Paying More for Health Insurance Just Because You Work with More Women Than Men…

by Lisa Codispoti, Senior Counsel, 
National Women's Law Center 

While we have talked a lot about women paying more for insurance than men when they get coverage directly from insurance companies, this can also be a problem when you get insurance through your employer.

As we’ve written about before, gender rating is the common insurance industry practice of charging women and men different premiums for health insurance. Legal in 40 states, this practice means that women who buy insurance directly from insurance companies (in what is called the individual market) often face higher premiums for the same insurance coverage as men until around age 55, then some insurance companies start to charge men higher premiums than women. 

But less well known is that this also happens in the group market -- when employers get health coverage for their employees. While individual male and female employees working for the same employer can’t be charged different premiums by their employers (that would be employment discrimination), insurance companies charge employers different premiums based on the gender make-up of the workforce. 

What does that mean? Employers with majority female workforces, like child care providers, home care providers, dentists and others often face significantly higher health care costs –- simply because they employ a higher proportion of women. And this translates into real bucks: as Kaiser Health News wrote about the Visiting Nurse Association in Pennsylvania, with a mostly female workforce, pays about $2,000 more per employee than the national average for individual coverage. The continuation of health status rating and age rating means this too is a problem too for employers with older workers or sicker workers. 

And while most versions of the health reform bills in Congress would end gender rating for individuals and all employers, the bill reported by the Senate Finance Committee would end gender rating only for employers with up to 100 employees.  So if you happen work for an employer with 101 or more employees who happen to be more women than men, and/or sicker, and/or older, then you’re out of luck: the Finance bill won’t help you.  And since there will effectively be no limits on how insurance companies can charge employers of that size, any guesses as to what you think the insurance companies will do? Furthermore, an employer could effectively be financially penalized facing higher health care costs simply by growing their workforce by a single employee- by expanding beyond the 100 employee limit for the protections against these discriminatory insurance industry premium practices. Probably not the best way to encourage job growth.

This all compounds the problem with some of the other policy proposals in the Finance Committee bill.  For example, the excise tax on so-called “high cost” health plans. This is the tax on insurance companies, that would in turn be passed on to employers and ultimately employees, if you have a health plan that exceeds a certain cost threshold. Problem is, if you happen to work for one of these larger employers, because these discriminatory insurance practices will continue unchecked, you’ll pay more for insurance. Which means, you could be faced with a tax on your health insurance. Talk about a double whammy –- paying more for your insurance just because of the composition of your workforce AND possibly being taxed because of it to boot. 

Fortunately, Senator Barbara Mikulski of Maryland and 24 of her Senate colleagues have called on Senate leadership to ensure that health reform eliminates discriminatory insurance premium practices for all employers -- not just those of a certain size.  

Health reform shouldn’t set an arbitrary limit on the end of gender rating -– it’s just as wrong if you work for an employer with 101 employees, as it is if you work for an employer with 99 employees. Let’s hope they get that one right.

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