How to Realize Health Equity in Benefits, OOP Costs for Women

October 02, 2023 - Health benefits are one of the under-explored contributors to healthcare gender disparities and health equity gaps. Employed women spend $15.4 billion more on healthcare than men per year out of pocket and are more likely to reach their out-of-pocket maximum, according to a Deloitte study.

Healthcare premiums go farther for men than for women. And, contrary to what many would assume, maternal healthcare costs are not the driving force behind this imbalance. Andy Davis, principal for Deloitte Consulting LLP’s Health Care practice, and Marielle Farina, senior manager at Deloitte Consulting, discuss this imbalance in health benefits equity and what employers and health insurers can do about it.

Hello and welcome to Healthcare Strategies.

I'm Kelsey Waddill, senior editor of HealthPayerIntelligence and multimedia manager at Xtelligent Healthcare Media. $15.4 billion. That's the amount that women pay annually for healthcare that exceeds what men pay, according to a report from Deloitte. We have two of the authors of that report here with us today to dive into the details of what factors lie behind that number and what healthcare stakeholders can do about it. So I'd like to welcome to the show Andy Davis, principal at Deloitte and national leader of Deloitte's health actuarial practice and one of the leaders of Deloitte's Future of Health, and Marielle Farina, senior manager at Deloitte Consulting and health actuary who works exclusively with health insurers on benefit and network optimization. Thank you both for joining us today.

Andy Davis:

Thanks, Kelsey. Happy to be here.

Marielle Farina:

Thanks for having us.

Kelsey Waddill:

It's a pleasure to have you. And I was wondering if we could just start off kind of summarizing what populations you analyzed in this report as well as what were some of the key results from this study just to get us all off on the same page.

Andy Davis:

So the analysis focused on commercially employed women in particular, but what we did is we actually looked at all commercially employed individuals, men and women, ages 19 to 64. We have a robust data set that's payer-collected data across those employer groups, which allows us to look at 16 million lives spanning both men and women for all of the medical claims that they had. And in particular, we looked at the calendar year 2021 where we had a full year of data. And then what we did is we applied an average annual benefit design--so, a standard deductible that we see as the average across the US population, a level of co-insurance and copays that you apply after you hit your deductible level, and then everyone hits an out-of-pocket maximum, which is required within your insurance. And so at that point, we stopped collecting out-of-pocket expenditures. So everything that we're going to summarize today is based on the out-of-pocket expenditures that you happen to hit, men or women, within that benefit design.

Now what's interesting as we looked at this, I would say there [are] three critical things that I would surface out that are important, and you hit on one of them that's really important. Women pay more out of pocket for their healthcare expenditures than men do. But what's interesting about that is, and one of the facts is that at every age on average, women pay more. So [from ages] 19 to 64, women pay more on average. Another thing is the actuarial value, and I know we'll get into this a little bit later, is worse for women, especially when you exclude maternity coverage. And so what that means is dollar for dollar when women and men are both paying the same amount in premium, women are getting less.

But I wouldn't be... as we talk about the facts and the numbers, I think one of the most important things, Kelsey, as we look at this analysis, is the fact that this is solvable. And so I think what you saw in the report, and what I hope everyone else sees in the report and what you're going to hear today, is that there are ways to actually bridge this gap for the way women experience healthcare, the way we can close the gap on benefits and truly, instead of having equity in premium, really have equity in benefits and premium, which I think it's actually not that far out of our reach.

Kelsey Waddill:

So then let's dive into more of the details of the content here. Your analysis found that maternity costs were not the only driver of these inequities, which is something that I think a lot of people would actually assume when they're hearing these kinds of statistics is that maternity is what is driving that up because we all know it's expensive. But that was not one of the main drivers. Can you share a little bit more about the non-maternal care cost factors that were increasing women's healthcare costs and benefit inequity, Marielle?

Marielle Farina:

Yeah, absolutely. And Kelsey, like you said, I think... when we started this analysis, we knew women were paying more. And when we dug into the details, our hypothesis was exactly what you said. Maternity care is expensive. As somebody [who] has a baby at home who went through it last year, you get a lot of care. Lots of prenatal visits, the delivery itself, lots of postpartum care, and those bills are not small. We thought that was the answer and how do we make maternity coverage more equivalent across genders. But as we dug into it, on the surface, women pay 20 percent more than men in their out-of-pocket costs. When we took out the maternity claims that only lessened that effect by 2 percent. So even without the maternity claims, women are still paying 18 percent more in out-of-pocket costs. So copays, co-insurance, deductible, etcetera. And so when we looked at the data in further detail, there were several categories of services that are causing that.

Mental health is one big example. Women are more likely than men to seek professional mental health services. And when they do seek those services, women utilize the service more than men. So even if men are seeking the service, women do go more often, so that's a big contributor. Other examples include things like diagnostic screenings and testing that are exclusive only to women. Lab is a big part of it. So even for things like your doctor's visit or your preventative visit that may be covered through your health insurance at $0, there's typically follow-up homework from those visits. There [are] labs you need to go get done. If you're having issues like fatigue, thyroid, anemia, etcetera, that are more prevalent in women, all of that blood work is not typically $0 out of pocket, so that's a higher cost for women.

And then another example is ER. So we found that the usage of the emergency room for women is actually higher than it is for men. In talking with physicians within our practice, they agreed that is something that when they were practicing in the ER, that was also something that they found women, for example, coming to the ER to get a pregnancy test. So all of that really does contribute to that big 18% more that women are paying that actually doesn't include maternity at all.

Kelsey Waddill:

Thank you. Yeah, the out of pocket expenditure differences are very striking in these situations. And as I mentioned at the top, women have 15 billion more in out-of-pocket spending than men per year, and it's more likely that they're going to hit their out-of-pocket maximum. And given those kinds of details that you just shared, Marielle, it's not hard to see how that would occur and how that would mount up.

But the benefits equity issue is also apparent in the actuarial value of benefits. I want to dive a little bit more into that. And first, Andy, I'd like to address this one to you. First though, could you kind of define actuarial value for those of us who are not actuaries and who are not well-versed in that terminology? And then maybe dive a little bit more into the significance of actuarial value in this context?

Andy Davis:

Yeah, I'll try to simplify. The actuarial value in its simplest form is the ratio of essentially covered cost by the insurer over the total amount of claim spend.

And so I'll give you an example, Kelsey. If, individually, I went into the hospital over a 12-month period, I had $10,000 worth of healthcare claims. That could be an inpatient admission, that could be doctor's visits. And at the end of the day, the health insurer covered $8,500. So again, $10,000 was total, $8,500 is what the insurer paid for my care. The actuarial value of that coverage would be 85 percent. So 8,500 over 10,000. The remaining $1,500 would be what we would call out-of-pocket expenditures. So that's the out-of-pocket costs that we would have.

And so what's significant about the actuarial value is it gives you an indication of how much of the costs are your premium[s] covering, if you think about it that way. In today's world, the premium expectation for men and women when you're employed is that they're equal. And what we found in our report is that even though the premiums are equal, the actuarial value for women is actually less than the actuarial value [for] men. And so what that means, the implications are that women are getting less for every premium dollar that they pay than men do. And I like to use an analogy here.

So if you think about buying a car and you go get longer-term coverage, it'd be like, I bought a car, the same car that Marielle did, and I bought 60 months of coverage for a thousand dollars, so it covers all the problems of the car. Yet Marielle walks in same car, same coverage, same premium, same thousand dollars, and yet they give her 48 months of coverage. It's the value of that in our healthcare system really just isn't working in the same way for men as it is for women. And when we talk about actuarial value, to me that's the core of the issue is how do we bridge that equity gap so that when women are paying their premium and just like men do, they feel like they're getting the same benefit from that.

Kelsey Waddill:

Thank you. That's a great analogy. That was very clear.

A lot of our listeners are very on top of what is happening in healthcare, especially in the policy space. And some people might think the Affordable Care Act fixed a lot of this for us, at least in terms of the preventive health benefits that a lot of women use, received more kind of universal coverage under the Affordable Care Act. But clearly from these results, it didn't fix everything. What is lacking in the current policy landscape in this area that should be fixed in order to reduce these disparities that we're seeing right now?

Andy Davis:

Yeah, I'm going to paint a contrast. I think the Affordable Care Act, I'd love to applaud the Affordable Care Act for what it was focused on and able to do, which was all about access. And if we think about where the Affordable Care Act took us: it brought in more people into health insurance, trying to get people off of uninsurance, which is an amazing thing. And I think the Affordable Care Act did a great job. It was defining services. So to your point around how do you define services that everyone needs, including those that for oftentimes weren't included, like pregnancy and maternity-related care, that was super important. And then it defined what I would say as good baseline coverage. That's the actuarial value we talked about. You could see it on the individual exchanges today. That's what the metallic tiers are. They're trying to define base coverage so that, I'll say, people aren't surprised by their healthcare. And, prior to the Affordable Care Act, they were.

And so if you look at that, the Affordable Care Act did a great job in addressing some of the access challenges that we have. And I wouldn't put it at the fault of the ACA in any way because really, and you saw this in the report, this issue wasn't uncovered, it wasn't known, it wasn't even visible. And I always like to use simple analogies, but be like hiding an object, an invisible object from my nine-year-old daughter and saying, go find it. That's a really unfair game.

No one, when they were drafting the ACA would have expected to have these results. I think now that we have them though, I think what's important is not what was the ACA missing out on, but how do we actually activate and change and what can we do about it that the ACA wasn't... When we enacted the ACA, we just weren't aware of it. I don't know Marielle if there [are] other things you would add to that.

Marielle Farina:

Yeah, I would just give an explicit example, right? We know that as Andy said, there [are] a lot of preventative care services that are now required to be covered by your health insurer at no cost, and that greatly benefited women. But there are still things that women need more of than men, and it costs more. So, as an example, if you take a mammogram, under the ACA, screening mammograms are required to be covered by your health insurer. And those are critical in order to have early detection for breast cancer. But a diagnostic mammogram, which is also often needed--whether that's a 3D mammogram or another type of mammogram to go further--if you do have an issue, those are not required to be covered. And those do significantly increase the out-of-pocket spends that women are paying, and there's not necessarily an equivalent from a utilization perspective for men. So while, like Andy said, the ACA made tremendous strides in terms of the coverage for women, there's definitely still a gap in terms of the out-of-pocket costs that women pay.

Kelsey Waddill:

Makes sense. So moving away a little bit from the policy space, I know that the report actually addressed a little bit about what stakeholders can be doing to help rectify these inequities that we're seeing. So I'd like to really dive into that and see what can we do about it, both from an insurance perspective and an employer perspective. Marielle, would you like to just share a bit about some of the action steps that you all recommended for these stakeholders?

Marielle Farina:

Yeah, sure. I'll start, and I know Andy has a great perspective on this too. First and foremost, a lot of people tend to rely on the health insurer when it comes to product and benefit design or what are they offering. I think employers have just as much, if not more of a role to play here, they really should be having the conversation and should be driving and demanding an equitable product for their employee population. And we've socialized the concept and talked to our experts internally who work with employers, who work with our own employee benefits at Deloitte, and this is something that's top of mind for everybody. When we started this analysis, we had to go really... as two actuaries who love data, we went really deep into the data and we did it on a national sample set, but every employee population is different.

And so while, yes, we believe that the categories that I had mentioned earlier, those will come up, if you looked at different employers' populations, there [are] probably other things that'll come up too. And the relative impact of screenings in one may be much different than lab in another. And so we really urge both the employers and the health insurers to first and foremost take a look at their employee population, take a look at their historical claims data, the benefits designs that they have in place, and figure out where are their big pockets of disparities for women in what they have today.

From there, there's likely a lot of iterative modeling, so to speak, that'll need to be done to figure out, "okay, now that we know where our landmines are, where are women paying significantly more out of pocket? What do we do to change that? What are the benefits that we need to make more equitable? And how much is that going to cost us, whether it's from a premium perspective and how is that being funded?"

And then lastly, I think communication and transparency around this is a big aspect. As you mentioned earlier, everyone probably listening to this podcast is very healthcare savvy, but I think most people, honestly, it's very hard to understand employee benefits. As somebody who lives and breathes this every day, as I mentioned earlier, I had a baby last year and it was complicated. It was complicated to navigate and understand what's going to be covered, what's not. How much is this going to cost me? And so for your average consumer, that doesn't work in the industry, it's tough. And I think employers and health insurers have a responsibility to help their members, their employees understand what they're getting for their coverage and how this is going to be more equitable for them.

Andy Davis:

And just one thing to add, and I think Marielle you hit on it, but I think it's important, Kelsey, to add in. The analysis that we did focused on the full out-of-pocket cost based on...an assumed benefit that you choose. What employers need to do, what insurers need to do, is look at both the out-of-pocket expenditures that you have--which, by the way, they have the history to do that--[and] the product that was selected.

We didn't look at premium[s]. We don't have that data. We don't have the ability. We do know that a lot of employers offer choice in their coverage. So to really get to the heart of the issue, you can't look at one in isolation. You need to look at both.

What products are my workforce really enrolling into, and when I add them together, are they getting the costs and the benefit out of them? Am I creating inequities?

And as Marielle put it, I thought it was great: It's a diverse set of populations that you will serve; it's also a diverse set of choices that people will make based on their risk profile and the type of product that they want. And so it isn't as simple as saying, the analysis is there, go change these services. You have to understand what's happening with your workforce, what they're seeing, what they need out of their healthcare, and then [address] those gaps.

Kelsey Waddill:

Thank you, yeah. I want to end our conversation addressing the fact that we've been operating on a gender binary in this conversation, largely because that's what the study focused on. But I would like to take a minute to just address anyone who finds themselves outside of the binary or anyone who identifies as part of the LGBTQ+ community. There's been a lot of conversation about access to care for this population, but I want to talk about what kinds of challenges or opportunities we see in benefits equity.

Andy Davis:

Yeah, thank you for asking that question. And I think for the analysis that we were able to do, we were lucky because we had access to the data that allowed us to separate the population out into men and women and look at the benefits. We had mentioned--we've said this a few different times, but--it's an analysis that up until this point hasn't been talked about, hasn't been addressed, hasn't even been known. And as Marielle highlighted earlier, I think even the findings within maternity care and beyond maternity care, were a surprise to us. If I go to this community--and I'd also say what employers and health insurers need to do, we need to collect the data. If I think about the biggest hurdle and obstacle in actually addressing any kind of bias in healthcare out-of-pocket expenditures for the LGBTQ+ community, I think we have to start with: can we identify and understand the data and what their care needs are?

And so I go back to something Marielle said: we learned a lot about the services that are different for women. We've known about them, but the data proves where we're putting a cost burden on women that we don't put on men. And I think for this community, for employers and for health insurers, getting and collecting the data so that we can replicate this analysis for them would be ideal. And creating an environment where that is something that's encouraged and influenced because you actually can't do this work. We can't address the healthcare issues. I don't know what those are because we don't have the foundational scale of data that we do for men and women. If you're an employer out there, a business leader, how do you actually influence and incentivize your workforce to help you identify every single person in their community so that we can do this later?

Kelsey Waddill:

Thank you both so much for your time. And just before we close completely, I just wanted to make sure if there's any other comments that you wanted to make about the results of this report or where you see this going or the future of health benefits equity?

Marielle Farina:

Yeah, I can start. Dovetailing off of what Andy just said, I think health equity has been something that we've been talking about the last couple of years and has really been accelerated with COVID. We've seen a lot of these disparities, not just in gender, but if you think about a lot of different demographics and a lot of emphasis has been placed on, at the point of care, what are our physicians and clinicians doing differently to support the underserved populations? I think this is something that our health insurers and our employers really can impact and they can impact now. Health equity--I think everybody's in agreement that it's super important. It's been really hard to make change, especially with the lack of data. But this is something that it's clear that it exists, hiding in plain sight like our report title, and it's something that employers, for their upcoming benefit product design, they can really make a difference this year. It's not something that we have to wait five years and see what happens. The time is now to act.

Andy Davis:

Yeah. What's interesting, Kelsey, on that, as we think about closing thoughts, I got asked the question as we were going through this, how could we get here? I'm a firm believer if you look at all the data and what we've been trying to do, this wasn't intentional. No one said, "we're going to put this financial burden on women that we don't put on men that are employed." But we do know that we are putting a financial burden on women that we don't put on men now that we've done this analysis, and I think to Marielle's point, it's within someone's control to action, so it's no longer a blind spot. We understand what's there, and I'm a firm believer that we'll be able to take this analysis and actually drive action and we'll see benefit modifications over the next two or three years.

Kelsey Waddill:

Yeah, hopefully. Thank you so much, and to all of our listeners, thank you for joining us. If you have any thoughts on this topic or if you have any healthcare-related stories that you'd like us to consider covering, you can reach out to me at kwaddill@techtarget.com. That's K-W-A-D-D-I-L-L@techtarget.com. Follow us on Spotify to get more of these conversations and let us know what you think by reading and reviewing the show. We'll have a one-week break after this episode airs, and we'll return with more conversations on October 16th. So see you then!