When providing health benefits for employees, is
it fair to provide the same dollar amount of benefit to both men
and women? This is the core of the issue behind the current sex
discrimination accusations being made by some vocal lobbying
groups.
The cost of providing health care to working-age
women is higher than the cost of providing care to men. That’s a
fact; this has always been the case and has nothing to do with
employee benefits per se. Apparently both biological and
psychological factors come into play to explain this; but it’s
not relevant to this discussion. In "the old days" of
employer-paid health benefits health insurance companies simply
blended the differences together to offer employers "single sex"
rates that complied with federal non-discrimination laws.
Now, in the age of consumer driven health plans (CDHP),
the intent is to shift purchasing decisions – for better or
worse - to the employee. In a CDHP, the employer typically
provides an equal dollar cash amount for each employee for “up
front” health care benefits. One physician was quoted saying
that this change in benefits formulation is equivalent to giving
every working woman a $1000 cut in pay! While I question the
arithmetic, the concept holds true. Put another way, assume
that an employer starts the year by placing $1000 in each
employees' health savings account (HSAs are not the most common
type of consumer driven health plan but they can be used as a
simple example). The median male employee will be able to pay
for all of his medical expenses from that fund and still have
cash left over at the end of the year. A woman with average
medical expenses would deplete the account, let’s say, by
mid-October and have to pay for the rest from her personal
funds. There really is a difference in the net financial effect.
Will it have any effect in the overall health
care of women? Recent data indicates that the percentage of
women receiving normal preventative gynecological care (PAP and
mammograms) is declining despite the fact that these tests are
covered by mandate – regardless of the type of health plan.
Could it be that some women are uncomfortable paying the visit
fee that might otherwise (in the former era of managed care)
been covered under a simple doctor’s office co-pay? That’s my
hunch, but I am not aware of any data to back it up. The actual
dollar amount we are talking about might only be $200-$300 per
woman per year. But that is still a lot of money for a many
women; certainly enough to change their health care behavior.
CDHPs could turn out to be penny-wise and pound-foolish in this
situation.
As far as tax and benefit law, my guess is that
we will eventually see some type of allowed (but not required)
parity for sex-weighted health benefit plans. For example a
reimbursement formula that includes sex in the calculation would
not necessarily be discriminatory. But, on the other hand, we
are unlikely to see Congress pass a separate schedule of
allowable HSA deductions for male vs. female.
Consider also that some of the opposition to
CDHPs comes from political proponents of a one payer health
care system that really is not going to happen in the U.S.
during our lifetime.
Separately, I am working on an article that will
discuss some practical ways that employers and
employees using CDHPs can compensate for this specific change in
benefits. The article will likely be published in another
industry magazine later this year. In the meanwhile, it might make sense for us to
be aware of the overall macroeconomic effects of this shift
in health care funding.
