Wouldn’t it be nice if insurance companies decided to charge companies that didn’t want contraceptives covered more to provide insurance, under the logic that their employees were more likely to have an unplanned pregnancy, with the accompanying increase in costs?
I can see where she is coming from, but I think she is wrong. We need to think like actuaries in evaluating the costs of the counterfactual. Everything that I have ever been told has been that birth control over a broad population is a net wash for an insurer. They pay more in pharmacy claims and less in labor and delivery claims if there is a broad risk pool.
We will think like actuaries for a bit.
There is a group of people who receive no cost sharing contraception. The cost to the insurer is the cost of the birth control plus the cost of birth control failures in the form of pregnancies that are not naturally miscarried. The benefit to the insurer of birth control is the wedge of unplanned pregnancies that are avoided because of birth control in the time period that the woman is covered by the insurer. If an IUD is good for five or more years but the woman is only covered by the insurer for six months, the insurer only cares about the fractional pregnancy averted in that half a year. Other payers benefit for the rest of the time that the IUD is working. The woman benefits from increased autonomy and control over her life but the cost benefit accounting in a narrow sense means the costs are immediate and the gains are not internalized by the insurer.
This is the base case.
Now let’s move to a world where birth control is regular cost sharing. The cost to the insurer is the cost of birth control minus the cost sharing paid plus the cost of birth control failures plus the cost of incremental unplanned pregnancies that don’t naturally miscarry from women who no longer use very effective birth control. These women may use other, less expensive birth control (the pill, barrier methods etc) or make behavioral changes in their sexual repertoire.
There may be shifts in the composition of birth control. Oral hormonal contraceptives might become incrementally more popular as the cost sharing price on a monthly basis is significantly less than the upfront cost of an IUD or other very effective long term options. The insurer may benefit financially in this trade if the insurer sees high churn.
In a full cost sharing universe, the insurers are paying for only a small proportion of the birth control that they paid for in a no-cost sharing world as most women won’t be hitting their deductibles anyways. The major risk is the proportion and expense of the incremental unintended pregnancies that are not naturally miscarried.
In a no covered birth control world, some of the women will still be able to find birth control at Planned Parenthood or elsewhere. Most of the women will be using less effective birth control methods (barriers, timing, etc). The insurers will have no claims for birth control and increased claims for unintended pregnancies. There will be increased administrative bloat as women have to fight to get birth control prescriptions for non-birth control purposes but that is a stable negative equilibrium if all insurers are reluctant to pay.
From an insurer perspective, these are the things that they need to consider. They can’t consider social costs, they can’t consider increased or decreased female autonomy, they can’t consider the incremental cost of educating a kid from kindergarten to twelfth grade. They can’t consider any of that in their calculations. We can, but we should not be surprised that insurers don’t make this argument. It is not their argument to make. Medicaid and CHIP programs can make this argument as they are funded by state governments that are on the hook for these increased societal costs but a Blue Cross affiliate is not responsible for those costs.