Much has been written about the issue of using gender to set individual health insurance premiums. Jaan Sidorov, writing at Disease Management Care Blog, has added to the discussion, and leaves it open to the reader to decide whether gender as an underwriting factor constitutes discrimination or just good business.
The new proposal put forth by America’s Health Insurance Plans (AHIP) would take into account only age and geography when setting rates, with men and women being charged the same rates. Jaan points out that while this is all well and good, doesn’t it leave things open to cries of foul regarding ageism and geographism? In my opinion, it does. Age and gender are both factors that are beyond our control, and to a large part, so is geographical location.
For the most part, I don’t consider the debate about using gender to determine health insurance premiums to be all that constructive in the overall picture of health care reform. I don’t think that it will have the effect of lowering premiums overall, which is what we need in order for health insurance to become more universally affordable.
Women use more health care dollars than men (until middle age) and thus their health insurance premiums are higher. Older people use more health care dollars than younger people, and subsequently our health insurance premiums keep going up as we get older. If individual health insurance carriers stop using gender as a factor in setting rates, it’s easy to see how people would also want age to be deleted as a factor in underwriting. And while this would might be applauded by older policy-holders, I don’t think that it would be beneficial overall. Young adults as a group have higher numbers of uninsureds than their older peers, and I think that this number would only increase if their rates were to increase in order to achieve an average rate for everyone. Generally, salaries increase with age, and people in their 40s and 50s tend to be more financially secure than people in their 20s. It might seem more fair to charge the same price to everyone, regardless of age, but I don’t think that it would help make health insurance more affordable or decrease the number of uninsured people.
As far as geography goes, it does make sense that health insurance would be more expensive in areas where incomes are higher and medical care costs more. But a far larger issue has to do with state regulations. Since each state has different requirements as far as health insurance coverage, premiums will obviously vary widely. States like Colorado (and most other states) that use medical underwriting to set premiums on individual health insurance policies will always have lower premiums than states that require all plans to be guaranteed issue. The only way this would change is if states relinquished control of health insurance mandates and turned this job over to the federal government. And I just don’t see that happening any time soon.
I found Jaan’s article in the Health Wonk Review, hosted at Workers Comp Insider. Head over and check it out if you haven’t already.