Gender neutral?
By jeremy.engdahl-johnson
Milliman’s Mike Sturm is featured as part of a recent article in Health Plan Week (HPW) about gender as a rating factor and whether men and women should be charged the same premiums:
Gender is “like any other rating variable,” Mike Sturm, a consulting actuary with Milliman, Inc., tells HPW. “You want to establish people’s rates as accurately as possible, and obviously men and women have different health care spending patterns.”
Sturm calculates that women, including maternity costs, are about 30% to 40% more expensive than men, using Milliman research data on the weighted average of all commercially insured women and men throughout their lifetimes. Even factoring maternity into the calculation, women remain higher cost than men by 20% to 30% over their lifetimes, he notes.
Without gender rating, if a man costs $100 and a woman costs $200, the insurer would charge them $150 apiece, Sturm explains. The situation works if the man and the woman stay in the pool, he says. But if the man leaves the pool, the insurer has $200 worth of cost and only $150 of premium. Yet Sturm says this result is not necessarily clear cut because age and health status seem to be more significant rating characteristics than gender.
If an insurer rates appropriately by age, Sturm asserts that there likely won’t be much adverse selection from gender because men pay more for women’s maternity costs in the younger years, but women pay more for men’s health conditions in the later years, evening it out in the long run.
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