How to Evaluate Benefits to Ensure Health Equity for All Members

October 02, 2023 - Although the healthcare system has made great strides in health equity awareness and promotion, women pay more and get less out of their employer-sponsored health benefits than men do.

Employed women are more likely to hit their out-of-pocket maximums than men and are less likely to receive adequate coverage for their healthcare needs, a Deloitte study uncovered. As a result, women pay an estimated $15.4 billion more in out-of-pocket healthcare costs annually than their male counterparts.

In a system that is striving for value-based care, this data represents a significant gap that payers have to address.

In a conversation with Healthcare Strategies, two of the study’s authors—Andy Davis, principal at Deloitte, 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 a health actuary who works exclusively with health insurers on benefit and network optimization—explained the study’s findings and what employers can do about them.

Listen to the full podcast to hear more details. And don’t forget to subscribe on iTunes, Spotify, or Google Podcasts.

Challenges of achieving equity in health benefits

Employers are uniquely positioned to address equity in benefits, an issue brief from the American Academy of Actuaries found. However, many avoid taking on this role for a variety of reasons.

Some employers fear that they will come across as too paternalistic or that it will seem like they are favoring certain populations of employees. Additionally, they may have trouble acquiring the data to track results or assess population-level needs.

Systemic discrimination, better benefits for higher-paid individuals, underlying assumptions of homogeneity, and in-group biases are also major barriers to change and instigators of health benefits inequities, according to a study published in the American Journal of Health Promotion.

One of the biggest barriers to achieving equity in health benefits that was highlighted by both the American Academy of Actuaries and the authors of the American Journal of Health Promotion article is a cost-centered mindset.

“Employers’ perception [of] benefits as a cost to be managed, rather than an opportunity for strategic investment in workforce human capital, has resulted in cost-shifting to employees,” the authors of the American Journal of Health Promotion article stated. “For low-wage employees, this cost as a percentage of wages is disproportionately greater relative to higher-wage employees.”

Moreover, benefits designs typically do not tie employees’ cost-sharing to wages. High-deductible health plans also prevent real change, forcing many low-wage workers to skip care. And even when employers do alter their benefit design, employees often face a lack of diversity among their in-network provider options, which can sustain inequitable outcomes.

The status of equity in health benefits

Given the starkness of these challenges, the poor status of equity in health benefits may be unsurprising.

To assess the state of employer-sponsored health benefits equity in the US, Deloitte researchers used an employer health plan data set encompassing 16 million covered lives. They assessed medical claims from 2021, applying an average annual benefit design to the data and evaluating the differences in out-of-pocket costs as well as the actuarial value of benefits.

The evidence showed that, on average, women pay more out-of-pocket than men at every age. In total, from ages 19 to 64, employed women spent as much as $15.4 billion more in out-of-pocket healthcare costs per year than men under an average benefits design.

Additionally, the actuarial value of an employed woman’s benefits—excluding maternal healthcare costs—is lower than her male counterpart’s because the benefits do not sufficiently cover her healthcare needs. The actuarial value of benefits for women is $1.3 billion less than for men.

“It would be like [if] I bought a car…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,” Davis explained.

“Our healthcare system really just isn't working in the same way for men as it is for women.”

Many might assume that women have higher healthcare costs and worse health benefits actuarial value due to maternity costs. The assumption is not without merit: maternal care from pregnancy through postpartum costs on average $18,865 in total and $2,854 in average out-of-pocket costs. Farina noted that she and her colleagues shared this hypothesis.

But the results did not concur. Farina and the Deloitte team uncovered that women pay 20 percent more than men in average out-of-pocket healthcare costs and that maternity care contributes only two percent of this. In other words, excluding maternity care, women still paid 18 percent more than men.

Mental healthcare utilization was a key cost driver. Women are more likely to seek out mental health support and, when they do, they use it more regularly than men.

Additionally, diagnostic tests and screenings that are more prevalent for women tend to push the costs higher and receive less coverage. Lab work for certain conditions that are common among women are less likely to receive zero-dollar preventive care coverage. Lastly, emergency department costs are higher for women due to higher utilization.

In a healthcare environment that is increasingly chasing high-value, low-cost care in the value-based care paradigm, these results reveal a serious gap.

Policy efforts to create greater balance

The Affordable Care Act (ACA) was a milestone in the journey to more equitable coverage.

ACA sought to reduce uninsurance, a key factor in high out-of-pocket spending. Individuals who are uninsured for a full year pay more than 40 percent of their out-of-pocket costs and are more likely to forego care and experience medical debt. The law’s efforts to expand access to coverage led to greater affordability.

The policy also established good baseline coverage, Davis noted. ACA laid out essential health benefits that plans had to cover. Moreover, it standardized the metallic tiers so that consumers had more accurate expectations of their financial responsibility.

However, even this monumental effort was unable to address the issue of benefits equity because the data was still unknown.

Now that the gaps are clear, potential areas for policy improvements include coverage for diagnostic work. For example, Farina pointed out that ACA plans must cover mammograms for free under the ACA, but coverage for diagnostic or additional mammograms is not required. These services primarily affect women.

Around 16 percent of commercially insured women who had a mammogram screening required additional breast imaging services. The price of these services can vary, but separate studies have identified that the costs of additional breast imaging can present barriers for women.

Farina acknowledged both the progress that has been made in women’s coverage due to the ACA and the gaps that remain regarding lowering out-of-pocket costs.

Steps payers can take to improve health benefits equity

Despite the staggering statistics that Deloitte’s work uncovered, Davis expressed that change is within reach.

For employers, bridging the gap in health benefits’ actuarial value could cost as little as $12 per employee each year. But before employers can realize these results, they must recognize that they have as much responsibility for health benefit equity as health insurers do.

Having shouldered this responsibility, employers should familiarize themselves with the disparities in their current benefit designs.

“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,” Farina emphasized.

Each employer’s workforce will experience different categories of inequity, so once those gaps have been identified the process will become more individualized. To outline a path forward, employers might ask themselves:

• Where are women paying significantly more out-of-pocket?
• What are the benefits that we need to make more equitable?
• What should we expect to invest in this change and how is that being funded?

Payers should also consider both members’ out-of-pocket expenditures and which products members select. Different populations of employees will choose different health plans for specific reasons. Employers will only be able to facilitate better health equity in benefits when they understand their workforce’s needs and motivations.

Finally, employers and insurers alike need to take on the responsibility of communicating changes clearly to their plan members. This involves not only detailing the new benefits but also why those benefits were necessary.

Both Davis and Farina emphasized that increasing equity for women and other underserved populations in health benefits is achievable and it is something that employers can start working toward today.

“Health equity—I think everybody's in agreement that it's super important,” Farina concluded.

“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.”