Unlike Workers Trust, the major insurance companies take a hard line on the subject, at least officially. Calls to companies like John Hancock, Prudential, and Boston’s Harvard Community Health received the same response that Blue Cross-Blue Shield gave the city of Boston: “We define ‘family’ as husband and wife.” Tom Jagow, a public-relations representative for Prudential, suggested that insurance companies are regulated by state law and under such laws could only extend coverage to cohabiting couples in states that recognize common-law marriages. (Gay couples wouldn’t be recognized as common-law marriages in any event.) Lawyer Coles dismisses this argument, adding that California does not recognize common-law marriages and that the issue was not brought up there. Lyn Thompson, vice-president in charge of marketing for Consumers United, says of the insurance companies’ claims about legal problems, “We have never run across that.”
Thompson says that the philosophy of the health-insurance industry has always been “better risks are those bound by blood or marriage.” One of the companies’ major fears in insuring domestic partners has been that relationships were unstable and thus that couples would break up after three months or so, and the companies would be left with large claims but only three months’ worth of premiums. That has not been Consumers United’s experience in its four years of insuring what Thompson prefers to call “named partners.” In tracking people by type of relationship, her company has found “no difference in experience rate for spouses or named partners.”
Another obvious reason the major insurance companies are unenthusiastic about insuring domestic partners, Coles says, is fear of the unknown. “The problem here for them is dealing with a group of people—domestic partners—for which there is absolutely no history at all,” he says. “It scares the bejesus out of them. And they are also afraid you may be bringing new people into the pool who are being brought in because they need insurance desperately or can’t get it elsewhere.” In the insurance business, that is what is known as adverse selection.
And adverse selection is certainly at issue if companies believe, for example, that some domestic partners run a substantial risk of coming down with AIDS. The AIDS issue, Cole admits, was “one of the firs things” companies brought up when discussing their worries about the San Francisco proposal. At the time, Coles put forth the argument that gay couples tend to be a younger group of people than the population at large, and that there is less likelihood of pregnancy and children—the major factor in family insurance costs. “We told them there is the AIDS risk, but there are other risks in this group that don’t exist. It was likely they would balance out,” he says. Today, the skyrocketing cost of AIDS coverage would probably make companies even more leery. During the first year of the epidemic, the Centers for Disease Control in Atlanta estimated the public-health costs per patient were approximately $65,000—a figure that has undoubtedly increased because of health-care inflation and newer treatment technologies.
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