BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 119
Assemblymember Jones
As Amended June 3, 2009
Hearing Date: June 23, 2009
Health and Safety Code; Insurance Code
GMO:jd
SUBJECT
Health Care Coverage: Eliminating Sex Discrimination in Pricing
DESCRIPTION
This bill would prohibit a health insurance policy issued,
amended, or renewed on or after January 1, 2010, from being
subject to premium or charge differentials because of the sex of
any contracting party, potential contracting party, or person
reasonably expected to benefit from the policy as a policyholder
or insured. It would prohibit a health care service plan from
charging a premium, price, or charge differential because of
sex, without the current exception for differentials based on
specified statistical and actuarial data.
BACKGROUND
The sponsor of the bill, the American College of Obstetricians
and Gynecologists (ACOG-IX/CA), states that now is the time to
rectify the discriminatory practice of pricing premiums in the
individual health plan insurance and HMO market on the basis of
gender. The ACOG-IX/CA contends that nearly one million women
in California currently purchase health insurance on the
individual plan market and that for many more, the higher
premiums charged under gender rating place affordable health
insurance out of reach. In fact, the National Women's Law
Center (NWLC), in a 2008 study entitled "Nowhere to Turn: How
the Individual Health Insurance Market Fails Women," estimates
that 18 percent of American women between the ages of 18 and 64
are currently uninsured, because they lack access to employer
coverage or they earn too much to qualify for public programs,
leaving them to the often-unaffordable individual insurance
(more)
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market as a last resort for coverage. For California, the NWLC
found that, for plans that use gender as a rating factor, there
was a minimum premium difference of 10 percent and a maximum
premium difference of 39 percent between 40-year old men and
women in the individual health insurance plans on the market.
On January 27, 2009, the San Francisco City Attorney filed a
complaint for declaratory relief and to enjoin the state from
enforcing the statutes that permit gender rating, asserting that
the statutes violate the equal protection guarantees of the
California Constitution.
On April 14, 2009 this committee passed SB 54 (Leno). While AB
119 and SB 54 are slightly different from each other, they would
have the same effect: prohibit discrimination on the basis of
gender in the issuance of individualized health care service
plan or policy.
CHANGES TO EXISTING LAW
1.Existing law , the Knox Keene Health Care Service Plan Act of
1975, provides for the licensure and regulation of health care
service plans (health plans) by the Department of Managed
Health Care. (Chapter 2.2, Health & Saf. Code Sec. 1340 et
seq.)
Existing law bars health insurance companies from charging
higher monthly premiums to individuals on the basis of race,
color, sexual orientation, national origin, ancestry,
religion, sex, marital status, or age, with specified
exceptions as described below. (Health & Saf. Code Sec.
1365.5.)
Existing law prohibits health plans from charging premium,
price, or charge differentials because of the sex of any
individual, but makes an exception for differentials based on
specified statistical and actuarial data. (Health & Saf. Code
Sec. 1365.5.)
This bill would delete the exception from the
anti-discriminatory provision for differentials based on
specified statistical and actuarial data.
2.Existing law provides for the regulation of life and
disability insurers by the Department of Insurance. It
prohibits life and disability insurers from engaging in
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certain discriminatory practices, but specifies that premium,
price, or charge differentials because of the sex of any
individual are not prohibited when based on specified
statistical and actuarial data or sound underwriting
practices. (Ins. Code Sec. 10140 et seq.)
Existing law requires health plans and health insurers
(disability insurers providing health insurance) that offer,
market, and sell health plan contracts or health insurance
policies to small employers (generally defined as employers
with between 2 to 50 employees) to use only permissible risk
categories, which are limited to age, geographic region, and
family size, as specified. It requires an employee's premium
to be determined based on the rate applicable to the
employee's risk category, plus an adjustment factor of not
more than and not less than 10 percent. (Ins. Code Sec. 10700
et seq.)
This bill would prohibit a health insurance policy issued,
amended, or renewed on or after January 1, 2010, from being
subject to premium, price, or charge differentials because of
the sex of any contracting party, potential contracting party,
or person reasonably expected to benefit from the policy as a
policyholder, an insured, or otherwise.
COMMENT
1. Need for the bill
The author writes:
Access to health care saves lives and the affordability of
health insurance should not be determined by gender. Those
who cannot afford the inflated price of the discriminatory
premiums now charged to women often go without insurance.
Uninsured women are less likely to obtain preventive care, and
are therefore more likely to seek treatment only when their
health problem has become an emergency and is more costly to
treat. This leads to worse patient outcomes, costs public
hospitals more, and burdens already over-crowded emergency
rooms. Those seeking health insurance in the individual
market should have the same protections from gender
discrimination as those whose health benefits are provided by
their employers.
According to the California Health Care Foundation (CAHF), the
individual health insurance market in California serves
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approximately 2.6 million people, and is the primary potential
source of coverage for California's 6.6 million uninsured.
The vast majority of individual subscribers are women. As a
growing number of employers are reducing or eliminating health
insurance for employees due to tough economic times, many of
their employees seek health insurance on the individual
market. The impact of gender-rated pricing is expected to
affect an increasing number of California women.
The wide variation in rate differentials among health
insurers, within California and across the country, suggests
higher premiums charged to women are not based on costs or
actuarial data because some insurers do not have any rate
differences for men and women while others charge as much as
40% to 50% more.
The author also points out that gender discrimination in
housing, employment, and other public accommodation and services
prohibited under the Fair Employment and Housing Act and the
Unruh Civil Rights Act, thus highlighting the need to address
the differential charges or premiums for health care based on
gender.
2. Gender-based differential charges, already outlawed in ten
states, are discriminatory
Recognizing that gender-based or sex-based charging
differentials are discriminatory towards women, ten states have
already passed laws prohibiting the use of gender as a factor in
rating. Those are the states of Maine, Massachusetts,
Minnesota, New Hampshire, New Jersey, New York, Oregon, Vermont,
and Washington. Many states that allow gender rating require
that any difference in rates between men and women be "justified
by actuarial statistics," which means that the rating
differential must be based on true variation to health costs
between women and men. (NWLC Study, supra.)
According to representatives of the insurance industry, gender
rating is "actuarially justified," because the costs of
providing health insurance to women are higher: their studies
show that women have higher hospital, physicians', and other
health care costs than men. However, over forty years ago the
industry itself abandoned the practice of using race as a rating
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factor, despite their position that the practice was actuarially
based, largely because it was bad public policy to discriminate
on this basis. Supporters argue that just as in the case of
race, the use of sex as a rating factor should be banned
altogether.
Pointing to the Supreme Court's ruling in Arizona Governing
Committee for Tax Deferred Annuity and Deferred Compensation
Plan v. Norris (1983) 463 U.S. 1073, 1083 (citing City of Los
Angeles, Department of Water & Power v. Manhart (1978) 435 U.S.
702, 716-17), ("Title VII requires employers to treat their
employees as individuals, not 'as simply components of a racial,
religious, sexual, or national class'") the NWLC and other
supporters contend that even though women as a class may have
higher health costs, an employer unlawfully discriminates if it
charges a female employee more than a male employee for the same
health coverage. Thus, they argue, the same principle should
apply to the individual market: individual insurance providers
should not charge a higher premium based on a generalization
about women as a class that is not necessarily applicable to the
individual woman being insured.
For women, other supporters argue, this differential rating
based on sex exacerbates an already grave situation, especially
in this economy. The American Civil Liberties Union writes:
Women are also especially hard-hit by the high costs of
individual health insurance, as they are more likely to work
part-time, and are often paid less than men for the work they
do. Additionally, in these tough times, more and more
employers are dropping group health care coverage for their
employees, leaving those individuals to purchase their own
insurance, or to join the swelling ranks of the uninsured.
Women hurt by gender rating may be either forced to purchase a
high-deductible plan with limited coverage, or priced out of
the health insurance market altogether. AB 119 helps prevent
this from happening." (Letter dated March 26, 2009.)
Thus, the NWLC advocates the elimination of sex from the rating
factors provided by the exceptions to the anti-discriminatory
provisions of Health and Safety Code Section 1365.5 and
Insurance Code Section 10140. "Gender rating should be
abandoned not only for its harmful effects for women's access to
affordable coverage, but simply because it is a discriminatory
practice. An individual's sex is an immutable characteristic
determined by genetics. A new federal law - the Genetic
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Information Nondiscrimination Act - prohibits insurers from
using predictive genetic information to set health insurance
premiums. Similarly, women should not face discrimination based
on the biological fact of their sex."
3. Opponents' concerns
Opponents such as Aetna state that, "[i]n today's voluntary
insurance market, where individuals are not required to maintain
coverage, health insurers need to appropriately and actuarially
manage costs for fairness to all individuals who purchase health
care coverage. ? For individuals who do not obtain health
coverage through an employer and instead purchase coverage in
the individual market, premiums are determined on the basis of
that individual's expected health care costs and utilization.
Some of the factors typically used by health insurers to
determine premiums include age, family size, geographic region,
health status and gender. Using these pricing factors helps to
ensure that premiums fairly reflect each individual's expected
costs. ? Allowing health plans to use rating factors ensures
that individuals pay the appropriate amount for their expected
use of health care services and helps keep coverage as
affordable as possible for all policyholders." These opponents
believe that eliminating gender rating "would likely have the
unintended consequence of raising average community rates for
everyone."
Support : Access/Women's Health Rights Coalition; AFSCME;
American Civil Liberties Union (ACLU); California Alliance for
Retired Americans; California Commission on the Status of Women;
California Academy of Family Physicians; California Communities
United Institute; California Maternal, Child and Adolescent
Health Directors; California Medical Association (CMA);
California National Organization for Women (NOW); California
Nurses Association (CAN); California School Employees
Association; City and County of San Francisco; Congress of
California Seniors; Health Access California; Mom's Rising;
National Women's Law Center; Planned Parenthood Affiliates of
California; Physicians for Reproductive Choice and Health
(PRCH); City of West Hollywood; California Society for Clinical
Social Work; (CSCSW); Health Access California; California
Family Health Council, Inc.
Opposition : Aetna; California Chamber of Commerce (CalChamber);
California Association of Health Plans (CAHP); Association of
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California Life and Health Insurance Companies (ACLHIC); State
Farm Insurance
HISTORY
Source : American College of Obstetricians and Gynecologists,
District IX (California)
Related Pending Legislation : SB 54 (Leno) also would prohibit
health plans and health insurers from charging a premium price,
or charge differential for health care coverage because of the
sex of the prospective subscriber, enrollee, policyholder, or
insured. It passed this Committee on April 14, 2009 and is
currently in the Assembly Committee on Health.
Prior Legislation : None Known
Prior Vote :
Assembly Judiciary Committee (Ayes 13, Noes 6)
Assembly Appropriations Committee (Ayes 10, Noes 5)
Assembly Floor (Ayes 51, Noes 29)
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