On Health Insurance Mandates

The Obama administration’s introduction of a mandate that employers provide health insurance to their employees that includes “free” contraceptives has sparked a debate over government mandates like these vs. religious freedom, since this mandate would require religious employers to pay for contraceptives for their employees even if the religious employer opposes the use of contraceptives on religious grounds. The furor caused by the mandate forced the administration to “compromise” by amending the mandate so that employers may decline to provide insurance plans with “free” contraception for religious reasons, but that in such cases insurance companies must provide “free” contraception directly to women who request it. Anyone who understands basic economics (i.e. not your typical leftist — H/T Eternity Matters) understands that this “compromise” is a distinction without a difference since insurance companies in such cases will simply raise insurance premiums – which are paid by the religious employer — to cover their costs of providing “free” contraceptives. Religious employers would thus still be paying for contraceptives (albeit indirectly), and so the debate rages on.

Leftists have many “arguments” in response to the objection that the mandate violates religious freedom. One that particularly highlights leftists’ inability to understand basic economics is the claim that the mandate will actually save money for everyone — including the insurance companies — since it is less costly to provide contraceptives than pay for all the expenses related to pregnancy and providing health care for a child (the economically enlightened response: if it was true that “free” contraceptives save money overall then the “greedy” insurance companies would already be providing free contraceptives to save themselves money, even without a government mandate). Another leftist “argument” in favor of the mandate uses an amazing twist of logic: some leftists argue that for a religious organization to decline to provide contraceptives via health insurance is tantamount to imposing its religious beliefs on its employees and is therefore a violation of its employees’ freedom of religion. In other words, by this leftist “logic” the only way to maintain religious freedom on the matter of contraceptives is for religious employers to actively pay for contraceptives for their employees! But of course this falsely assumes women are unable to acquire contraceptives on their own, with or without health insurance. The actual way to maintain religious freedom is to permit women to purchase contraceptives (which they already can) while allowing those who object to contraceptives to decline to pay for them (which, of course, is the exact opposite effect achieved by the mandate).

The argument against the “free” contraceptives mandate on the grounds of religious freedom is an important one as a challenge against the constitutionality of the Patient Neglect and Unaffordable Care Act (Patient Protection and Affordable Care Act, in Newspeak). However, there is a far more important and fundamental argument against the “free” contraceptives mandate in particular and government mandates on health insurance in general: government mandates unnecessarily drive up costs of health insurance, and insurance companies have no business “covering” contraceptives in the first place (whether ordered to do so by the government or not).

Let us first consider why insurance companies are not in the business of covering contraceptives. The purpose of insurance is to alleviate risks which would cause unexpected and significant loss to the insured. Insurance companies are profitable while protecting against these risks because (a) these risks are spread amongst all the insured who pay the insurance premium and (b) these risks are not certain to occur (though of course these risks must have some nonzero probability of occurring, otherwise the insured would be wasting their money on insurance). But in the case where an insurance company protects against the monetary loss of purchasing contraceptives (by providing “free” contraceptives) condition (b) is not met. A woman who is using contraceptives (e.g. she regularly takes birth control pills) is certain to incur the “risk” of having to purchase contraceptives and her insurance company knows that, so the insurance company will calculate its cost of providing her and every other woman with “free” contraceptives and raise everyone’s premium to not only recover this cost but also make a small profit. But these predictable expenses are less costly overall if the insurance company middleman is cut out and people pay for them directly. Insurance is not meant to cover predictable expenses — it’s the reason why auto insurance doesn’t cover predictable expenses like gas, oil changes, regular car maintenance, etc., why homeowner’s or renter’s insurance doesn’t “insure” against mortgage or rent payments, and why there’s no such thing as “food insurance” for groceries (yet most of these items cost considerably more per month than contraceptives!).

Condition (b) is also not met if an insured risk is certain not to occur. For the case of “free” contraceptives provided by insurance, the “risk” of having to purchase them is exactly zero for many individuals: people who want children, post-menopausal women and their partner(s), the abstinent, homosexuals*, those who are morally opposed to contraceptives, those who are using free alternative methods of preventing pregnancy, etc. But if an insurance company is forced to provide “free” contraceptives to anyone who asks, the insurance company will be forced to raise premiums on all their customers — including everyone who has no need for contraceptives. While is it theoretically possible for an insurance company to only raise the premiums of those who do need contraceptives, the insurance company has no way of knowing a priori whether to raise the premium for a particular individual or not (someone can claim a desire to have children — and thus have no need for contraceptives — in order to obtain a reduced premium but later demand “free” contraceptives from the insurance company, which is mandated by law to provide these contraceptives for free). The effect is that the insurance company’s costs of providing “free” contraceptives are passed on to all the insured (which, per the individual mandate, includes everyone — even those who don’t need contraceptives and/or morally oppose them) even though the “risk” of having to purchase contraceptives has no possibility of occurring. It’s like forcing people without a car to buy car insurance so that they are “insured” against costs for their “car”.

Government mandates that insurance companies provide certain “free” products (like contraceptives) and services ultimately result in unnecessarily higher costs for such products and services. For one, as already mentioned the insurance company becomes an unnecessary middle entity which raises premiums to cover its costs and make a small profit for providing the “free” products and services — it would cost less to buy those products and services directly, if possible (as is certainly the case for contraceptives). Secondly, basic economics says that a reduced price will result in more demand — consequently, there will be more demand for “free” contraceptives. The problem is that the cost of supplying those contraceptives hasn’t decreased — instead, the costs are obfuscated from the recipients of the contraceptives and spread to all the insured (whether they want contraceptives or not). The added demand for contraceptives will therefore result in an increase in the overall cost of contraceptives. Considering one of the selling points of the Patient Neglect and Unaffordable Care Act was to “bend the cost curve down”, the “free” contraceptives mandate is a particularly dumb way to attempt to reduce overall health care costs.

Despite the fundamental problems with the “free” contraceptives mandate, leftists usually try to justify it by arguing that it is necessary to help poor women who can’t afford contraceptives (the “think of the poor” appeal to emotion has become the new “think of the children”). But the most appropriate way to do this would be to propose a tax that would subsidize contraceptives for poor women. Unlike insurance, taxes can be and are used to subsidize all sorts of expenses that are predictable yet not used by everyone (like food stamps). The problem with a tax subsidized contraceptives approach, of course, is that such a proposal would sound less appealing than “mandating free contraceptives for women’s health” and would therefore receive even more political opposition than the contraceptives mandate. It would also require an act of a divided Congress to pass such a tax, which would be much harder to accomplish than declaring an executive diktat.

*If roles were reversed and a leftist was making this argument, you’d probably be called a “homophobe” at this point. How dare you make homosexuals pay for something they don’t need!


18 thoughts on “On Health Insurance Mandates

  1. I agree that the “compromise” is phony. Religious organization should be able to opt out on the grounds of religious freedom – period. If people disagree, don’t work for Catholics.

    On the other hand – why the hell are we still debating whether contraception is moral or not. Time for the Catholics to catch up with this whole contraception thing. Sex is most certainly not JUST for reproduction.

    What married couple is trying to have a kid EVERY time they have sex? Saying its a sin for a married couple to have sex just to enjoy eachother is laughable.

    • The Catholic Church teaches that artificial contraceptives are immoral but that natural birth control (“natural family planning”) is a moral way for married couples to have sex even when they do not want to reproduce.

      Answers to moral questions are not things that anyone would need to “catch up with”. Either something is moral or it is not, regardless of time or culture.

      • That’s interesting. The catholic church used to say it was immoral to believe that the earth revolved around the sun, or to believe certain aspect of science. Morality is absolutely and constantly evolving relative to the beliefs of the people.

        Remember when irracial relationships were immoral by society or when the catholic church ruled the crusades were moral? I don’t hate the catholic church, but there are certain flaws with any beleif system

        And what exactly is “natural family planning”? How do you have sex without an intent of reproduction without some sort of birth control? (withdraw?) I’m not quite sure what you mean.

        • A culture or organization’s opinion on what is moral or not may certainly change, but morality itself does not change over time or with culture. Either something is moral or it is not. Saying that the Catholic Church needs to “catch up with” others’ opinions on morality implies, it seems to me, that morals are whatever the majority opinion says they are (which of course will change with time and culture).

          I agree that any belief system has flaws.

          “Natural family planning” is a method by which a woman tracks her body temperature and other bodily indicators to determine when she is ovulating (it is sometimes called the “rhythm method” but this is inaccurate). It is based on the same scientific knowledge that allows birth control pills to work. The idea is to avoid sex when the woman is ovulating (if you are trying to avoid pregnancy) or have sex when she is (if you are trying to get pregnant). The nice thing about it is that about the only monetary cost is a thermometer.

          • Using contraception to prevent pregnancy with your spouse so you can have sex is not immoral. A couple should be able to have as much sex as they want without fear of pregnancy – especially since it is possible to do and be healthy. I’m sure others would disagree.

            • “A couple should be able to have as much sex as they want without fear of pregnancy…”

              Unfortunately, that is NOT the nature of the human body. Sex is designed FOR procreation. Contraception works ‘contra’, or against, conception. There’s always a fear of pregnancy – always a fear that the contra-ception will fail – and, that the body will work as it is naturally supposed to.

              Unlike contraception which works against what the body naturally does, Natural Family Planning (NFP) accepts what the body naturally does. By observing fertility signs of the female’s body, a couple can ‘make use’ of the infertile phase that occurs in the woman’s monthly cycle. Thus, NFP does not work like contraception does.

              The beauty of the Catholic Church’s view is that it simply accepts the inherent nature of the human body and the inherent dignity of each human.

    • “On the other hand – why the hell are we still debating whether contraception is moral or not. Time for the Catholics to catch up with this whole contraception thing.”

      I certainly agree with Null that morality is what it is, and so that it doesn’t make sense to say that anyone’s understanding of the moral law should “catch up” with anyone. But what I’d like to add is that millions of non-Catholics also believe that contraception is morally wrong. Given how much our culture has both degenerated and disintegrated since contraceptives came into common use in the twentieth century (as well as other things one sometimes hears about contraceptives), I’m no longer sure they’re wrong.

  2. Well done. I hope more people realize that “health insurance” has not been actual “insurance” for decades. It has become a method for conducting transactional economic behavior with other people’s money. Thus, the continued higher levels of inflation when compared to any other sector, regardless of economic conditions.

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    • Thank you for the comment and suggestion! I’m glad you saw the connection between the HHS mandate and positive vs. negative rights.

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  5. Excellent points, especially about the purpose of insurance. If we would just focus more on catastrophic care and not the equivalent of covering oil changes, we’d be much better off.

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