Five vital facts about Obama’s contraception compromise

By James D. Agresti
February 13, 2012

After the president’s Friday press conference regarding his contraception mandate, a number of major media outlets ran headlines such as, “Obama Retreats on Contraception” (Wall Street Journal), “Obama Backs off on Birth Control Controversy” (Associated Press), and “To Allay Outcry, Obama Eases Birth Control Rule” (Real Clear Politics).

In contrast, many observers, such as NJ Congressman Chris Smith, wrote that this “so-called new policy is the discredited old policy, dressed up to look like something else.” Similarly, the Los Angeles Times published a house editorial accusing Obama of “relying on magical thinking in the hope of making the political firestorm disappear.”

So, what are the facts?

First, the Affordable Care Act, which provides the legal basis for this mandate, does not confer authority to impose such a mandate on employers. The section of Obamacare mandating coverage for preventive health services only applies to a “group health plan and a health insurance issuer offering group or individual health insurance coverage.” It does not apply to employers in general (read the text here).

Thus, when the president stated in his press conference that religious employers “won’t have to pay for or provide contraceptive services,” but their “insurance” will, this is no different than the original mandate. It was already the case that the insurers, not the employers, would have to provide copayment-free contraceptive services.

Nevertheless, when a government requires insurers to provide a certain benefit, all of the insured are forced to pay for it through their insurance premiums. Obama obliquely acknowledged this in his press conference when he stated that “no religious institution will have to provide these services directly.”

Second, some religious employers are self-insured and thus directly provide health coverage to their employees instead of purchasing such plans from an insurance company. The White House fact sheet does not address this scenario and nor did the president during his press conference, at which he refused to take questions. If the employer and the insurer are effectively the same entity, Obama’s assertion that the insurer must pay, but the employer doesn’t have to pay cannot be true.

Third, although most major media reporting of this issue does not mention the word “abortion,” the issue is involved here. The morning-after pill, which is covered by this mandate, will sometimes cause what many medical professionals consider to be an abortion. The specifics are laid out in this article from Just Facts.

Fourth, regarding objectors, the president and the media have almost exclusively focused upon religious institutions, but individuals and families who purchase health insurance will also be forced to pay for services that they find objectionable. During his press conference, the president said, “I cherish” the “principle of religious liberty, an inalienable right that has been enshrined in our Constitution.” The Constitution, however, enshrines this right for all individuals, not just for religious institutions.

Fifth, at the outset of his press conference, Obama stated:

As part of the healthcare reform law that I signed last year, all insurance plans are required to cover preventative healthcare at no cost. That means free check-ups, free mammograms, immunizations and other basic services.

We fought for this because it saves lives and because it saves money for families, for businesses, for government, for everybody. And that’s because it’s a lot cheaper to prevent an illness than to treat one.

This assertion about preventative care saving money is largely untrue. Repeated studies have shown that that preventative care increases overall healthcare costs. As explained by the Congressional Budget Office:

Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.

That result may seem counterintuitive. For example, many observers point to cases in which a simple medical test, if given early enough, can reveal a condition that is treatable at a fraction of the cost of treating that same illness after it has progressed. In such cases, an ounce of prevention improves health and reduces spending—for that individual. But when analyzing the effects of preventive care on total spending for health care, it is important to recognize that doctors do not know beforehand which patients are going to develop costly illnesses.

To avert one case of acute illness, it is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway. … Judging the overall effect on medical spending requires analysts to calculate not just the savings from the relatively few individuals who would avoid more expensive treatment later, but also the costs for the many who would make greater use of preventive care.

With specific regard to the costs of contraception services, the White House fact sheet states:

Covering contraception is cost neutral since it saves money by keeping women healthy and preventing spending on other health services. For example, there was no increase in premiums when contraception was added to the Federal Employees Health Benefit System and required of non-religious employers in Hawaii. One study found that covering contraception saved employees $97 per year, per employee.

These examples do not provide a valid comparison for the president’s mandate, which forces insurers to provide such services without any copayments. A rational comparison would contrast the cost of the status quo (individuals purchase contraceptives on their own or via copays) with the cost of individuals receiving contraceptives at no direct cost to them.

A primary driver of escalating U.S. healthcare spending has been the pronounced rise of third-party payments, wherein individuals do not directly bear the costs of their healthcare. Between 1960 and 2009, the portion of healthcare expenses paid directly by consumers decreased from 48% to 12%, and a major study has shown that when people don’t directly pay for their healthcare, most will tend to spend more but obtain no appreciable positive effect on their health.

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