No Free Lunch. No Free Contraception.

The otherworldy Obama Administration solution to the contraception firestorm might work politically but it makes no sense in the real world.

The President, hoping to quell a growing political firestorm, today announced a new policy that no longer requires religiously affiliated organizations to provide employees with contraception coverage in health-insurance plans.

Under the new policy, insurance companies will be required to offer free contraception for their employees and dependents. The administration’s idea is to shift the onus for the coverage from the employer to the insurer. Catholic leaders, and lots of other people, had objected to the requirement, which exempted churches but not hospitals, charities and universities with religious affiliations.

So, let’s just play a game here. The religious organization just pretends that it has nothing to do with it but the insurance company pays for it anyway. Hey, the insurance companies are rich.

Of course there is a cost. Today, contraception is almost universally covered in health insurance policies. The argument that forcing insurers to pay for it, without deductibles and copays, saves money because it avoids pregnancy costs is just plain silly.

If insurers saved money handing out contraception for free in the first place, they would have started to hand it out for free years ago. Add to that the insurance company must absorb a not insignificant administrative cost for adding a person-by-person “rider” for free contraception.

In addition, we have the unique situation where a business will be required to provide a product to a specific market (religious organizations not wanting to provide the coverage) but prohibited from charging for it–apparently because the government has done the cost calculation for them and in their sole discretion has decided they don’t have to.

The administration is arguing that offering contraception actually lowers costs and therefore forcing insurers to waive copays won’t mean higher costs. If this were 1970, when modern contraception was first offered, that might be true. But now plan sponsors are expected to waive copays and deductibles on something that is already virtually universally available.

This is simply an attempt by the administration to backpedal from a firestorm of controversy they should have never been in in the first place. They are caught between the left that is not about to back down over what they see as a critical women’s health issue and the right that is not about to countenance the government ever telling a church what to do.

But insurers will likely just shut up and go along with it. They have no intention of getting into the middle of this political mess—but they will quietly pass the costs along. In fact, for any large religious organization that is self-insured, they won’t have much choice but to pass the costs on to the employer. But that won’t be a problem so long as everyone just agrees to pretend.

This is a clumsy attempt on the part of the Obama Administration to be on both sides of a thorny issue.

The problem is that there is no free lunch and there is no free contraception.

22 replies »

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  2. If you are mandated to have a fire extinguisher you still had to pay someone that makes them.. The maker of the extinguisher was not mandated to provide it for free. When cars had to have seat belts their cost was passed on the the consumer. Just like when airbags were mandated the supplier did not provide them to the car companies for free and the car companies past that cost to the consumer. Yes Government mandate happen all the time but they do not mandate who pays. Mal-Mart and Target are not mandated to provide car seats to consumers for free. The parents have to have them but they don’t get them for free.

    And many regulation like providing a ramp for handicap people to meet current access regulations pay out of pocket to build that ramp but many of these cost are one time cost. But having to pay for something on a on-going and permanent bases is like having a baker that provides many different products and are mandated to provide their chocolate chip cookies for free to kids or a grocery store having to provide Ensure to senior citizens. The grocery still has to pay the provider of the Ensure just like the insurance companies still have to pay the drug company for the BC pills or the doctors for the “free” service. I mean why stop at the insurance company when they can just mandate doctors give completed physicals for free. Isn’t that preventive medicine. Why not just make the maker of the BC pills provide it for free.

    Even when Doctors are paid a significantly reduced rate on a given service for a patience on Medicare or Medicaid they either pass that cost on to other patients or more importantly they can opt out of taking Medicare or Medicaid patience all together.

    I still says the mandate is not legal. And this power can be and will be abused.

    I think kids need milk so I want the groceries stores to make it available for kids free of charge. Let them eat the cost on their other products they sell. I don’t care I just want my grandson’s milk for free. Or better yet make the dairy farmer provide it for free. I don’t care I just want that needed and necessary milk for free.

    There is no end to what people or Government will think they “need” or is “necessary”. It’s a wonder how we got this far as a human race without all our free stuff. Really, it is amazing.

    Sorry for typos… I typed this in a hurry..

  3. …the Federal Government has never mandated any industry or company provide any product or service at their own expense, period.

    Safety equipment doesn’t count? Seatbelts? Fire extinguishers? Backup warning sounds?

    What about food inspectors? I once toured a poultry processing plant and one individual on the production line was identified as the federal inspector. She was snipping off bruised spots, broken wings and legs and tossing them aside. When I said something about tax dollars at work I was corrected and informed she was on the company payroll. I recall vividly since it struck me as a conflict of interest.

    I can tell you that as a manager I was told more than once that if my OSHA log was not kept up to date my job was in jeopardy. I sure didn’t need the information but any federal official who happened by expected to see it. Same for the I-9 file.

    I hear banks are required to report any transactions exceeding ten thousand dollars. Maybe a lot more stuff I don’t know about considering how much complaining I hear about Dodd-Frank, Sarbanes-Oxley and other federal regulations. I haven’t heard that the extra accounting expense is deductible but maybe it is.

    David, I don’t know where you live but if you have found a place free from federal mandates it must be well-hidden.

  4. In the unlikely event some regulation is added that makes a home currently under construction more expensive to build that cost is passed on to the buyer even if they have already agreed on a price.

    Regardless of perceived cost savings the Federal Government has never mandated any industry or company provide any product or service at their own expense, period. It is a dangerous precedent! If allowed to stand were does it stop? It will happen again and again to continually bribe constituents for votes. Once government perceives to have that right they will exploit it at every opportunity no matter who is in office. The Federal Government has no history of constrain once they feel they have a right to do something. No matter what perceived good this mandate has the Government has no right to do so.

    If they want to tax something or some one to raise money to pay the provider so that product or service is free to the recipient that is within their authority if it is approved through congress. To simply mandate someone provide it at their own expense is not under their authority.

  5. To Kemetra, The Catholic Church in many cases are the provider because in many case they are the insurer. In those case they would be part of the mandate.

    And I will repeat from a previous post. The U.S. Federal Government has no right to mandate any person, company or industry provide any product or service for free nor have they ever done so until now.

    The Federal Government can and does provide products or services for free through tax dollars which reimburses the provider. Never have they mandated any industry or company to provide actual services or products free at their own expense. The is wrong and it is simply another bribe for votes. Vote for me and will give something for free. If allowed to stand where does it stop once Government know it can?

  6. I agree that you and this article has touched on the major point on this issue and I would like to expand on this. Regardless of the 1st amendment issue which I agree the administration’s attempted compromise did not solve. When has the federal government ever mandated any person, company or industry provide any product or service for free? And if it is allowed to stand where does it stop! It’s not like government has ever showed any kind of restraint on a right it perceives to have. This sets a dangerous precedent!

    I know the federal government has and does provide funds for many things that are made available at no cost to the recipient but the provider was paid through taxes. What is to stop the Government to later mandating something else for free from the insurance companies or any other industry whenever they see fix or to bride another group of constituents or simply to destroy an industry which in this case is the real reason I believe this administration is trying to slowing do. The left is very patient and they want their one payer universal healthcare rammed down our throats.

    Even if I’m wrong about trying to destroy the insurance industry I certainly feel it is a bribe in exchange for support for re-election. Vote for me and I will give you something for free. And too many Americans are willing to except that bribe. It’s women today or some other constituent tomorrow but the government knows “we the people” have a price.

  7. The Affordable Care Act reduces out-of-pocket expenses for women in the United States. This act covers birth control, well woman visits, mammograms, Plan B, sexually transmitted disease counseling, domestic violence counseling, and etc. All of these services will be provided without copay and deductibles. According to the new health plan young adults age 26 will get dropped from their parents insurance. Passing this act allows women to stay protected and continue preventative services. Birth control is not only used for contraceptive purposes; it is also used to decrease pain associated with menses, shrinking ovarian cysts, over active bleeding and other gynecological issues. The treatment for these services can be very costly for individuals who do not have adequate income. These preventative services will decrease pregnancy rates, emergency room visits, and shorten hospital stays. Women who have unplanned pregnancies are more likely to engage in drugs, alcohol and other risky behaviors. This act will reduce some unplanned or unwanted pregnancies and allow women to be better educated on preventative measures.
    Religious organizations do not have to offer insurance for contraceptives. No one person will be forced to use contraceptives especially if it is against their religious beliefs. Ultimately, this act will save insurers money by focusing on preventative care instead of acute and critical care.

  8. Having insurance cover birth control fully, no co-pay seems up front like a good idea. However, who will be paying for the co-pay that once did exist? Will premiums increase? More than likely, yes, where else will insurance companies obtain the funds? I completely understand where the Catholic community is coming from, it’s their belief, and while not my belief, I have respect for theirs. Then Obama came about and made a change stating that insurance companies will provide free birth control, not the religious organization. In other words, religious organizations are not required to offer free birth control, only the insurance companies insuring them. This still upsets religious organizations. While the idea of free birth control seems like it would help decrease unplanned or unwanted pregnancy I believe the more important issue is education. Women need education on pregnancy prevention. Sure, you can be on the pill, but if you don’t take it every day at the same time, it’s ineffective. In addition, while taking antibiotics birth control becomes ineffective; therefore, women must know to use another form of birth control. A third way to have an unplanned pregnancy is switching birth controls. When switching birth controls it could take a month for the birth control to become effective; therefore, another form of birth control will be needed. Many women do not know these things, and while taking the pill thinking its working, one ends up pregnant. Education is so important; with good education, many pregnancies and illnesses can be prevented. Nonetheless, this act is not only about preventing unplanned or unwanted pregnancies, but also preventive health. Women who take birth control have a lesser chance of developing cervical cancer, again, no cervical cancer, no treatment needed and overall a decrease in health care costs. In addition, providing free mammograms and yearly checkups will provide women with free preventive health care decreasing disease and decreasing health care costs. The Affordable Health Care Act on paper seems wonderful, and I believe it’s the right way to go; however, I wonder about funds with our trillion dollar debt.

  9. 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. 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.

  10. You have got to love the government. As soon as they see an opening they are going to try to impose what they think is right on everyone. When will they realize that one size does not fit all and they can not just walk in and dictate their agenda to us. Birth control cost and somebody will pay in the end. Socialism at its best.

  11. Oppps, rational people finnaly arrive at the conclusion that the adminstration has no authority to tell private citizens and entities what to buy or giva away “free”.. Quick, we must distract with data (not information) and call them names. I’ve got it, they are just a bunch of name callers.

  12. Nobody cares about “data” when it comes to stuff like this (except to the extent that they can selectively cite them in the service of their foregone conclusions). The more you counter them with empirical evidence, the more they will just call you names.

    And, Jonathan, you are right. It indeed does not compute. But, it’s just part of the overall ongoing Whack-a-Mole cost shifting that characterizes our reimbursement “system.”

  13. Has anyone estimated what the net effect on premium this policy is expected to have, after reduction in abortions and births are accounted for? $1 per month per policy? Less? More? I’m looking for data, not intuitions.

    I saw a recent poll that reported the highest approval of Obama’s policy to be among Catholics (vs mainline Protestant and evangelicals), something like 70%.

    Still, this seems like a bad battle to pick for Obama. The religious freedom argument cannot be easily dismissed (though many of these institutions, especially the hospitals, have little in the way of religious identity left). And as others have noted, demanding insurers cover contraception for free just doesn’t make sense on its face. If the Catholic institutions don’t pay, other customers of the insurer will.

  14. THey actually didn’t get out of the problem because the Bishops didn’t buy it.
    And the point about being self-insured is exactly right. If all the insurer does is provide administrative services only, the “free” contraception is paid for by the self-funded employer.

    But the larger issue that Robert addresses is really troubling: what makes the administration think that it can just declare benefits to be “on the house” as fits their political situation. It’s completely arbitrary. THey really think they own the health insurance system, and Secretary Sebelius is now “The Nation’s Health Insurance Commissioner”.

    It’s a little like the famous Lyndon Johnson line when he was walking down the flightline at an air force base and the young lieutanant says, “Mr President, your helicopter is this way” and Johnson says, “Son, they’re all my helicopters . . .” “Those are all my health plans . . . “

  15. This was a very insightful post that allowed me to view the issue at a different angle. I had completely forgotten about TNSTAAFL as I was watching this play out on the news. I’m not sure yet where I stand on the issue itself, but I can now see how the administration didn’t do much to actually remedy the situation.

  16. This was a very insightful post that allowed me to view the issue at a different angle. I had completely forgotten about TNSTAAFL as I was watching this play out on the news. I’m not sure yet where I stand on the issue itself, but I can now see how the administration didn’t do much to actually remedy the situation.

  17. Wow, Joe. Nice stuff, nicely documented.

    5.USC.8103 Verbatim:

    “(a) The United States shall furnish to an employee who is injured while in the performance of duty, the services, appliances, and supplies prescribed or recommended by a qualified physician, which the Secretary of Labor considers likely to cure, give relief, reduce the degree or the period of disability, or aid in lessening the amount of the monthly compensation.

    These services, appliances, and supplies shall be furnished – (1) whether or not disability has arisen; (2) notwithstanding that the employee has accepted or is entitled to receive benefits under subchapter III of chapter 83 of this title or another retirement system for employees of the Government; and (3) by or on the order of United States medical officers and hospitals, or, at the employee’s option, by or on the order of physicians and hospitals designated or approved by the Secretary.

    The employee may initially select a physician to provide medical services, appliances, and supplies, in accordance with such regulations and instructions as the Secretary considers necessary, and may be furnished necessary and reasonable transportation and expenses incident to the securing of such services, appliances, and supplies.

    These expenses, when authorized or approved by the Secretary, shall be paid from the Employees’ Compensation Fund. (b) The Secretary, under such limitations or conditions as he considers necessary, may authorize the employing agencies to provide for the initial furnishing of medical and other benefits under this section.

    The Secretary may certify vouchers for these expenses out of the Employees’ Compensation Fund when the immediate superior of the employee certifies that the expense was incurred in respect to an injury which was accepted by the employing agency as probably compensable under this subchapter.

    The Secretary shall prescribe the form and content of the certificate.”

  18. I am astonished — no, I can no longer be astonished at the Administration’s policy decisions — by the failure to recognize that many of the impacted religious organizations are likely to be self-insured…so who is the insurer who will offer the “free” coverage, and who will pay for that (e.g., the self-funded plan will get any savings via reduced maternity, not the insurer)?

    The administration looked a the Hawaii model to craft this so-called compromise…if memory serves, Hawaii has the only ERISA exemption, so in effect there are no self-funded plans there. Is it possible that no one in the Administration is aware of this?

  19. If the Left is of the mind that free birth control pills are on par with eliminating religious freedom, then they do not deserve to be in the discussion at akk. But I just do not believe the Left really thinks that at all. They are free to be the Left and I free to be the Right due to the shackles on government power established by the Constitution.

    Loosen the shackles and we have to fight the King all over again.