SUPREME COURT SAME-SEXMARRIAGE DECISION:

IMPACT ON INSURANCE INDUSTRY

Health insurance providers may be surprised to hear howhealthcare costs have been impacted after states passed same sexmarriage laws. Studies have been conducted which demonstratedoverall decreases in healthcare costs after the passing of same-sexmarriage laws. Most notably, 12 months after Massachusetts madesame-sex marriage legal there were statistically significantdecreases in visits to medical care facilities and overall decreasesin mental health care costs for the gay community [2].

ACTUARIAL AND PRICING MODELS SHOULD BEEXAMINED AND UPDATED

The Supreme Court’s ruling on June 26th, 2015 which makessame sex marriage legal across all states in the US is amonumental historic event for society. Self-identified lesbian, gay,bisexual, and transgender (LGBT) US citizens make up roughly3.8% of the country’s population, or approximately 9 millionindividuals [1]. Therefore, many companies are interested indetermining how this will impact their industry. Across theinsurance space actuarial, legal and marketing departments shouldbe actively strategizing how to appropriately react. Health insurersin particular should examine their actuarial models to determine anypotential impacts while taking historical data into consideration.There will also be potential regulatory impacts from a consolidationof state laws, which currently have differences in how same sexmarriage is treated. Additionally, while marketers across industrieshave been crafting messages and campaigns that are moreinclusive to this community over the past few years, more could andwill be done to target these individuals. What steps can insurerstake to ensure they appropriately respond to potential changes inthe marketplace?

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REGULATORY CHANGES WILL REQUIRECOMPLIANCE REVIEW

Additionally, the growth in customer base should help to addrevenue for health insurers. New York saw a large shift fromuninsured individuals and those on Medicaid to employer sponsoredhealth insurance plans after legalizing same-sex marriage (Table1). Therefore, health insurance companies should be dedicatingactuarial resources to modeling out these potential impacts on theirspecific book of business, or seeking out external support touncover more historical trends and craft updated projections. Givenhistorical trends as demonstrated, health insurers may surprisinglysee more revenue from an increase in customers and also see aslight decline in healthcare costs for those new customers whichwill open additional investment opportunities.

Regulatory impacts are another potential area of concern forinsurance providers. There were 14 states that maintainedlegislative bans on same sex marriage before the Supreme Courtdecision, so there will be an impact on how those states willregulate certain product benefits moving forward. Health and lifeinsurers will see the largest effect due to the nature of their productoffering. As of the court’s ruling, it appears that all married couples,regardless of sexual orientation, will be treated equally across allstates (and thus should receive benefits in the same fashion). Thisshould help simplify some of the state by state regulatorychallenges which are notoriously complex and cause challenges forinsurance providers.

Table 1: Changes in Health Insurance Coverage after New YorkSame Sex Marriage Law [3]

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OPPORTUNITIES EXIST FOR DEDICATED MARKETINGEFFORTS

An additional regulatory and strategic decision must be madearound the domestic partnership benefits which many insuranceproviders offered as a way of extending support to same sexcouples that lived in states without same sex marriage. States havevarying degrees of differences between how benefits for domesticpartnerships versus married couples are treated. Insuranceproviders may begin eliminating offerings for domestic partnershipsto remove the additional layer of pricing and regulatory complexitynow that all couples have the right to marry. However, that mayresult in consumer frustration from opposite sex couples that are ina domestic partnership. There are also unknowns around howstates will treat domestic partnerships moving forward. Somestates, such as New Hampshire, automatically converted alldomestic partnership agreements into marriages once they passedsame sex marriage laws. This level of complexity will requireoversight and strategic focus to ensure the proper course of actionis taken.

While pricing and regulatory concerns may top the prioritylevel for insurance providers, there are additional opportunities inthe marketing department. Educational resources across the webare a great first start to begin marketing to this community.However, many companies have already begun leveraging SEObest practices to ensure they remain top of mind. Googling “lifeinsurance for LGBT” yields several top insurance companies withdedicated LGBT pages (Image 1). There were also several paid adsin the search results, showing that big brands are eager to marketto this community and they are already funding associatedinitiatives. This same technique could be applied to additionalinsurance products as well. Most importantly, brands should dotheir best to avoid advertising on properties that are deemed “anti-gay” as that can have drastic impacts on whether the LGBTcommunity will consider purchasing. A recent report from HarrisInteractive showed that 74% of lesbian, gay, bisexual, andtransgender individuals would be less likely to purchase a productfrom a company that advertised on a program which demonstratesnegative views of the gay and lesbian community [4].

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Image 1: First four organic results on Google for “life insurance forLGBT”

The Supreme Court’s ruling will have an enormous culturalimpact on the United States for the foreseeable future. Whileinsurance carriers will be impacted to some degree, they should allbe well positioned to adjust accordingly. Health and life insurersmay see the biggest impact and require dedicated resources forpricing updates and regulatory support. At a more holistic level, allproviders should be open and prepared to market to the LGBTcommunity in a variety of ways. These actions will help ensurecarriers are able to manage the slight shift in the marketplaceappropriately.

References1. “LGBT Percentage Highest in D.C., Lowest in North Dakota”.State of the States. Gallup Politics. 15 February 2013.2. “Effect of Same-Sex Marriage Laws on Health Care Use andExpenditures in Sexual Minority Men: A Quasi-Natural Experiment”.Mark L. Hatzenbuehler, PhD, Conall O'Cleirigh, PhD, Chris Grasso,MPH, Kenneth Mayer, MD, Steven Safren, PhD, and JudithBradford, PhD. 11 July 2011.3. “Association of the New York State Marriage Equality Act WithChanges in Health Insurance Coverage”. Gilbert Gonzales, MHA.JAMA. 26 June 2015.4. “Companies Begin Marketing to Gay Market”. Catherine Valenti.ABC News. 26 July 2014.

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