Women and the Individual Health Insurance Market: It's No Shopper's Paradise

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by Lisa Codispoti , Senior Advisor
and Brigette Courtot , Policy Analyst
National Women’s Law Center

This post is part of a weekly series on Women and Health Reform .

The overwhelming majority of people get their health insurance from an employer or through a public program like Medicare or Medicaid . So it’s not surprising that most people have absolutely no idea how tough it is to buy insurance directly from an insurance company in the individual insurance market. And for women –- it is a particularly tough place.

At the National Women’s Law Center, we just released a report identifying the many obstacles women face in getting affordable comprehensive health coverage in the individual insurance market. The barriers include being rejected for coverage for reasons that are relevant to women, being charged more than men for the exact same coverage, and experiencing great difficulty in finding affordable health coverage that includes comprehensive maternity care.

There are many federal laws that protect women who get their health insurance through their employer. Those federal protections simply don’t apply when you try to buy coverage in the individual insurance market.

Insurers can reject applicants for a variety of reasons -– many very relevant to women. For example, a woman can be rejected simply because she had a Caesarean section (in 2005, 30% of all births were by C-section). In nine states and the District of Columbia, it is still legal to be rejected for coverage because you are a survivor of domestic violence.

Women are often charged higher premiums than men -– for the exact same health coverage. NWLC found that in 40 states and the District of Columbia, it is legal for insurers to charge women and men different insurance premiums for the same health coverage, under a common industry practice called gender rating. Our findings raise real questions about how arbitrary gender-rating is in practice. In the worst case, for instance, we found an insurance plan in Missouri that charged 40-year-old women 140 percent more than same-aged men for identical health insurance policies. Yep, you read that correctly –- 140 percent more, solely because of gender! To be fair, we did find that beginning at age 55, some insurers actually charge men more than women. But at least half of the plans we reviewed still charged women more than men even after age 55; once again, the variations we found raise questions about how arbitrary this practice really is.

On the availability of maternity coverage (or lack thereof), of the more than 3500 individual market health plans we studied, the overwhelming majority did not include any maternity coverage. We found supplemental maternity policies- called “riders” -- in Kansas and New Hampshire for more than $1100 a month (no- not a typo); that cost, of course, is on top of the premium for the underlying health plan. We also found maternity riders offered in 25 states that capped coverage at a paltry $2000 during the first 2 years of coverage –- over $5,000 less than the average cost of a best-case-scenario uncomplicated delivery.

So, why should you care about the individual market in the first place? After all, it is the least likely way for a woman to get insurance. Why the big deal?

Well, some health reform proposals could push more people into looking for coverage in the individual insurance market. Other proposals for a flat tax credit for health insurance raise real questions about equity. For example, if everyone gets the same tax credit of $2,000 -– is it fair or equal for the women who have to pay more for their health insurance, simply because of their gender? Or for those who have to pay more because they are older? Or sicker? What about those who are denied coverage because they had a Caesarean section? Or are a survivor of domestic violence? Where can they turn?

While some states have taken steps to protect consumers in the individual market, far too many have not. A patchwork of protections has resulted, so that a woman’s ability to purchase individual market health insurance depends largely on the state in which she lives. Simply put, too many women have nowhere to turn for health coverage, and are at the mercy of insurers in a market fraught with obstacles. This is unacceptable. Expanding the role of the individual insurance market is no solution for the health care crisis. We’ve said it before: the next Congress and Administration need to make real health reform their top priority, and this health reform must guarantee that all people — women and men alike — have access to comprehensive, affordable, quality health care.

This post was cross-posted from Womenstake .

Posted by RobinNWLC - September 26, 2008, at 07:22PM | in Health