Kentucky largely repealed the law in 1998, and insurance companies returned to the state, Kliff reports.














According to Kliff, Kentucky's case shows how "small changes in regulation can ripple through a market to have a serious, and not necessarily favorable, impact," although "by no means is Kentucky the rule." For example, in 1993 Montana successfully outlawed gender rating "and never looked back," she says. "And even if some adverse selection does occur, advocates of gender-neutral policies say that's OK -- there are larger, philosophical issues at stake," Kliff reports. The NWLC report said that advocates in states with successful laws restricting gender rating have found that "society considers gender discrimination to be just as repugnant as racial discrimination" and that insurers should eliminate the practice as they did for race discrimination in the 1950s and 1960s.

In the congressional health reform debate, the "tide seems to be turning in favor of eliminating gender ratings," Kliff writes. In a statement released in May, America's Health Insurance Plans said it supports "discontinuing rating based on a person's health status or gender" so long as there is a "personal coverage requirement to get everyone into the system." Kliff says the "personal coverage requirement" part of the statement "is key to what AHIP is saying," because "if everyone had to sign up for health care, adverse selection becomes a moot point: there isn't any selection at all." However, individual mandates are becoming a "contested point" in the debate, and observers can "expect to see insurance companies rethinking their support for scrapping gender ratings" if the mandates are not included in the final legislation, Kliff says (Kliff, Newsweek, 10/19).


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