November 3, 2008 9:43PM

Should Women Pay More for Health Insurance?

Women pay higher health insurance premiums than men. The New York Times reports that some activists and politicians believe this is due to unfair discrimination against women. Presumably, the remedy is to force insurers to charge women and men identical premiums, which would reduce premiums for women by increasing premiums for men.

First of all, is this unfair discrimination? As I wrote to the Times:

If health insurers charge women higher premiums, and those premiums cannot be justified by the fact that women file more claims than men, then that would indeed carry the odor of sexism. But to prove that those higher premiums are indeed sexist, one must first explain why competition hasn’t eliminated sexist surcharges.

If insurer A quotes my sister an actuarially fair premium plus a sexist surcharge, then insurer B can profit by quoting her a premium with no sexist surcharge. To prove sexism, activists and politicians must explain why insurers are not maximizing profits – which is the opposite of what activists and politicians usually claim. 

Unfortunately, your article did not broach this glaring omission. Thus we don’t know if those who want men and women to pay the same health‐​insurance premiums are truly battling sexism or just desperately seeking subsidies.

Second, if charging different premiums based on sex is wrong, why only look at health insurance? Men pay higher premiums for life and auto insurance. While we’re at it, young drivers pay higher auto insurance premiums than older drivers. Are those premiums evidence of sexism and ageism? Should we tax female drivers to subsidize males? Should we tax older drivers to subsidize young speed demons? Women’s higher health‐​care costs may be driven by biology, but so are males’ higher life and auto insurance premiums (e.g., men are biologically programmed to be more aggressive). So where’s the outcry on behalf of young men?

Third, risk‐​based insurance premiums are an essential tool for containing health‐​care costs. High health‐​insurance premiums create profit opportunities for insurers and providers who can deliver insurance and medical care to women at a lower cost. As my colleagues Peter Van Doren, Tom Miller, and John Samples write (altered to fit this context):

Free markets work best if they include all costs and benefits to market participants. No one likes the added costs and anxieties created by [women’s higher medical consumption], but we can’t pretend they don’t exist or that the government can magically make them disappear. Our markets for risk are not failing, they are simply telling us news we don’t like hearing…

If fewer insurance policies are written and fewer [women obtain health insurance], then that is the best we can do under the circumstances — until we find a way to change those circumstances…

Change the risk. Don’t hide its cost.

In health care, changing the risk means encouraging the most frequent consumers of medical care (e.g., women) to be more economical. It also means deregulating medical professionals and health insurance, so that the market can meet women’s needs at a lower cost. 

Throwing subsidies at the problem will only make it worse.