The Audacity of Dupe

Let me get this straight. Catholic institutions won’t have to pay for contraception coverage in their health insurance? Instead, their health insurers will provide it for free? Did I hear that right?

The President seems to have found the long elusive free lunch. If he has, hand him his Nobel Prize in Economics now; no economist will ever top that. (That would make him just the fifth person to win two Nobel Prizes. Such greatness inspires.) I am afraid that the Nobel Prize committee will have more work to do, as the free lunch will remain as scarce as the unicorn. Just bear in mind that health insurers charge different prices for all of their clients. How is anyone to know whether they are providing contraception to some Catholic institution for free? Will we have a federal agency auditing whether an insurer’s 6.743 percent price increase should have been 6.682 percent? And is this new rule even Constitutional? Since when can the government force private businesses to give away their products? I guess a government that believes it can mandate that consumers purchase contraception coverage regardless of the price also believes that it can mandate insurers set the price for contraception coverage to zero.

And suppose insurers really do provide contraception for free to Catholic institutions, but not for any others. This gives the Catholic institutions a competitive advantage in labor markets. Mr. President, may I suggest that as long as you are giving away stuff to employees at Catholic institutions, why not force Apple to give away iPads to Northwestern University employees? (Most of them voted for you and surely deserve it!) Apparently all it takes is an executive order. What did Mel Brooks say about this? Oh yeah, “It’s good to be the king.”

I don’t believe there will be free contraceptive coverage, any more than I believe in free lunches. But Catholic institutions seem to believe it, with many expressing their support for the President’s initiative. This is more than just a leap of faith. This is insanity.

Of course the media are lauding the President for his “compromise.” Well Mr. President, you seem to be getting away with this one. You have duped everyone. Well, almost everyone.

David Dranove, PhD, is the Walter McNerney Distinguished Professor of Health Industry Management at Northwestern University’s Kellogg Graduate School of Management, where he is also Professor of Management and Strategy and Director of the Health Enterprise Management Program. He has published over 80 research articles and book chapters and written five books, including “The Economic Evolution of American Healthcare and Code Red.” This post first appeared at Code Red.

25 replies »

  1. Speaking of line items reminds me of a comment I left yesterday at yet another post about the same issue. Talk about whipping a dead horse…

    Lighten up, folks.

    All this indignant talk about expenses and government mandates is a smoke screen. Anyone who has ever built a house knows that building codes change between the time the plans are approved and the house is under construction, and the changes invariably ratchet the costs up. Same goes for safety regulations from children’s toys to medical devices. All those are government mandates. Rules and regulations — federal, state and local — cost private companies fortunes. Should I go on?

    For insurance companies it’s an accounting modification and nothing more.

    Costs for contraceptives now get a journal entry under “expenses” along with electricity, advertising, complementary catered lunches to doctors’ staffs, junk mail printing and postage and however else insurance companies spend their revenue stream — every dollar of which, incidentally, comes from somebody’s HEALTH insurance premium. Gimme a break.

  2. I guess it could be “free” coverage if exactly zero employees and their dependents elect to not use the contraceptive benefit, which they undoubtedly will as devout Catholics.

    Sounds like a dare from the administration. We’ll tempt your employees and their dependents with covered contraceptives, they’ll all reject it is since they are devout, and not a penny will be spent by the insurance company. Let’s see if any employees risk their jobs and use the benefit.

    Let’s just hope the annual cost/utilization report excludes a line item for contraceptives, which it should since the employer isn’t paying for it.

  3. Blog ‘etiquette’ considers that posts should remain on topic to the original posting or article rather than oblique comments that have been appropirately dealt with. I have full faith that the editor’s can handle these.

    I am most interested in responses to Professor Dranove’s considerations.

  4. Thanks, Maggie.
    (And they keep coming…)
    But when a post title is a snarky play on a book title what else can be expected? References to free lunches, unicorns and swipes at the Nobel Committee are not calculated to spread oil on any water. The post seems calculated to provoke controversy.

    Matthew, you getting this?
    Your moderator is doing a great job but is caught in a net not of her making.

  5. I think this site is not about pure partisan posts, and we know who are the usual players, even if the authors themselves did not submit the post on their own here. Maybe it is time for sites like this that are about Health Care issues to post opinions and columns that are asking for honest and fair debate, not just fostering ulterior motives, like getting PPACA moved forward and then finally learning about travesties like the contraceptive matter this week.

    You want transparency and complete accountability, and then readers are exposed to political party manipulations and defense of extreme, rigid, inflexible views that history shows only divides and disrupts. Maybe this site could put a mission statement under the banner at the top so readers coming on will know what they are getting into before committing to posts and threads as we have all read these past couple of years.

    PPACA is not a black and white legislation, it was yet another partisan effort to favor the few and screw the many. Just like Bush and the Republicans did with the Iraq War. My repeated question is this, why do the majority average, moderate citizens have to put up with the extremist rhetoric that truly divides and conquers? Don’t expect the usual suspects here to provide honest, transparent debate to look for solutions!!!

  6. I agree with John Ballard.

    A few people are responsible for turning THCB threads into something that most of us don’t bother reading–or responding to.

  7. Hmm, people want full transparency, yet why is it often those clamoring for it will find ways to disrupt, demean, and discredit in less than savory ways. Not necessarily you, mr Ballard, but, been there and had it done to me. Besides, I have told the authors who I am.

  8. I second those suggestions, particularly regarding the identity of commenters. As a long-time reader and occasional commenter I learned long ago that when one or two familiar names appear in a thread not to waste time entering the conversation. This forum, like others dealing with sensitive topics, will always attract assertive, usually well-educated readers with strongly held opinions (which many of them regard as facts).

    Anyone moderating here does a tough and thankless job. This is the first real “intervention” I have come across except for cleaning up spam. And I appreciate it.

  9. I agree, and ask that you delete my replies to the provocateur. Clean up the mess. I apologized to blog editors privately for my part in the escalation. I was the one attacked, for the initial thread comment simply pointing out a quote about the avg coverage cost of contraceptives and noting the > 20x differential with respect male ED drugs, coverage of which has not raised any controversies. The hypocrisy is amazing. That’s all.

    I am directly accountable for everything I post, unlike the resident and drive-by mudslingers.

    There’re two things you could do to improve this blog commentary feature. Provide a user “edit” function (rather commonplace on many blogs), and allow for user deletion of their own comments (also commonplace; even Facebook does that). The other, 3rd thing (shortly of “moderation”) would be to require documentable screen name links, which would go a long way toward self-reinforcement of mutual civility.

  10. There was an ugly thread that developed here last night. We deleted the comments because they were completely off topic.

    I’m just asking that all commenters keep it relevant and especially that they refrain from making personal attacks.

  11. Did I miss something here? My above comment was directed solely at the current occupant of the White House, no one else.

    Believe me when I say/write this, if I have issue with a commenter here, it will be direct and to the point.

  12. I didn’t unleash a bitstream torrent of juvie expletives (which, I see, have been deleted). In the future I will do better at passing on troll-itude.

  13. BobbyG is not banned.

    But that kind of stuff is getting old. You can all stay if you clean it up.

  14. I made similar comments to Robert Laszewski’s post, but I’m amazed that the Administration fails to realize that (a) many of these plans will be self-funded, so there will be no “insurer” and no maternity savings to an insurer from which to pay for the contraception coverage, and that (b) the Hawaii model fails because for decades Hawaii has had an ERISA exemption that effectively means no such self-funded plans. They are not doing their homework.

    More comments on the topic at my blog: http://mcolblog.squarespace.com/kcblog/2012/2/9/just-say-no.html

  15. “Dupe” is perfect description. Nothing more than an insurance mandate, this will be paid for by all regardless of affiliation. The political slippery slope is frightening; what about Jehovah’s Witnesses paying for blood, or Catholic’s paying for employees who wish to withdraw life-sustaining care?

    Am also curious what back room deal was made with insurers for this?

  16. A Catholic employer cannot do business with an insurer that provides service that is against the doctrines of the church. “Plausible deniability” does not work with God. Accounting tricks do not keep and respect freedom of religion.

    Time for a faith-based impeachment movement?

  17. Wow. I’ve seen comments threads deteriorate before but rarely this fast…


    Regarding the post, the arithmetic seems pretty straightforward. From the cost/benefit standpoint it’s less expensive to prevent pregnancy than deliver babies. (Same reasoning as clean needle exchanges for drug users to help prevent the spread of AIDs.)

    There was a time when STD (they used to call it VD) was a court martial offense for soldiers. Old vets know about middle of the night “short arm inspections” because nobody wanted to face a court-martial. And venereal disease was rampant.

    When the policy was changed to treat STDs as medical problems the problem became more manageable.

    Like getting pregnant, STDs have not gone away, but they are less expensive to manage when policies face the reality that they are medical issues, not rebellious disciplinary behavior or sins.

    As to insurance companies charging different rates for different groups and individuals, I hear they are in the business of making money. They can and will charge whatever the market will bear. If I see a rash of insurance companies facing bankruptcy I’ll start to worry. Til then, I’m more interested as a citizen and tax payer to do everything possible to bring down the costs of medical care. And contraception is on the list.

  18. What a joke, he talks of allowing choice when this bs legislation is nothing about choice. Choice by Obama: submit or die!

  19. “Opponents of insurance coverage for birth control have two central arguments. One, the rise in premiums that would ensue if insurers covered all common forms of contraceptives is simply not worth the $30-per-month average cost of most birth control. Secondly, some insurers argue that pregnancy is not a medical condition, whereas erectile dysfunction is. Thus, coverage is justified in the one case but not the other.”


    Avg cost of a 30 tablet supply of the 2 major male “ED” drugs, ~ $660.