Colorado House Bill 1224 made it through committee last week by a vote of 10 -1. The bill would require a legislative health care task force to look into the effects of using gender to set individual health insurance premiums. Currently, individual health insurance premiums in Colorado (and in most other states) are based partly on gender. Supporters of HB 1224 note that this practice is unfair to women, because younger women pay more for health insurance than younger men. The rates are based on statistics pertaining to use – women use more health care services, and thus pay more for health insurance. It’s similar to the process by which a 21 year old male will pay much higher car insurance premiums than his 50 year old mother, even if they both have a perfectly clean driving record.
But while the higher rates for younger women has been getting a lot of media attention over the last year or so, I don’t see nearly as much discussion about the fact that men typically pay higher rates than women later in life. To illustrate the differences, I ran quotes for a few imaginary friends. A male and a female who are 30, and another male and female who are 61. All four are healthy non-smokers living in Colorado. I looked at premiums for $5,000 deductible HSA qualified policies from Anthem Blue Cross Blue Shield, Aetna, Assurant, Cigna, Humana, and United HealthOne. Here are the monthly premium price ranges for those five health insurance companies:
- 30 year old male: $51 to $89
- 30 year old female: $79 to $130
- 61 year old male: $231 to $461
- 61 year old female: $258 – $359
Out of the six Colorado health insurance companies I looked at, the lowest priced one was still less expensive for the 61 year old male than for the 61 year old female. But four of the six companies had lower prices for the female, and on the higher end of the scale the difference was dramatic ($359 for the female versus $461 for the male). This is a reversal of the differences we see for the 30 year olds, where the high end of the scale is dramatically less for the male than for the female. While most health insurance companies do start to charge less for females than males by about the age of 55, I rarely see this aspect of the debate in articles devoted to the topic of individual health insurance premiums and gender.
I can see where the lawmakers are coming from on HB1224. But I’m curious as to whether those same lawmakers would advocate that auto insurance companies and life insurance companies be required to charge the same rates to males and females? How much weight should statistical use of services be given in setting premiums for any type of insurance? It’s a valid question, and fairness doesn’t always mesh well with statistics.
My concern with HB1224 is that it doesn’t do anything to address the soaring cost of health care. As long as health care keeps getting more expensive, so too will health insurance premiums – for both men and women. If lawmakers decide to disallow the use of gender to determine individual health insurance premiums in Colorado, the result will be that younger women and older men will have lower premiums, while younger men and older women will have higher premiums. There won’t be any actual benefit to the overall population – health insurance will still be the same price, but the premiums will be averaged across men and women alike.