Contraceptives are precisely the kind of benefit that should not be covered by insurance. The need for, and cost of, contraception is eminently predictable, affordable and budgetable. It is a routine expense that women and their partners should be able to pay for directly.
Processing the bills for contraceptives through an insurance mechanism would prove wasteful and inefficient, adding to the mounds of paperwork already swamping doctors’ offices and pharmacies. Every time a claim is filed, proof of coverage is required. Insurers would also need to assess that the patient is not buying more contraception than needed and possibly passing it on to a friend who doesn’t have coverage.
The insurer would have to check to see if the pharmacy where the sale is made is “participating,” and if so, how much of a discount the pharmacy provides. If there is a cost-sharing provision, the insurer would need to make sure that the patient paid her $5 or $10 co-payment. That all adds costs that are related not to actual health care services but just to administrative activities. Those costs increase premiums well beyond the actual cost of the service provided.
Then what’s the rationale for such a proposal? It may be the idea that it is fun to force employers pay for stuff — it feels like you’re getting things for free. But you aren’t. Employers calculate how much they can pay out in total compensation. If they have to pay more in benefits, they will pay less in wages. That was one of the primary causes of “wage stagnation” in the 1980s. Employers were paying more to retain workers, but most of the added expense went to cover soaring health care costs, not directly to the employees.
So, employees who would get “free” contraceptives from their employer would actually be paying for them twice. First, it is more expensive to pay for routine costs through insurance than it is to just slap the money down on the counter. Second, every dollar paid by the employer for insurance is a dollar taken out of wages.
The fact that Republicans are supporting the plan belies the GOP’s concern for “unfunded mandates.” Republicans may resist mandating how state and local government spend our money, but the private sector is still fair game. It’s a chance for Washington politicians to “do good” without touching the federal budget.
Of course, the Washington politicians are just picking up where the state politicians left off. For years, every time a state legislator got a notion — “Golly, Aunt Emma’s massage sessions ought to be covered by her insurance plan. Let’s pass a law!” — they would quickly introduce legislation that would make insurance companies pay for it. The states passed more than one thousand mandated benefits covering everything from treatment by social workers and chiropractors to alcoholism and wigs for people suffering from alopecia areata.
Most of these benefits don’t do any harm and may do some good — if the consumer freely chooses to purchase them. But having such benefits mandated in all insurance contracts eliminates freedom of choice and raises costs for all consumers. If you want to buy an insurance plan, you must pay for all the benefits mandated by your state legislature. By some estimates, the added costs have increased by 25 percent the number of people who can’t afford insurance.
So, doing good for free can be pretty costly. Not surprisingly, that part of the equation is usually omitted from the politicians’ press releases.