Monday, October 5, 2009

Off-topic: discrimination in health insurance pricing = bad; discrimination in auto insurance pricing = who cares?

With the health care debate, the following was as predictable as the turning of the earth. Women's groups are seeking a "ban on insurance companies charging women more for the same policies as men," says USA Today. "Forty states and the District of Columbia allow 'gender ratings,' in which insurance companies can charge women more for the same health coverage as men and can charge businesses with mostly female workers higher group rates." And: "When it comes to health insurance, women are discriminated against," said Sen. Barbara Mikulski, D-Md. "We pay more and we get less, and often we are denied care."

But contrast this effort with the fact that in 43 states, auto insurers have the right to legally discriminate against males between 16 and 25 in terms of auto insurance pricing. Young men are charged more than their female counterparts simply because they were born male. Thus, a very responsible 18-year-old male driver will pay more for insurance than a completely irresponsible 18-year-old female driver, simply because of their genders.

I am not suggesting that auto insurance gender pricing discrimination and health insurance gender pricing discrimination are equal in terms of their economic impact. (My suspicion is that many families are not affected by the latter since employers generally pick up the health insurance tab, but any family with a teenage son will feel a real financial pinch when he starts to drive.) The point here is that it's impossible to logically justify correcting one but not the other on discrimination grounds. In both cases, insurers are stereotyping individuals because of the class into which they were born, and any system where this occurs generally leads to unfairness against some individuals. If that is wrong when it affects one gender, it has to be wrong when it affects the other. (Now, whether it is, in fact, wrong at all, or whether it is a necessary tool of the insurance industry, is another topic.) But this point is beyond dispute: in a perfect world, the correction of discrimination that affects your group should not depend on whether your group has a powerful, focused, angry lobby. Frankly, I can think of few groups in America less interested in exercising their political clout than 16 to 25-year-old males. Does that mean they should be ignored?