Last month, I wrote about California's proposed ban on differential health insurance rates for men and women (4/2/09). The New York Times (2009) reports that Karen Ignagni, president of America’s Health Insurance Plans (an association representing insurance companies) offered to eliminate these rate differences in a session of the Senate Finance Committee. Ignani's statement (pdf)) does not address this issue; according to the NYT, she responded to Senator Kerry who introduced a bill amending the Public Health Service Act (1946) to ban differential billing for women(S.969, 5/5/09).
A month ago, when I first found out about these difference in insurance rates, one thing I didn't think about was where the money for insurance comes from in most cases. In the U.S., only 8.5% of men and 9.4% of women purchased their own health insurance in 2007 (Census). About 60% of Americans are covered by employer-purchased health insurance. I wonder if this means that companies in female-dominated industries are paying more for their health insurance than companies in male-dominated industries? I don't actually know if these differences in rates impact group plans or only individual ones. Apparently I'm sleepy: the NYT article seems to say that this is only for individual plans - the approximately 10% of people who buy their own insurance.
Also, I asked in April, and got no response, so I'll ask again: is it fair for insurers to charge more for clients who are more likely to need care, and more likely to use it? How do you define "fair"? Is fair when people pay for what they use, or when everyone pays the same?
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About Me
- Dan4th
- ex-activist, ex-pagan, ex-vegetarian, ex-female, post-queer blogging addict. B.S. in theatre, studying for Master's in Psych. Day job in research administration.
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23 comments:
Nobody bats an eye if your auto insurance company charges you more for being in a higher-risk group. But apply it to health insurance, and suddenly we start talking about fairness, discrimination, etc. Are actuary tables a form of prejudice?
*nods* I want to say there's a difference when it's about your body, but I think that this may be a case of people confusing "insurance" with "maintenance plan".
I'd define a fair system as one where the insurance companies are able to make their modest profit, encourage healthy living, and pay for good health care for everyone.
It does make sense to charge more for people who have a difference due to a choice, such as smokers, drinkers, the obese, etc.
It doesn't make much sense to charge more for people for conditions that aren't their fault, including genetic, random, and accidental problems.
Charging people more for random conditions is an arbitrary punishment and risks creating an underclass of people who pay more for insurance and are either poorer or less healthy as a result. It doesn't encourage healthy living and it discourages healthcare for everyone.
*sits this one out*
FIGHT ME!
@Peter
Well, if you insist...
My concern is that the lines between health and choice aren't particularly well-defined. "Obese" is a line drawn on an actuarial table, and one that's gotten me into trouble recently enough that I'm hesitant to call it a choice-based variable. There's also the ongoing debate about the disease model of various addictions, etc, and generally, I question how much I want to let an insurance company define my lifestyle -- can they say I shouldn't smoke? can they say I shouldn't eat meat? Is exercising less than 3 hours per week a choice? Can they require me to be on cholesterol-lowering medications that have sexual side effects?
Yeah, it's a slippery slope straw man. But I think there's definitely valid questions to be asked about what constitutes a choice.
I'm pretty unsympathetic to claims of genetic predisposition to being overweight or on drugs. Diabetics have a genetic predisposition towards high blood sugar, but I also think diabetics who let their condition run out of control should pay higher premiums.
There does need to be a common sense rule about how much insurance can manage your life, and I think most of that gets caught by the fact that the information has to come through your doctor. And if the choice is between punishing people for smoking or punishing people for being born the wrong gender, it's a pretty easy call.
One salient point: If a rating variable with any actual predictive power is removed, the result is that the rates will level somewhere between those rates--the lower rated groups will see increases; the higher rated will see decreases.
In general, this means that some groups will essentially be subsidizing the others (at least more overtly). There is a danger here in the case where your competitors do not have to remove that rating variable--all else equal, your "better" risks will go to a competitor (for the lower prices), leaving you with rates set too low for a generally higher risk group. "Adverse selection" is a favorite term here.
I'd be more okay with paying more on the basis of my gender if I weren't likely to also have a lower income for the same reason. This is getting screwed coming and going.
Also, how much of the increased cost of care for women is for pregnancy-related concerns? I'd ask the same question about domestic abuse, but that's harder to track.
@Penny
the NYT article dodges the question a bit:
"Women ages 19 to 55 tend to cost more than men of the same age because they typically use more health care, especially in the childbearing years. Moreover, insurers said women were more likely to visit doctors, to get regular checkups, to take prescription medications and to have certain chronic illnesses."
@Penny
Probably not the right answer to your question, but Trussell (2007) estimated the cost of an unintended pregnancy at US$1,609. I imagine an intentional pregnancy costs as much or more.
Another point: imagine how much different this discussion would be if we were talking about race instead of sex.
Race is rarely a socially acceptable rating factor but sex generally is. This holds regardless of how predictive these variables actually are. I think part of this is that race is very poorly defined (sex is almost always well defined--present company, of course). For example, I get the distinct impression that you can tell most Americans that President Obama is "black" and they'd agree; you can ask the same people if President Obama is "white" and they'd look at you funny. Even though both statements, as far as I understand, are equally false.
I would actually argue *for* the use of *both* race and sex as rating variables--inasmuch as they're demonstrably predictive--but not right now. I would similarly argue *against* equal opportunity programs--but not right now. Because right now we're a nation of children. And I don't trust much of anyone to behave like adults about these matters. Because every time we've been told that we have the house to ourselves for the weekend, we've thrown wild parties where someone ODs and the cops are called. This holds triple in the financial sector.
If you are obese or addicted to drugs you may have a different viewpoint than if you aren't. I don't think science knows for sure if these things are a choice. Maybe it is a choice for some and not for others. How do you tell?
I'm fat...but I have great blood pressure and cholesterol and I bike 8 miles a day. I know thin people who have high levels of both and don't exercise. Who's healthier? Who should pay more?
If I lose weight does my rate go down? How soon?
Should the elderly be penalized for being old and predisposed to disease?
Oh...and do I get penalized for being a female bodied person in my childbearing years if I don't have sex with men?
The point of regulating (or determining "fairness" for) health insurance should be to make sure they are appropriately pooling risk and ensuring health.
Kennedy is completely right to bring race into the discussion. I'll go a bit further.
Cancer and chronic illness are the main drivers of health insurance premiums, and they are likely to have a largely genetic cause. As it becomes possible to do genetic tests for the likelihood of these conditions, health insurance based on personal conditions becomes more and more useless. If I can predict 80% of what I'll pay for your medical coverage then you might as well save the premium up and eventually pay for the procedures yourself.
A side effect of this is the ridiculous situation where people don't want to get genetic tests because then their insurance premiums will go up.
By rating only based on matters of choice, not by genetics, circumvents all these issues.
I'm not sure how to handle age, but it happens to everyone so it doesn't really matter much.
hrafn
2009-05-07 08:00 pm UTC
I think as long as we are stuck with this bullshit "insurance" system, that any attempt to make people's BASIC healthcare costs higher simply based on sex is, well, horrible and discriminatory. People who "use too much" healthcare are ALREADY going to pay more because, hello, co-pays! My premium may be the same as some dude's, but if he's too stupid/stubborn/whatever to go see the doctor, his overall costs will be lower. At least for now. While his health problems are minor.
But if what he (or any other anti-getting care even while insured person) has is actually a Serious Problem and then it costs a lot MORE to deal with years later, where's the outrage? How come when women go to the doctor more - because, for example, if we want fucking birth control pills, we HAVE TO get a fucking pap smear every year, regardless of cancer risk - we get told our costs should be raised from the get go, but there's no similar discussion about men avoiding getting treatment and having their issues get worse - and more expensive to them and the system - years later?
One thing I will admit Mass. got right with the mandatory health insurance thing is that when you sign up for one of the state's plans, it doesn't ask your sex. Age, though, that changes the costs, and I think that's fucked up, too.
To get at Peter's point I actually think the deal is that we do confound urgent health care--such as for accidents or unexpected illness, say--with routine health care. In contrast you might get property damage/personal liability coverage for your car, but you don't generally get insurance that covers oil changes, tire rotations, and so on. The expenses of car ownership are a little insane and the vast, vast majority of Americans would be pretty screwed without cars; the expenses of medical care are completely fucking insane and many, many Americans are suffering without adequate access to it.
Should also add--any insurance rating system is inherently discriminatory. Otherwise it's not a rating system, it's a flat fee.
@Peter by kementari2
2009-05-08 09:31 pm UTC
re: Cancer and chronic illness are the main drivers of health insurance premiums, and they are likely to have a largely genetic cause.I'm confused by your saying that cancer and chronic illness are likely to have a largely genetic cause. Although I'm no doctor, I definitely have gotten the impression that cancer is usually a result of exposure to carcinogenic chemicals and other environmental factors (e.g. sunburn, smoke, air pollution) and that chronic illness is usually a result of lifestyle choices (e.g. improper diet, heavy metal exposure) or chronic infection (e.g. Bartonella).
I think you're both a bit wrong (Peter and Dan4th) as far as the nature v. nurture for chronic illness/cancer.
Example: some of the largest hits to *liability* insurers in the past few decades have been related to toxic torts/asbestos exposure. These typically culminate in cancers and death. I bring it up because 1. these costs have certainly bled into medical, excuse the pun and 2. you can have all the anti-cancer trait you want and this environmental exposure will still get you and 3. numerous insurers and other companies, even some big ones, have tanked from this (liability) exposure.
There are significant genetic components to chronic illness of all kinds as well as numerous environmental factors that can lead to it. It's the traditional nature v. nurture argument: the correct answer seems to be both, sorta, and we have exactly zero data with good controls.
There are however some real questions as to where the crazy medical inflation has come from. The two main drivers to my knowledge are life expectancy growth and increasing expenses especially from Big Pharma. We're getting better at this stuff so people live longer, and living longer means more medical care (and pricier medical care). Also, the more sophisticated tools and medicines we employ have also been jacking up prices. My understanding for the price-setting from Big Pharma relates to their claim that they need to recoup their R&D capital + profit margin from *all* of their drug lines (even the ones that die before they get through the FDA) to stay afloat. In reality, of course, where no one reading this is a Concerned Billionaire, the fact is that Big Pharma generally runs each drug line as a monopoly through the vehicle of patent law. Even the "Live Free Market or Die! Don't Tread on My Invisible Hand!" whackjobs agree that monopolies lead to global welfare losses.
Hey, just cause I'm not a Concerned Billionaire yet doesn't mean I shouldn't vote like one! </republicanism>
@kementari2 - There are a bunch of rather expensive chronic conditions and cancers that are largely genetic. Check http://en.wikipedia.org/wiki/List_of_genetic_disorders
@nfkennedy -
I'm with you on the medical inflation.
I don't see what your disagreement is on chronic illness. If you're arguing numbers, then I'll admit any numbers I cite are purely imaginary. It is safe to assume that some expensive medical conditions result from genes, such as the medical condition of being a woman, which brought this all up in the first place.
Imagine four patients. Patient 1 worked in the asbestos mines back when everyone thought it was safe and fun. Patient 2 was born with bad genes. Patient 3 was struck by lightning. Patient 4 voluntarily smokes radioactive pine needles. Each patient has a 75% chance of getting cancer over the next 5 years (lightning is carcinogenic, it causes smoking). Which patient should pay higher insurance premiums?
The idea of insurance is to share risk, and if your risk assessment is tailored to include all sorts of accidents, then you're not really sharing it. I'm ok with adding a moderate surcharge to people for most voluntary risks, but that shouldn't get too punitive.
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