Gender Rating in Health Insurance
HEALTH CARE TASK FORCE
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01:31 PM -- Gender Rating in Health Insurance
The committee reconvened. Senator Boyd introduced the topic of gender rating in health insurance and discussed legislation from the 2009 session that referred the issue of gender rating to the Health Care Task Force. Dick Cauchi, NCSL, began his presentation on other states' actions in the area and NCSL's survey of states. He then defined the concept of gender rating as the practice of using gender as a factor when setting insurance premiums, which can result in higher premiums for women to obtain insurance. Mr. Cauchi gave some statistics on where people get their insurance (employer, individual market, etc). Mr. Cauchi described case law that has effectively banned gender rating in the employer-sponsored group health insurance market. He said that only 10 states have bans on gender rating in the individual market and 2 states use rate bands to limit the premium difference by gender. Mr. Cauchi described the prohibitions in 12 states that have banned gender rating in the small group market. Mr. Cauchi described the opposition to the banning of gender ratings that has occurred in some states. Opponents say that gender rating bans result in lower-risk people paying higher premiums to support higher-risk groups. He also described the requirement in some states that any differences in rates due to gender be based on sound actuarial statistics.
Mr. Cauchi said that the policy positions regarding gender rating have moved quickly and discussed an agreement reached with health insurers to end gender rating. Mr. Cauchi then shared a NCSL report on gender rating. (The report and Mr. Cauchi's presentation are in Attachment N). He said that none of the states surveyed have reported negative effects from banning gender rating. A handout in support of removing gender-based rate setting in the individual insurance market was distributed to the committee (Attachment O)
Lisa Codispoti, National Women's Law Center (NWLC), began her presentation. A copy of her presentation and a copy of her testimony were distributed to the committee (Attachments P and Q). She also shared a report from the NWLC titled "Nowhere to Turn" concerning gender rating in the individual market (Attachment R). She urged the Colorado General Assembly to enact law to prohibit higher insurance rates for women. She said that nationally, gender rating results in wide variation in insurance prices for men and women. She said that the premium cost differences between men and women exist up to age 55. Representative Massey asked why costs drop at age 55, as compared to age 40, considering child-bearing age and women's longevity. Ms. Codispoti said that she could not explain how the insurance industry sets these rates, and that the wide variation and arbitrary nature of the gender ratings raise many questions. She said that premiums varied greatly by state and within a state. She described the methodology for her report and showed that even plans with the same features had varying costs. Representative Kerr asked about the discrepancy and Ms. Codispoti said that women would not be aware of the price discrepancy unless they shopped for a man's policy as well as for their own. She said that the individual market had many problems beyond gender rating. Representative Massey asked about the cost discrepancy for victims of domestic violence, and Ms. Codispoti said that Colorado doesn't allow that type of rating, but that some companies think women who have been victims of domestic violence could be at risk for future injury. Senator Foster asked about the difference in men's and women's health and why there are premium differences. Ms. Codispoti said that the insurance industry would say that on average women use more health care. Ms. Codispoti said that maternity benefits alone couldn't explain the rate difference.
Ms. Codispoti described NWLC's survey of insurance policies in Colorado, and said that only one insurer (Kaiser Permanente) did not charge different rates for men and women. Among the insurers that charged differing amounts for men and women, the cost difference by gender varied greatly, but the cost difference was consistent across the state. Ms. Codispoti described the results by age. She described Kaiser Permanente's market share and said that Kaiser's experience shows that a company can be successful without resorting to gender rating. Ms. Codispoti said that NWLC supports community rating for health insurance and that women nonsmokers are sometimes charged more than men who do smoke. Ms. Codispoti said that sex is genetically determined and that federal law prohibits premium determination based on genetics; therefore, gender rating should be prohibited. Representative Massey asked about the wide disparities in premium costs and asked how the actuarial data could support such variation. Representative Frangas asked about guaranteed issue and access to insurance, and asked how that relates to gender rating. Ms. Codispoti said that there are proxies for gender rating (such as occupational rating which can target women-dominated occupations). She also discussed how guaranteed issue can result in higher costs and could limit access. Representative McCann asked whether insurance companies leave markets when bans on gender rating are enacted. Ms. Codispoti said that change in availability of insurance could not be directly linked to banning gender rating since there are many factors that influence what policies are offered in a state. Representative Massey asked how insurance companies can protect against cost shifting if gender rating is banned. Ms. Codispoti said that they did try to see how the prohibition of gender rating affected men's premium costs, but many states did not track this data when the bans took place.
Cathy Alderman, Planned Parenthood of the Rocky Mountains, said that her organization opposes gender rating. She said that 94 percent of her clients are women and described their insurance situation. She stated her belief that gender rating restricts access to insurance and can result in financial strain for women. Toni Panetta, NARAL Pro-Choice, began her presentation and shared data on the health needs of women in Colorado. She described her organization's research concerning lack of insurance, reproductive health, and family planning. Ms. Panetta said that costs for birth control are not covered equally between men and women. She described the lack of maternity benefits in many insurance plans and the need for prenatal care in Colorado. She stated that NARAL supports ending gender rating as a first step towards more equal access to health insurance. She described how birth control often requires a doctor's visit which can result in an insurance claim, and how a woman can be penalized later by an insurance company for filing a claim.
Bob Semro, Colorado Consumer Health Initiative, stated his organization's opposition to gender rating. He described the three health reform bills being considered in Congress and stated that those bills, if passed, will likely end gender rating. However, he said that any bill, if passed, would not take effect until 2012 or 2013. He said that until then, women in the individual market would be subject to gender rating. Mr. Semro described the wage discrepancy between men and women and how higher premium costs and lack of maternity coverage exacerbate the problem. He described insurance policies offered in each of the Health Care Task Force members' districts, and noted that the information shows a premium discrepancy for men and women in Colorado. He said that none of the plans he assessed cover maternity, prenatal, or delivery costs. He further described the cost differences by gender and age. Mr. Semro described other states that have prohibited gender rating with few negative results. Senator Schwartz about small insurance markets and commented that there didn't appear to be a disparity in the premium differences for men and women in rural and urban areas. Mr. Semro noted that geography did not seem to have an effect on cost. He said he was surprised that there was such a wide discrepancy in costs even though maternity benefits were not included. Representative Massey asked what were the cost drivers since maternity isn't included. Mr. Semro said that he didn't know and could not identify an obvious reason for the wide discrepancies.
A.W. Schnellbacher, AARP, testified that gender rating was an important topic because many of his members are below the age of 65 and are not yet eligible for Medicare. He said that many AARP members below age 65 are retired, and do not have adequate health insurance. He said that women are more likely to lack insurance, and that lack of insurance strains the budget for other programs like Medicaid. He distributed information to the committee on the rates for CoverColorado and other materials (Attachments S through U). He described a study on insurance claims that found differences in underwriting by geography. Based upon these factors, Mr. Schnellbacher expressed his belief that gender should not continue to be a factor in setting insurance rates.
Vanessa Hannemann, Colorado Association of Health Plans, testified that she was not for or against gender rating. She discussed the use of actuarial rating and said that the Division of Insurance requires that premiums be actuarially sound. She said that modified rating factors can increase coverage and that young women use more health services than men of the same age. Ms. Hannemann said that women go to the doctor more often, go to their annual checkups, have more prescriptions, and are often on birth control. She referenced the lower costs for a male smoker and said that the health care costs of smoking will not occur until later in life. She said that premiums are set based on current anticipated usage. Representative Massey discussed premiums paid by individuals who smoke. Ms. Hannemann said that the current premiums are not based on future needs, but on anticipated needs at the moment. Ms. Hannemann described her support for coverage of preventative services in health care plans.
Ms. Hannemann described the rate filing and examination process, noting that rates are determined by mathematicians. She said that a majority of states allow premiums to vary by gender to ensure access to coverage. Ms. Hannemann provided two handouts to the committee on costs (Attachments V and W). She said that women subsidize the cost of coverage for men earlier in life and men subsidize the cost of coverage for women later in life. She said that all Americans should have access to coverage and said that her organization supports bipartisan reform. Senator Foster commented on the need to reward positive behavior and preventative actions.
Jamie Scholl, Colorado State Association of Health Underwriters, described his organization and its goal to increase health insurance coverage. He provided a handout to the committee (Attachment X). Mr. Scholl described the group costs of health care and said that costs are allocated among the members of the group, and that changes in ratings shift costs among users. He said that young men are more likely to be uninsured and are not as responsible about having coverage. Senator Boyd commented that lower rates for young males seems to be rewarding bad behavior. Mr. Scholl said that it is important to consider the costs from a group perspective and described shifting costs as pushing on a balloon.
Senator Schwartz commented that ratings are based on actuarial models. She also asked about male smokers and what actuarial considerations go into setting rates and whether insurance companies need to take a longer view on health costs. Mr. Scholl discussed wellness programs, describing how federal law allows employers to charge different rates to promote wellness. He said that smokers are charged more for health insurance coverage. Representative McCann asked about smoking and the costs for treating preventable disease from smoking and obesity. She asked for data that justifies higher costs for women who do not smoke than for men who do smoke. Mr. Scholl discussed the rating system in the individual market. He said that women who want to buy a maternity policy intend to use it, but that a male smoker likely won't need to use his health insurance coverage for smoking-related diseases for 20 to 30 years. He said that maternity coverage is more expensive that paying out of pocket for a normal delivery, and that standard insurance will cover any complications during a delivery. Representative McCann asked why there is a cost difference for men and women in the policies, even when maternity coverage is excluded. Mr. Scholl said that women have more health needs and tend to take care of themselves better. He also said that a lot of women's health needs occur earlier in life, whereas men's costs occur later.
Senator Foster asked about mental health and adult diagnosis of mental health issues and if there are gender differences in costs for mental health coverage, especially preexisting conditions. Mr. Scholl said that in the group market a person will maintain coverage for preexisting conditions, but in the individual market insurance companies can decide whether to cover a certain disease. He said that this is why CoverColorado is a necessary part of the health insurance system. He said that there needs to be some kind of a subsidy in the system to provide affordable access to health insurance for everyone. He described how Colorado is one of the healthiest states in the nation, but has some of the highest insurance rates due to various regulations. He described how the automobile and life insurance markets also take gender into account when setting rates. Senator Schwartz asked about tort reform. He said that tort reform doesn't really come into the equation, but there are many ways to reduce the costs of medical care in the country. He said that insurance companies aren't driving the cost of health care.
Dayle Axman, Department of Regulatory Agencies, Division of Insurance, read a statement from the Commissioner of Insurance opposing gender rating in setting insurance rates (Attachment Y).