Here is the latest on the controversy over the Obama administration’s new regulations that require religious organizations, except actual churches, to provide birth control/contraception coverage under any health insurance programs that they provide to their employees:
“The White House has given reporters the rundown on the ‘accommodations’ that President Obama will announce on the health reform law’s requirements for hospitals run by faith-based groups to cover the costs of employees’ contraceptives. Here’s how it works.
As it stands, church-run hospitals are required to cover contraceptives at no cost to employees. A slew of Catholic groups have opposed that requirement. So on Friday, the White House rolled out a new rule, where insurance companies, rather than faith-based agencies, will offer birth-control coverage directly to these employees and foot the bill.
‘If a charity, hospital or another organization has an objection to the policy going forward, insurance companies will be required to reach out to directly offer contraceptive care free of charge,’ one administration official explained. …
The administration thinks this is a good deal for insurance companies since the economics tend to work in their favor. Numerous studies have shown that covering contraceptives is revenue-neutral, as such preventive measures can lower the rate of pregnancies down the line. Pregnancy and childbirth coverage is, of course, much more expensive.”
Except that what the Administration is proposing doesn’t work. Maybe providing contraceptives is no more expensive than covering pregnancy and childbirth, but requiring insurance companies to provide contraceptives for free because they won’t have to pay for the additional pregnancies and births that would supposedly otherwise occur only works if the insurance company has already factored in those additional pregnancies and births in its pricing to begin with, which, of course, it hasn’t. What the insurance company included in its pricing was contraception. But religious organizations don’t want to pay for contraception (for legitimate religious reasons), so the amount they pay to the insurance company goes down. It has to go down, or the religious organizations would be paying the same amount for less coverage, which makes no sense.
So where does the insurance company get the money to pay for the contraceptives that it now has to provide for free? It doesn’t get them from additional pregnancies that supposedly don’t happen because it never priced those pregnancies in its coverage in the first place. It priced in contraceptives, but now it isn’t getting paid for those – even though it still has to provide them.
Let me give an example. A hospital has 100 employees. Half of them are women. On average three of the women would get pregnant in any year and ten of the women would use contraceptives. The insurance company prices the health plan for the hospital, including both childbirth coverage and contraceptives, based on these averages.
But this hospital is Catholic and it cannot, in line with its religious beliefs, provide contraceptive coverage to its employees. So it tells the insurance company it does not want to provide that contraceptive coverage to its employees. And since it is not providing that coverage, it doesn’t want to pay for it.
But now, the government comes in and tells the insurance company that it has to provide contraceptives to hospital employees free of charge even though the hospital doesn’t have to pay for them. The Administration says that this is okay for the insurance company because providing contraception costs less than the childbirths that it would otherwise have to pay for. Except that the insurance company didn’t price those births into its policy. What it priced into its policy was contraceptives. But the hospital didn’t want the contraceptive coverage and wouldn’t pay for it. And now the insurance company has to provide the contraceptive coverage even though it’s not getting paid for either the contraceptives or the alleged extra births it is supposedly avoiding by giving away free contraceptives.
Actually, under the Obama administration’s theory, the insurance company shouldn’t charge the Catholic hospital less even though the insurance company is not providing contraceptive coverage because, without contraceptive coverage, there would supposedly be more births.
Also, a point I saw here: Some big private employers “self-insure” the health coverage they provide to their employees (mine does), and they just hire an insurance company to administer the program, i.e., to handle the paperwork. If a big religious hospital chain self-insures its health coverage, who provides the contraceptives in that case? The insurance company which was hired to just handle the paperwork?
Actually, if the Obama administration thinks that free contraceptives are a great idea, there is simple solution. The government should provide them and raise general taxes to pay for the program. That would be honest and above board. And religious groups wouldn’t have an objection – or at least the objection they have today. But the Obama administration doesn’t want to do that way. They want to hide the cost. So instead of the government providing it, the Obama administration passes a regulation saying that private employers have to provide the coverage and that when they won’t, the big insurance companies have to provide it – for “free”.
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