following trend, connecticut health insurer to charge more for most women
connecticare plans to start charging thousands of women health insurance rates that are 3 to 40 percent higher than men in an effort to even up the score with competitors anthem blue cross and unitedhealth group.
hartford courant, april 22, 2004
farmington-based connecticare, one of the state's largest health plans, will begin july 1 to phase in gender-based rates. they will apply to connecticut workforces of 50 or fewer employees.
anthem blue cross and unitedhealth group already use gender rates for small employers here, and it is not known yet whether other managed care companies will follow suit.
connecticare's new rates, which are subject to regulatory approval, are meant to reflect the differences in usage of medical services between men and women. the amount of difference in premiums for men and women will depend on age, type of health plan and whether a spouse or children are covered.
premiums in some cases will be slightly higher for men than for women at age 60 and up.
the new rates will be applied as small employers come up for renewal july 1 and later. employers, though, could still buy connecticare insurance with unisex rates through the connecticut business and industry association's health connections program.
female workers subject to gender rates are expected to feel some financial pain. that's because small employers generally contribute a set percentage of the premium for a worker, or a specific dollar amount, regardless of the premium.
men who work for small employers could see lower prices under gender rates than they would have seen under the current plan.
the final premiums that employers and workers pay, however, will be affected by more than just the switch to gender rates. connecticare, like other insurers, also has regular rate increases to reflect rising medical costs.
in addition, insurers in the small-employer market charge higher premiums as workers age. the increases are significant when an employee reaches middle-age.
it's possible that some small employers would face steeply higher premiums if they are affected by all three factors.
the impact of gender rates alone on a small employer depends on the make-up of the workforce. an employer with a predominantly female workforce could end up paying more than under the old system. a business with mostly male workers who are young to middle-aged would pay less than if unisex rates were applied.
paul philpott, senior vice president and chief marketing officer at connecticare, predicts that about two thirds of the company's roughly 70,000 small-group members will be subject to gender rates. the rest, he believes, will choose connecticare unisex rates through cbia or the municipal employees health insurance program, which is open to small employers.
connecticare estimates that 60 percent of its small employers will either benefit from gender rating or see no effect when they renew their insurance. the benefit, philpott says, could be up to 5 percent of premiums.
another 35 percent of the employers will see premiums rise 5 percent or less due to gender rates. the final 5 percent of employers will see premiums increase more than 5 percent because of gender, philpott said.
although connecticare has been raising rates in general, the use of gender itself doesn't produce extra revenue, he said. gender rates, he said, simply re-apportion who pays what share of the overall premium income.
for one of connecticare's typical hmo plans, the rate for a man 25 to 29, who doesn't insure anyone else, would be $176.34 a month. for a woman the same age, the rate would be nearly 29 percent higher or $247.21 a month. those rates are for an "open access" plan - no referrals needed to see a specialist - with a $20 co-pay for a doctor visit and prescription co-pays of $15, $30, or $40 depending on the drug.
the gender difference in rates for the same plan narrows with age to about 14 percent in the age 40 to 44 bracket. by age 60, the rate for a man is $673.07 a month, 3.5 percent higher than for a woman.
in plans with lower co-pays, female rates are as much as 40 percent higher than rates for men. rates for families show less difference between the sexes than employee-only rates.
"all we're doing is reflecting the actuarial realities," said philpott. yet connecticare is not charging as much of a difference between men and women as claims data would justify, he noted.
connecticare, for instance, finds that medical costs for men 25 to 29 are 49 percent lower on average than for women of that age, philpott said. much of the difference, he says, stems from pregnancies and related care.
the gender differences narrow as women pass childbearing age, and people start developing heart and other problems.
connecticare felt it had to switch to gender rates for small employers because anthem, the largest health insurer of connecticut residents, has long used the system, philpott said.
that means connecticare and other insurers who don't gender-rate could attract a disproportionate share of employers with more women than men - the higher cost groups.
connecticare's decision is "marketing genius" because it still allows access to its unisex rates through cbia, said bob feen, president of the benefits group inc. in cheshire, which sells health insurance and other employee benefits.
with the choice of accessing connecticare directly or through cbia, small employers and their benefits brokers "can pick which model works best for them," feen said.
small employers must pay cbia dues to buy health insurance through the association, and must also buy life insurance through the program.