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The Obama administration’s decision to require health insurers to cover all FDA-approved contraceptives, and several other related services, free of charge to the patient goes a long way in explaining why the economy is struggling. It’s the same pattern we’ve seen repeatedly from this president:
- Identify a “crisis”—in this case, access to contraceptives and other women’s health services;
- Accuse the private sector of profiteering and greed for not meeting people’s needs; and
- Announce how Obama will force companies to act appropriately—which, by the way, will grow the economy and create countless new jobs.
The fact is that neither President Obama nor his economic team seem to understand the first thing about what drives business and economic growth. Just look at some of the underlying assumptions behind their actions.
Regulations Have No Cost. Obama, and apparently most Democrats, believe federally imposed regulations make markets more efficient and equitable, improve quality, and lower costs.
Hence his 2,700-page health care bill, the Dodd-Frank financial reform, and the Consumer Financial Protection Bureau, just to name some of what Obama thinks are major achievements.
The Affordable Care Act (i.e., ObamaCare) imposed countless new restrictions and mandated benefits on health insurance. When health insurers started the process of raising premiums to meet the new coverage demands, Department of Health and Human Services Secretary Kathleen Sebelius had a fit. No way did all of these regulations and newly covered items cost that much, she asserted. Didn’t the president repeatedly claim that his reform would lower health insurance premiums by $2,500 a year by the end of his first term?
So the secretary, smelling what she thinks is a health insurer skunk, set up a process to monitor health insurance premium increases, and woe to the company that offends her sense of how much health insurance should cost. Now, the administration is once again touting new “free” coverages.
To begin with, there is no crisis of access to affordable contraceptives. One pharmacist told me that birth control pills can run between $20 a month for the generic versions to $100 for some of the newest pills that try to reduce the estrogen content—and that’s before insurance. Depending on the insurance coverage, the co-pay could be as low as $10. And Walmart offers two birth control pills for $9 a month regardless of health coverage.
But if insurance must pay for all contraceptives with no co-pay, why not choose the $100 option over a $9 pill, even if there is no medical need for the patient to have the newer product? And why even mess with over-the-counter spermicides? The irony here is that liberals have for years tried to push patients toward cheaper generic rather than brand name drugs. But they have just rammed through another regulation that will have the exact opposite effect.
The Private Sector Can’t Be Trusted. The flip side of this assumption is that only the government can be trusted. Take, for example, Maryland Senator Barbara A. Mikulski’s response to the recent contraceptive dictum: “We are one step closer to saying goodbye to an era when simply being a woman is treated as a pre-existing condition.”
The underlying sentiment—which has been widely embraced by some women’s groups—is that women are victims of health insurers, which discriminate by charging women more than men.
Here’s what actuaries tell me: Women’s health insurance costs are significantly higher than men up to about their mid-30s, when those costs start leveling out. And by the time women hit age 50 to 52, their “experience” (i.e., health care utilization) actually drops below men.
Yes, health insurers typically charge more to cover young women than young men. However, I’m told that the variation is so wide that insurers usually overcharge young men in order to subsidize young women, so that women don’t have to bear the full cost of their health care utilization. This has nothing to do with gender discrimination; it has everything to do with actuarial tables.
But the Obamaites distrust the “fat cats” and “greedy profiteers” in the private sector, and that goes double for health insurers; only the government can be trusted to get the premium right.
Ironically, several states had the same idea in the early 1990s and passed legislation to require health insurers selling individual (i.e., non-group) policies to charge everyone the same premium, or close to it (ObamaCare has a similar provision). Every one of those states destroyed their individual health insurance market, as premiums exploded and insurers stopped offering coverage.
To be clear, I am not questioning women’s need for safe, effective and affordable contraception, but those are available now. The Obama administration has imposed numerous mandates requiring health insurers to cover certain procedures and populations, always under the justification that they will lower health care costs. Only a fool or an economic imbecile would think you can add a plethora of new regulations and services, with no co-pay, and premiums won’t rise.
What we really need is birth control for new government interference and regulations. If we had a pill for that, even with no co-pay, the country would save a lot of money.
Merrill Matthews is a resident scholar at the Institute for Policy Innovation in Dallas, Texas. Follow at http://twitter.com/MerrillMatthews
