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Health Insurance: States Move Ahead on Curbing Costs

Whatever happens with health reform in Washington, D.C., unfair health insurance rates for women are being banned by an increasing number of states. Here, two New Mexican advocates tell how it happened in their state.

While Democrats in Washington struggle to pass health care reform, a number of states aren’t merely waiting for federal action. Some state legislatures are moving to negate possible federal reform, but others are enacting measures that would ensure fairer insurance rates regardless of the outcome at the national level.

Gender equity in insurance has been a goal for feminists at least since Montana, using its Equal Rights Amendment, passed a law guaranteeing fair rates for women 26 years ago. Without such protection, according to examples uncovered by the National Women’s Law Center, a 25-year-old woman may be charged up to 84 percent more than a man her age even for individual plans that exclude maternity coverage. Though Montana has had to reject repeated repeal attempts, one as recent as last year, the idea caught on in other states.

The insurance industry had long argued that higher premiums are justified for women because they use more health care. But according to the industry publication Health Care Week, actuarial data show that while younger women have higher than average health costs than men, overall male and female costs average out over a lifetime because men need more and costlier services as they age.

Federal antidiscrimination law already prevents businesses from charging individual employees based on gender, but overall group premiums can be higher based on the number of women insured. In such businesses as child care or home health care, the high proportion of women employees can make for a much greater cost. Rates for large groups are less likely to be based on gender, and larger groups are more likely to be self-insured. So state legislators have focused on individual and small group markets. The industry long ago stopped using race as a factor in setting premiums. As the New York Times editorialized in the middle of the Great Recession: “Surely it is time to eliminate gender-based premiums in the individual health insurance market as well. Otherwise women, who typically earn less than men, may find themselves priced out of adequate health coverage.”

Last week, Governor Bill Richardson signed a bill prohibiting gender discrimination in the individual health and small group insurance market, making New Mexico the 12th state to pass such a measure. A Colorado bill, passed just days ago, awaits the governor’s signature; California passed a bill dealing with individual policies in 2009; Utah called for a study of gender rating; and Illinois is currently considering a bill.

New Mexico: A Case Study

New Mexico once again took up the challenge of eliminating gender rating at an auspicious time. (An earlier reform had limited the allowable surcharge for women to 20 percent). Available research from the National Women’s Law Center and other national organizations provided resources to advocates in a climate focused on health care reform. Some legislators were shocked to learn that women were still charged more than men. They viewed the matter as a rights issue, and several Republican women legislators crossed the aisle to support women’s equality.

In 2008 the Governor's Council on Women's Health hosted a policy briefing on maternity coverage in insurance plans, and the National Women's Law Center presented its study documenting discriminatory rates to a packed room of advocates, policy makers, and state government staff. Within two months, a gender rating ban was added to a previously introduced health reform package. Although that legislation failed, individual elements of the package received committee endorsements in this year’s session, and a bill phasing out gender as a rating factor for individual and small group plans passed both houses, shepherded through by Senator Nancy Rodriquez and Representative Gail Chasey.

Opponents had argued that the new law would make men's rates go up without reducing the cost for women. But according to a 2009 National Conference of State Legislatures survey, there was no conclusive evidence that men’s rates rose in states that already banned gender rating. And the bill’s provision for a phase out over four years would create blended rates, so any adjustment would be gradual. In addition, men’s rates hadn’t risen in New Mexico after the earlier gender rate cap at 20 percent. A large group of advocates—including the N.M. Women’s Agenda, the Religious Coalition for Reproductive Choice, AAUW New Mexico, the Southwest Women’s Law Center, and the N.M. Public Health Association—armed with information provided by cooperative state agencies managed successfully to counter the opposition.

The country will soon learn whether a bill will pass in Washington. Meanwhile, states have shown they can act as a proving ground to demonstrate “best practices” to the nation.

At the National Level

Representatives of an insurance trade association told Congress that they wouldn’t oppose doing away with gender rating, and both health insurance reform bills that passed the U.S. House and Senate in 2009 address discriminatory rating. The House bill eliminated gender rating, but the Senate bill allows a loophole exempting larger employers (unless a state allows larger employers in the new exchanges to be established). The National Women’s Law Center is demanding that “final legislation should apply new premium rating rules to all groups, as in the House bill.”

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