New Report Says Women Pay $15 Billion More Than Men For Medical Costs

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The “Pink tax”—the financial penalty levied on females for everything from tampons and razors to toys and dry cleaning—is alive and well in the U.S. healthcare system.

Despite prohibitions against gender discrimination built into the Affordable Care Act (ACA), women are still paying more in out-of-pocket healthcare costs than men and getting less value for their health insurance premium dollars, according to new research released today from Deloitte.

The new report, “Hiding in plain sight: The health care gender toll,” showed that women spend $15.4 billion more than men in out-of-pocket healthcare costs each year, based on deductibles, coinsurance, and out-of-pocket maximums. The discrepancy held for women in every age group from 19 to 64.

The main driver of the gap between men and women’s out-of-pocket costs was utilization: women use more services than men. In addition to general trends that show women are more likely than men to have contact with a healthcare provider, Deloitte found that women use certain services more than men. Those services include radiology, laboratory, mental health, emergency room, office visits, physical and occupational therapy, and chiropractic care.

On average, female employees with individual insurance paid nearly 20% more than men—or approximately $266 more per year out-of-pocket. This figure excludes pregnancy-related costs, which can average $2,900 out-of-pocket. Overall, maternity care accounted for less than two percentage points of the gap in spending between men and women.

“When we initiated this analysis, we assumed that pregnancy and delivery were going to be critical drivers of any additional burden on women,” said Andy Davis, principal in the healthcare practice at Deloitte Consulting, LLP and one of the report’s authors. “What we didn’t anticipate was uncovering a billion-dollar burden on women beyond maternity care that potentially places them in a position to choose between care that they need and care they can afford.”

According to KFF, 50% of women have put off healthcare they needed and 40% have skipped a recommended medical test or treatment because of cost, compared with 35% and 26% of men, respectively.

These costs put women’s financial health at risk as well as their physical health, according to Stacy Francis, CFP®, CDFA®, CES™, founder and Board chair of Savvy Ladies and president and CEO of Francis Financial.

“Sky-high health care costs threaten women’s economic security,” Francis said. “Women carry much higher debt burden because of medical costs that they cannot afford to pay at the time of care…These women are just one serious illness away from financial disaster.”

Women Get Less Value for Their Health Insurance Premiums

Women don’t just spend more than men on medical expenses, they also get less value for their health insurance dollars.

A key measure of health insurance value is called “actuarial value,” defined as the percentage of expected healthcare costs a health insurer will pay, based on assumptions about average costs in a population.

If you use more services than was projected for the group overall, but not enough to hit your out-of-pocket maximum (at which point the insurers pays 100% of the costs for covered services), you can wind up getting less than the intended actuarial value.

Deloitte’s analysis showed that this is precisely what’s happening for women: the actuarial value of health insurance benefits for women was lower than for men because more women were stuck in between lower- and higher-than-projected utilization.

Nearly half of men (46%) had less than $1,000 in medical claims, compared to just 35% of women. On the high end, half of women had moderate-to-high cumulative claims (between $1,000 and $10,000), compared with 42% of men. In this range, most people don’t reach their out-of-pocket maximums, which means they’re paying 100% of those costs on their own.

The only exception was for women ages 30 to 51, who presumably use enough services to get the full value of their coverage. Nonetheless, the report says, the trend is clear across a woman’s lifespan: “Women consistently derive lesser value of each health care premium dollar spent.”

Closing the Gender Gap

Deloitte suggests that it would cost employers $133 per insured employee per year to close the $15.4 billion out-of-pocket expense gap. Closing the gap in actuarial value would cost even less, just $12 per employee per year or $1.34 billion overall.

Davis said there is a lot that insurers and employers can do to close the gender gap. He advocates two main actions: 1) analyzing premiums and out-of-pocket expenses in the specific employee population and 2) creating a broader set of protected services for women.

“By examining where in-house issues might be, you can tailor solutions to fit your needs or address gaps that are identified,” he said. “Advocating for protected services, such as diagnostic mammogram services, is how we will help women maintain their health and wealth beyond the four walls of each business leader’s workforce.”

Diagnostic mammograms are just one example of a cost that specifically hits women. Though the ACA mandates annual screening mammograms be free for women over 40, follow-up diagnostic mammograms are not considered preventive. As a result, they often carry heftier cost-sharing for consumers. Redesigning benefits to treat these follow-up mammograms more like the preventive ones could reduce disproportionate financial burdens on women.

Davis also points to mental health as an area where employers can make a particular impact for women. Deloitte’s analysis showed that women use more mental health services than men per capita. In many plans, mental health services may have lower copayments but are still subject to coinsurance once an employee meets their deductible. Lowering consumer cost-sharing on services that women use at higher rates than men can help close the overall gender gap.

Not all benefit designs can be changed in this way so Deloitte’s report advocates that all employers start with an investigation of how their own benefit design impacts women. With that insight, employers can work to remove unintended financial consequences for women.

Francis encourages women themselves to take control of their financial lives, scrutinizing and arguing medical bills, learning their health insurance benefits, and cutting unnecessary expenses to build up an emergency fund for living expenses and/or to pay off existing medical debt.

“This will put you in a much more solid financial position to weather any unforeseen health-care-related costs,” she said.

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