Last month, Colorado became the third state to prohibit health insurance carriers from denying claims based on sexual orientation and/or gender identity. At first, we were puzzled when we saw the headlines in the news, since they mostly mentioned discrimination based on sexual orientation or discrimination directed at LGBT insureds. We were thinking mainly in terms of gay, lesbian and bisexual clients, and we couldn’t remember ever dealing with a claims denial issue based on sexual orientation. We also had never seen any questions on a health insurance application regarding sexual orientation.
The only issue we had ever come up against in terms of LGBT discrimination had to do with same-sex partners who wanted to apply together for family health insurance policies in the individual market. Although individual health insurance for two people was the same total price regardless of whether they were on one policy or two, it was often inconvenient for families to have to have two separate policies, and in the case of HSA-qualified plans, it was also financially detrimental to have to split up the family for health insurance purposes.
But we never had any issues with applications being rejected or claims being denied based on sexual orientation. I posted last month on Google+ that although I’m always in favor of expanding equality, I was a bit perplexed by this new regulation, given that we weren’t aware of any carriers using sexual orientation as an initial underwriting and/or claims issue.
Then I started discussing this issue with Dede de Percin, Executive Director of the Colorado Consumer Health Initiative, and Ashley Wheeland from One Colorado, and I’ve learned a lot more about it in the last few days. As far as I’ve been able to tell, the DOI bulletin, titled “Insurance Unfair Practices Act Prohibitions on Discrimination Based Upon Sexual Orientation” is primarily a response to broad exclusionary language in health insurance policies that allowed for claims to be denied if the insured was transgender. The claims 
exclusions could range from specific treatment related to gender transitioning, to onerous exclusions for just about any medical care at all: De Percin notes that one transgender person was denied coverage for a broken arm because the health insurance carrier determined that the hormones the person was taking weakened the bone and thus led to the break. This is absurd, and it does sadden me to learn that such broad exclusions were being used to deny coverage for transgender individuals. I’m glad that the DOI has clarified the situation to give transgender people in Colorado a measure of equality when it comes to health insurance. To summarize, the DOI bulletin basically requires health insurance carriers to cover medically necessary treatments (as determined by a healthcare provider) for transgender insureds in the same manner that it covers them for non-transgender insureds. So things like hormone replacement therapy, mental health care, and even surgery would be covered as long as those things are covered for everyone else on the policy too. Exclusions would have to be applied to the entire insured population in the same manner, rather than being applied just for transgender insureds.
I would have preferred that the emphasis on transgender insureds have been more clearly noted in the reports regarding the DOI regulations, as I think the terminology “discrimination based upon sexual orientation” is generally regarded by most lay people as having to do with gay and lesbian individuals (that’s not to diminish the “T” part of LGBT, but it’s a small segment of the whole LGBT population). I wonder how many people read the reports about the non-discrimination bulletin and assumed that health insurance carriers had been denying applications and/or claims based on the fact that an applicant or insured was homosexual? I wonder if people assumed that health insurance carriers were asking about sexual orientation on the application? Or if people thought that claims were being denied for gay policy-holders just because of their sexual orientation? I can’t say for sure, but if I had to guess, I would imagine there was probably some confusion surrounding the news stories about this subject. Especially if people aren’t fully aware of how medical underwriting and/or claims reviews work in the individual health insurance market, the way some of these stories were worded might have further fueled the – sometimes misplaced – animosity directed at the health insurance industry.
So to clarify, the DOI bulletin is primarily focused on protecting health insurance benefits for transgender Colorado residents. Roughly 0.3% of American adults are transgender – three in a thousand. Because of the low overall number of people, the total cost to cover healthcare for these individuals is relatively small when spread across the pool of the state’s entire insured population. Although Colorado is on the leading edge of states taking this step, CA and OR have already done so, and have found that the total impact on 
health insurance premiums has been negligible (see page 35 of this report. Total premium impact in 2011-12 was estimated to be about 0.08%. To put that into more simple language, on a $1000 premium, the impact of non-discrimination rules for transgender individuals was about eight cents). So although it will take some time before we know the actual impact on premiums here in Colorado, I think we can safely assume that it’s not really going to cause any significant premium increases.
Knowing this is an important factor in generating public support for the non-discrimination regulation. When Colorado created a law requiring all individual health insurance policies to cover maternity, our article about (and in support of) that legislation generated numerous comments from residents who were unhappy with what they perceived to be a rule that was going to increase their health insurance premiums in order to provide a service that they were never going to use. It’s now been more than two years since the maternity mandate went into effect, and the general consensus we’ve heard from the health insurance carriers with whom we work is that the premium impact from this mandate has been quite small. And it’s likely that the sexual orientation non-discrimination regulation will have almost no impact on overall premiums.
Healthcare can be a significant struggle for transgender individuals. 27% of transgender individuals in Colorado are uninsured, compared with about 17% of the overall population. This report from One Colorado is a sobering look at the daily healthcare struggles faced by the LGBT population, and in particular those who are transgender. On page 8 of the study from One Colorado, you’ll notice that among the overall LGBT population that was surveyed, 64% had health insurance coverage through an employer, which is slightly higher than the general population (60.9%; see table 7 of this EPI report). But only 38% of transgender survey respondents were covered by an employer’s health plan. And while the overall LGBT population was less likely than the general population to be uninsured (10%), the transgender group was far more likely to be uninsured than the general population. One important aspect of the new non-discrimination regulation has to do with the fact that health insurance will be mandatory starting in 2014. Although there will still be an uninsured population in Colorado, we can assume that many currently uninsured transgender people will join the ranks of the newly-insured starting next year. Asking them to do so without the non-discrimination rules on the books would be patently unfair.
Colorado has been at the forefront of implementing widespread healthcare reform legislation over the past several years, putting into place numerous regulations that strive to make healthcare in Colorado more comprehensive, widely available, and fairly priced. Many of the changes that Colorado has enacted will be implemented nationally in 2014 under the ACA, and it’s nice to be in a state that leads the way in these reforms. That said, one of our concerns when we look at new health insurance regulations is the extent to which they will end up increasing overall health insurance premiums for everyone. There are currently about 800,000 people in Colorado who have no health insurance at all. Even after the ACA is fully implemented, the state will likely still have somewhere between 300,000 and 400,000 uninsured residents. In general, I think that the first priority needs to be working to get health insurance coverage and access to basic healthcare for everyone in the state. New regulations that enhance existing health insurance coverage are great, but they only benefit people who have health insurance, and they often cause premiums to ratchet upward, which can make health insurance even more out of reach for people who cannot afford it. So my first question – once I understood the details of the sexual orientation non-discrimination bulletin – was whether it made sense to make a change that might increase premiums for everyone while only benefiting a very tiny minority of the population. Now that I’ve read more on this topic, I think that the impact on premiums is likely going to be exceedingly small, and the benefit for the transgender population in Colorado will be significant. In my discussion with Dede de Percin regarding this issue, she said
“I believe it is the particular responsibility of democracy to protect the rights of the minority. In this case its not a particularly heavy policy or monetary lift, it’s a psychological one.”
I agree.
