Impossible rates may squash incentive to obtain preventative care.

Women's advocates and lawmakers are up in arms about gender disparities in healthcare coverage -- and the problem's been brewing long before Health and Human Services Secretary Kathleen Sebelius brought it to the forefront a couple weeks ago (see the last issue of Medicine & Health).

The National Women's Law Center released in September 2008 a report titled, Nowhere to Turn: How the Individual Health Insurance Market Fails Women, and the public is taking note.

Gender Rating Is Arbitrary, NWLC Says

Many insurers charge women higher premiums for the exact same coverage as a man in the individual insurance market, a practice known as "gender rating." While this practice is prohibited in 10 states and limited in two, it continues to flourish in all other states "outside of the employer-provided benefits setting, where gender rating has been banned nationwide for over thirty years," the report notes.

Case in point, NWLC calculated different premiums among women and men across the country, ages 25, 40, and 55, with the same individual health plans. In this sampling, 25-year-old women were charged between 6 and 45 percent more than men, 40-year-old women were changed between 4 and 48 percent more, and 55-year-old women were charged 22 percent less to 37 percent more.

But the insurers' argument, "women's health coverage costs more," is losing ground. For one, many women paying higher rates are not even paying for maternity benefits. In addition, MWLC found wide variations in gender-based premiums within a single state showing "the arbitrary nature of gender rating in practice," the report said.

"The wide variation in premiums could not possibly be justified by actuarial principles," NWLC co-president Marcia D. Greenberger told the New York Times in an Oct. 30, 2008, story on the topic.

More Cost in the Long-Run

Insurance companies argue that women simply utilize healthcare more often. "Under the age of 55, women tend to be higher utilizers of healthcare than men," Elizabeth J. Leif, a health insurance actuary in Denver told the Times. "I am more conscious of my health than my husband, who will avoid going to the doctor at all costs."

But is that a bad thing if it means preventing future complications that could cost even more in the long-run? Plan administrators may want to think twice about indirectly penalizing women for seeking preventative care in individual health plans.

As individual health plans charge whopping rates for women without maternity benefits, it's no surprise that plans with maternity coverage are either scant or extremely expensive. "The vast majority of individual market health insurance policies that NWLC found do not cover maternity care at all," the report stated. Only 12 percent of 3,500 individual insurance market policies NWLC analyzed include comprehensive maternity coverage.

The argument: "If maternity care is included as a benefit, it drives up rates for everybody, making the whole policy less affordable," D. Bykerk, president of the Society of Actuaries and former Mutual of Omaha executive VP told the Times.

"Premiums for our individual health insurance plans reflect claims experience," Thomas T. Noland Jr., a senior vice president of Humana told the Times. In addition to the high costs of maternity care in itself, "bearing children increases other health risks later in life, such as urinary incontinence, which may require treatment with medication or surgery," he said.

But not covering maternity care or charging impossible coverage rates may come back to haunt the insurance industry as a whole. "Why should we cover pregnant women? Because the cost of an unhealthy child remains in the community," former state insurance commissioner and California Lt. Gov. John Garamendi told the Los Angeles Times in an Oct. 21, 2008, story on insurance rates.

And backing up the "arbitrary" argument, Rep. Xavier Becerra, (D-Calif.), told the NY Times that "if men could have kinds," such disparities would probably not exist.

Meanwhile, "five states have enacted mandate laws that require all insurers in the individual market to cover the cost of maternity care," the NWLC report pointed out.

Nix the Individual Market, NWLC Says

There's no simple solution to fixing the health insurance market, but NWLC concludes in its report that the individual market is a recipe for disaster for women. Any reform proposals should eliminate or reduce the need for the individual market," NWLC said.

How? "Make employer-sponsored insurance easier to obtain," especially focusing on small employers who are less likely to offer health benefits, NWLC recommended.

But the report doesn't expect insurance companies to figure out this debacle for itself. In fact, it suggests that the states and even the federal government can chip in with financial help or incentives, or create purchasing pools. NWLC cites Montana as an example, which offers refundable tax credits to certain small businesses that are currently offering their workers health insurance.

For the short term, NWLC says individual insurance should be easier to afford, aka, there should be no gender rating.

Finally, NWLC recommends that "all health insurance policies sold include coverage for vital health services such as maternity care."