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

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 American healthcare system.

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

The new report, Hiding in Plain Sight: The Health Care Gender Number, showed that women spend $15.4 billion more than men in out-of-pocket health care costs each year, based on deductibles, coinsurance and out-of-pocket maximums. The difference occurred 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 showing that 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 less about $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 began this analysis, we assumed that pregnancy and childbirth would be critical drivers of any additional burden for women, said Andy Davis, head of the medical practice at Deloitte Consulting, LLP and one of the report’s authors. What we didn’t anticipate was discovering a billion-dollar burden on women beyond maternal care that may put them in a position to choose between care they need and care they can afford.

According to KFF, 50% of women delayed health care they needed and 40% skipped a recommended medical test or treatment because of cost, compared to 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.

Skyrocketing health care costs threaten women’s economic security, Francis said. Women carry a much higher debt burden due to medical costs that they cannot pay during the 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 health costs that a health insurer will pay, based on assumptions about average costs in a population.

If you use more services than were projected for the group as a whole, but not enough to reach your out-of-pocket maximum (at which point insurers pay 100% of the costs for covered services), you may end up receiving less than the intended actuarial value.

A Deloittes analysis showed that this is exactly what happens for women: the actuarial value of health insurance benefits for women was lower than for men because more women were stuck between lower and higher than projected utilization.

Almost half of men (46%) had less than $1,000 in medical claims, compared to only 35% of women. At the highest end, half of women had moderate-to-high cumulative claims (between $1,000 and $10,000), compared to 42% of men. In this range, most people do not meet their out-of-pocket maximums, meaning they pay 100% of those costs on their own.

The only exception was for women ages 30 to 51 who are supposed to use enough services to get the full value of their coverage. However, the report says, the trend is clear across a woman’s lifespan: Women consistently receive less value from each health care dollar spent.

Closing the Gender Gap

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

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

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

Diagnostic mammograms are just one example of a cost that specifically affects women. Although the ACA mandates that annual screening mammograms be free for women over age 40, follow-up diagnostic mammograms are not considered preventive. As a result, they often bear a heavier cost share for consumers. Restructuring benefits to treat these follow-up mammograms more like preventive ones could reduce disproportionate financial burdens on women.

Davis also points to mental health as an area where employers can make a special impact for women. Deloittes 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 after 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 benefits designs can be changed in this way so Deloittes report recommends that all employers start with an investigation of how their own benefits design impacts women. With that understanding, employers can work to eliminate unintended financial consequences for women.

Francis encourages women themselves to take control of their financial lives, examining and disputing medical bills, learning their health insurance benefits, and cutting unnecessary expenses to build 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 costs, she said.