A deal is only fair if you are willing to switch sides and accept what you're offering.  If your daughter agreed to switch rooms would he charge SD the increased rent?  If so, I would say he's being fair.  He's not choosing between them, he's looking at market value.

He is not her dad and is not obliged to pay anything for her.  You are her Mom.  If you want don't want her to have to pay medical because you think parents should pay it, then you pay it.  If you don't work but you're a home maker and you feel that he should pay it as part of your contribution you two have a tough conversation to have.  But the medical is beside the point.

Now, if your daughter offers to switch rooms, and SD turns it down because she doesn't want the higher rent, I'd say the rent stays the same.  Because you both agree that your daughters should be allowed to live with you for a time, you both agree that rent should be charged, but neither of the daughters want the bigger room with bigger rent - so there's no fair way of solving it without choosing a favourite.

I like Mominit's ideas. I don't think it's wrong to charge differently per room, but the price needs to be fair AND each of them should have the opportunity to choose which room they prefer. Additionally, I don't think the medical maintenance piece should play into the price of the room. If you wanted to pay for your DD's medical, you could just like he does for his DD. You choose not to (for whatever reason) so your DD has to pay it. Even if she were renting elsewhere, she wouldn't get a discount because she has more expenses than another tenant.

Regarding what to price the rooms, I'd say they're priced at the same rent per square foot/meter (or whatever measure system used for rooms). Like, if one room is 120 square feet (11ish square meters) and the other is 100 square feet (9ish square meters), then charge $2 per square foot ($22 per square meter). Tell each of them the price and let them decide which room they want to stay in. Just don't let your DH charge some arbitrary amount where your DD is paying way more for space than she actually gets.

Even with this, I wonder what sparked this idea out of your DH? Did SD come to him complaining? Does he feel like he is overpaying for you and yours while his daughter gets scraps? This seems like a symptom of a bigger problem that your DH isn't talking about.

How much bigger is the bigger room and how much more does he want to charge for it?

for your children and perhaps thinks its unfair or uneven. He pays medical for you and your son from someone else.

I think if the rooms are extremely disproportionate that your daughter should pay more.

Unless there are other areas that DH enables his daughter.

I'd need to know more about the two rooms, and more about your husband's motivation.  Does he feel like he's subsidizing your daughter at the rent currently being charged, and he resents that?  Is he trying to come up with a way to move his daughter into the nicer room?  

Is rent the real issue here? Or does your DH feel like he's supporting you and your kids more than he thinks is fair? Is your DH's behavior toward your kids otherwise friendly, or does he have his daughter on a pedestal?

I guess I wouldn't object to charging more rent for the larger room if that is the real issue, but unless one room is substantially larger than the other it seems petty. But if you do, figure out the difference based on price per square foot, not a random number. That way they both get the same deal.

No matter what the arrangement was before SD moved out, she moved out. When she decided to move back home, the smaller room was available. SD had a choice, move to the smaller room or find other accommodations. If DH wants to charge his daughter less for the smaller room (based on a verifiable ratio) fine, but your daughter's rate should not go up

As to the insurance, is it actually costing him more to carry your son if he is carrying your daughter? When carrying children, most policies use a family rate not per child. When SD drops off the insurance, you should re-examine the cost and pay toward it if it is the better insurance.

I would ask your DH the following:

1. Why does he feel the need to increase the rent?

2. If your daughter were to move out, whether SD or someone else moved into that room, what would he charge then?

3. If SD and your daughter were to agree to swapping rooms at the new price, would he be agreeable to that?

4. If your daughter is paying for her medical, shouldn't that offset the difference of rent between her and SD, since SD  is on his medical, not paying, and would be paying less for rent (if the rooms are relatively the same in size). 

Sidenote for you: how do you know that SD is paying her portion? Do you see her pay him or do you just take his word for it? Is this whole "making our children pay rent" thing something that was agreed upon prior to either children moving back in.

You can only charge more for the room if both daughters act like true tenants and have no or minimal access to the rest of the house.
 

If they use other facilities and rooms, then are you going to time how long they stay in the living room, how much space they each use in the fridge, how often they walk on the stairs and on the carpet?

You simply cannot determine that.
 

If you charge SD less for the room, Dd could say but she used tv for more minutes or takes over the bathroom longer or has more stuff in a bathroom vanity or takes more space in the living room when she stretches her legs. It's insane 

But, not my situation so... if charging a Kid/Skid by the square foot area of their room is a view worth the climb, so be it.