Lewis & Ellis, LLC

How will gay marriage ruling impact the health insurance industry?

Health Care and Health Insurance
by Chris Merkel
How will gay marriage ruling impact the health insurance industry?
How will gay marriage ruling impact the health insurance industry?

Last week, the U.S. Supreme Court handed down a number of important decisions, the most impactful of which will likely be the case of King v. Burwell, which involved federal subsidies for the Patient Protection and Affordable Care Act. However, another that might have an impact for health insurers across the country is the decision for Obergefell v. Hodges, which effectively legalized same-sex marriage in all 50 states.

While that landmark decision will prove important to millions of Americans both now and in the future, the more immediate impact might end up being a net negative in the short term, according to a report from CBS News. And interestingly, it's not only gay or lesbian couples that could feel the pinch, because heterosexual couples could likewise be impacted as the health insurance industry tries to assess the ways in which the decision in Obergefell v. Hodges will affect the sector going forward.

Why is that the case?
A recent survey of human resources departments found that 77 percent of employers currently offer their employees' same-sex partners benefits, mostly because they were located in states where gay marriage had not yet been legalized, the report said. With this ruling, given that same-sex couples are now allowed to be married anywhere in the U.S., many of those companies are likely to drop the benefits options for same-sex partners.

But what becomes problematic is what happens when they do so, the report said. For instance, Verizon and Delta were both among the firms offering same-sex partner benefits, but in many states had already stipulated that employees receiving those benefits would have to be married within six months or else give up the benefits they were receiving. Many argued that this would effectively "level the playing field" between gay and straight couples by requiring the same level of legal and interpersonal commitment of both sides.

It turns out the Supreme Court's gay marriage ruling will also impact health insurers significantly.It turns out the Supreme Court's gay marriage ruling will probably also impact health insurers significantly.

A closer look
Indeed, a poll conducted before the Obergefell v. Hodges decision came down indicated that more than 1 in 5 companies that offered same-sex benefits would drop them, but 2 in 3 said they'd keep them regardless, the report said. However, it seems that many of those companies are doing so because they extend benefits to "domestic partners" regardless of sexual orientation; that is, these companies already allow a man and woman in a long-term relationship to effectively receive the same benefits as married couples regardless of their own marital status. In general, those that do not extend that kind of benefit are typically going to be the ones that contract benefits in the near future.

While it's easy to see why companies would want to keep their risk and costs for health insurance and other benefits down in this way, the fact is that the impact of any shifts in this regard could be far-reaching. For this reason, health insurers will have to keep close tabs on the developing trends for their business clients large and small, and see if they can tailor their next steps to better suit the attitudes of the market.



Consultants to Contact