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Interactions of Health Care Rating Factors with Race, Ethnicity and Socioeconomic Factors


Lydia Tolman, FSA, MAAA
Jacquelyn Young, ASA, MAAA
Jelena Milovanovic, PhD, AIAA, ACIA
Hongjuan Zhou, PhD, ASA
John Zicarelli, PhD, FCAS, CFA
Lydia Gabric
Hayley Osterkorn
Joe Simpson


The health insurance industry has historically used several factors to develop premium rates. Many of these, e.g., gender rating, have been largely eliminated from health insurance rating practices by regulations like the Patient Protection and Affordable Care Act (ACA) because they were determined as inequitable. However, several other factors remain as differentiators in premium rates charged to individuals and groups. The aim of this research is to determine if there could be unintended factors, like race, ethnicity or socioeconomic status, that are inherently included in some of these remaining allowable factors.

This study focused on three allowable rating factors—tobacco usage, geographic area or industry—may be impacting insurance premiums across certain socioeconomic or racial/ethnic groups. This study did not examine whether these rating factors accurately reflect the differences in claims costs for each group. Certain geographic areas may cost more than other areas because of provider (e.g., hospital system) contracting, utilization patterns within urban versus rural populations, etc. People using tobacco generally may have higher health costs than a similar person who does not use tobacco. Certain industries may be riskier and prone to higher health costs than other industries. We did not have access to the underlying claims costs (actual or projected) and cannot conjecture whether rating factors are indicative of actual costs. However, if rating factors are indicative of claims costs, our results indicate the costs of health care in the region studied could be greater in the areas where some socioeconomic and demographic groups are more likely to live.


Interactions of Health Care Rating Factors with Race, Ethnicity and Socioeconomic Factors

Suggested citation: Tolman, L., J. Young, et al. Interactions of Health Care Rating Factors with Race, Ethnicity and Socioeconomic Factors. Society of Actuaries, July 2022.


The Society of Actuaries Research Institute would like to thank the Project Oversight Group for their input and guidance during the project and on the report:

Mary Hegemann, FSA, MAAA, Chair
Kelly Edmiston, PhD
Gabrielle Guzman, FSA, MAAA
Sarah Maune, FSA, EA
Norman Niami, FCAS, MAAA, Affiliate IFoA
Ann Weber, JD

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