Why Contraceptives Are Important

As readers of this blog might suspect, the (ObamaCare) contraceptives issue is not of much concern to me. It is of interest only because it reflects the mindlessness that permeates so much of the Affordable Care Act.

In a free market, no one would ever purchase insurance coverage for contraceptives, any more than they would use health insurance to pay for seatbelts or airbags in automobiles. Because of their low cost almost everybody can afford contraceptives and if price is a deterrent they are available for free from local public health authorities or from such private organizations as Planned Parenthood.

Further, how did anyone ever get the idea that people should give up their First Amendment rights when they incorporate? This issue goes far beyond the Hobby Lobby and Conestoga Wood cases now before the Supreme Court. I don’t think the federal government should be able to put the executives at Pfizer in jail if they distribute an article from the New England Journal of Medicine describing an off label use of a Pfizer drug. Pfizer executives should have the same free speech rights as anyone else.

But here is something else that should be of interest to all of us: why would Congress pass a law mandating free contraceptives but leave people exposed for thousands of dollars of out-of-pocket costs if they need bypass surgery? I have been trying to explain this phenomenon to people for 30 years — ever since I discovered similar anomalies in the British National Health Service.

I call it the “politics of medicine,” and it illustrates why government should always play a very limited role in health care and why individual choice and competition should be given maximum reign.

And she’ll have fun fun fun
‘Til her daddy takes the T-Bird away

Here is how I explained it in Priceless:

In a typical U.S. insurance pool about 5 percent of enrollees will spend 50 percent of the money. About 10 percent will spend 70 percent. The numbers differ a bit from group to group, but you get the idea: a small number of people spend most of our health care dollars in any given year.

Now suppose you are a Minister of Health. Can you afford to spend half of all health care dollars on 5 percent of the voters? (Even if they survive to the next election, they are probably too sick to get to the polls and vote for you anyway!) Can you afford to spend virtually nothing on the vast majority of voters just because they happen to be healthy?

The answer is clearly “no.” The inevitable political pressure is to skimp on care for the sick in order to spend on benefits for the healthy. Put differently, the politics of medicine pushes decision makers to underprovide to the sick in order to overprovide to the healthy.

That is why it is easier to see a primary care physician in Britain than it is in the United States, but harder to see a specialist and much harder to access expensive technology. In the 1970s, the British invented the CAT scanner and for a while supplied half the world’s usage (probably with government subsidies). But the NHS bought very few CAT scanners for use by British patients. The British also invented renal dialysis (along with the United States), but even today Britain has one of the lowest dialysis rates in all of Europe.

Similar observations apply to Canada, where services for the relatively healthy are ubiquitous and expensive technology is scarce. PET scans, for example, can detect metabolic cancer about a year earlier than MRI scans. At last count, the United States had more than 1,000 PET scanners, while the Canadian Medicare system had only about 18!

These same political pressures can be found in the U.S. health care system:

In the U.S. Medicare program, policymakers achieve through patient cost-sharing what other countries achieve through the rationing of services: they punish the sick in order to reward the healthy. For example, although basic Medicare pays for many minor services that most seniors could easily afford to purchase out of pocket, it leaves the elderly exposed to thousands of dollars of catastrophic costs. (This is exactly the opposite of how insurance is supposed to work.)

When the federal government began regulating Medigap insurance (which fills the gaps in Medicare), Congress forced insurers to follow the same pattern. Medigap must pay small bills, but seniors can still experience thousands of dollars in out-of-pocket costs.

The pattern is repeated in the new Medicare prescription drug program (Part D). A “donut hole” exposes the relatively sick to significant out-of-pocket expenses for no other reason than the political desire to provide first-dollar coverage to the relatively healthy.

Consider a similar pattern in the Affordable Care Act. Every senior is entitled to a free wellness exam (of almost no medical value), while continuing to be exposed to large catastrophic costs. Younger people are required to have insurance that has a long list of preventive services with no deductible or copayment while being left exposed to more than $6,000 of catastrophic expenses in some cases.

Bottom line: when politicians choose health insurance plans, rational insurance is impossible.

Comments (28)

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  1. Ken says:

    Good post.

  2. charlie bond says:

    Good morning John,
    John, I am surprised at this post that asks the obvious question, “Why mandate coverage for contraceptives?” The answer is simple–especially for politicians and bureaucrats: If we want to lower the cost of health care for people, just have fewer people! Voila.
    Of course, in a few decades when the Baby Boomers no longer boom, we will have fewer people, by which time we will have constructed a health system so dysfunctional that folks will neither be able to use it or afford it, and our kids will be facing a massive debt for our care and a standard of living lower than we enjoy.
    But between now and then, thanks to the boys in Washington, patients can get screwed–at no extra cost and with no immediate consequences! Sounds like perfectly typical health policy to me. . . .
    Charlie Bond

  3. Greg Scandlen says:

    Excellent. But there is another explanation as well.

    I’ve dealt a lot with state mandated benefits. Politicians decide there is a big social problem, say substance abuse. But they don’t want to take responsibility for setting up a program and raising taxes for dealing with it. Instead they mandate that the benefit be included in all insurance policies.

    What a sweet deal! They get to go home and campaign on having “done something” to fix the problem, but avoid any flak for tax hikes. When the bill comes due everyone blames them greedy insurance companies for rising premiums. Politicians get all the credit and none of the blame.

    Oh, and then when more and more people can’t afford the resulting premiums, the politicians blame the newly uninsured for being deadbeats and free riders.

    Man, life is good!

  4. Lucas P says:

    Something is clear; government always seeks something in return for their policies. All legislation that is approved has interests behind it. This is true for legislation regarding business, healthcare, farming, everything. Dr. Goodman is explaining how politicians take advantage of the healthcare industry to support their future aspirations. He makes it clear, that is naïve to think that politicians are doing something for the benefit of the people. Politicians seek their own gain; if the people are benefited (or harmed) it’s just a byproduct.

    • Matthew says:

      Politicians no longer are adequate representatives of the people. It is clear the advantages they take for the sake of their betterment as well as the governments. Contraceptives are just another topic in a long list that should be free from government regulation.

  5. Thomas says:

    “when politicians choose health insurance plans, rational insurance is impossible.”

    Anything that politicians choose is irrational. They all have their own incentives and agendas aside from creating functional policies. This blog post has numerous examples of how government needs to be limited.

  6. Claire H says:

    I have never thought about it that way. It makes total sense. If the government provides free treatment in the things that are cheap, that healthy individuals appreciate and that is widely used, it will have a stronger political support than by covering expensive diseases that only few individuals can benefit from. This makes even more sense when we are looking to a legislation that needs young generations in order to be sustainable. Make the young happy and they will support your legislation, regardless if it is a useless legislation for the older generations. Government doesn’t care if the laws actually work; their sole interest is that the legislation seems to work.

    • Perry says:

      Yeah, the problem comes when these young folks get older and realize they’ve been taken to the cleaners, but then it’s too late.

  7. Andrew says:

    “…although basic Medicare pays for many minor services that most seniors could easily afford to purchase out of pocket, it leaves the elderly exposed to thousands of dollars of catastrophic costs. (This is exactly the opposite of how insurance is supposed to work.)”

    The purpose of insurance has become so convoluted and are now the opposite of the intended purpose. Health insurance is not there to pay for your doctor’s visit, it is there to pay for a costly accident or surgery.

  8. Ron says:

    Maybe there is a silver lining. With birth control for liberals and expanded abortion for the forgetful libs, we can keep down the future voting block for more idiocy.

    Just look at it as modern day “Darwinism” at work.

  9. James M. says:

    “…why would Congress pass a law mandating free contraceptives but leave people exposed for thousands of dollars of out-of-pocket costs if they need bypass surgery?”

    This is exactly the problem with allowing government to regulate health insurance. They have insurance companies cover the low cost and leave individuals with the high cost of everything else. Adverse selection at its finest.

  10. Samuel R says:

    It is stated really clear; contraceptives are so cheap, that almost everyone can afford them, and those who cannot, can get access to them through charities. I don’t agree with this mandate, I really don’t think that forcing contraceptives to be included on the insurance plans improves the nation’s overall healthcare. Providing contraceptives is simply a way to please the ignorant, while hiding what really matters.

  11. Jeff N says:

    All the debate that is going around about this issue of contraceptives, has been used by liberals to mock the believes of others, and to make matters worse this mockery is being sponsored by the government. Let people do whatever they want; government shouldn’t tell us what we should do or how to live our life. Contraceptives is not the real issue, it is just the Trojan horse used to attack a different style of life.

  12. George A says:

    The government will pay for the cheap things that everyone can afford and leave those extremely expensive treatments for the people to pay. That makes no sense at all. Why would I want to have insurance if those things that will cover, I can easily afford? ACA is problematic, not only does it forces you to pay high premiums, but it makes you pay for the expensive treatments as well. It is much simpler for people to be responsible, set up a HSA with monthly payments equal to the insurance premiums, and in a few years you can pay out of pocket for any treatment that you need. Obamacare is not making things better for everyone, it is the contrary, by harming the majority, and the government is helping the big insurance companies to keep their profitable business.

  13. Diana Furchtgott-Roth says:

    Brilliant, as always. That’s why government systems like to cover small expenditures but not large ones…

  14. Devon Herrick says:

    Many health plans cover contraceptives. Health plans don’t want cost to become a barrier that results in even more expenses (i.e. labor & delivery is expensive). But, that is health plans’ decision; it should not be the government’s decision.

    believe the decision goes even further than the mere politics of medicine. Interest group theory comes into play as well. Creating one specific group of winners cultivates support for a program that is controversial. It’s not likely that young males will support the PPACA. However, providing something that is especially beneficial to young women in their reproductive years is a way to boost votes more efficiently than merely mandating coverage for, say, an extra (free) primary care visit each year.

  15. Sam Kazman says:

    This is really an excellent piece, John, succinctly explaining something I’d never realized before.


  16. Steven Baer says:

    Brilliant, John. Thanks!

  17. Floccina says:

    As readers of this blog might suspect, the (ObamaCare) contraceptives issue is not of much concern to me. It is of interest only because it reflects the mindlessness that permeates so much of the Affordable Care Act.

    Not at all. Young woman are an important constituency of the democrats who occasionally go republican. Rather than thoughtlessness it is a brilliant move by the Democrats and all this press helps all the more. It is skillful Machiavellian vote buying.

  18. DR. L. BRODY says:

    John, this is one of your best. But only health professionals will read and understand it.

    I love it. In the meantime, more taxation and more bureaucracy. It’s survival of the fittest time.
    and I enjoyed all the comments too.

  19. Kathleen Goryl says:

    Contraception may not be important to some, namely those that have not heard from Professor Janet E. Smith. Once you listen to the CD, “Contraception: Why Not” New and Revised 3rd Edition, it will likely make more sense why contraception is important. This CD is available from My Catholic Faith Press, http://www.MyCatholicFaith.org.

  20. wanda j. Jones says:

    John and Colleagues:

    The government has other cheap options for limiting births:

    Put mainland Chinese in charge of birth policy: Only one child per family.
    Make abortions free to the woman, but a man has to pay for them.
    Can’t buy a car or a house if have baby while single.
    Parents of teens have to agree to assume all costs of teen births.
    Reversible male contraceptive for all participants in sports. Have to ask for reversal when married and without bastard children.

    And so on. These are no crazier than the policies floating out of Washington.

    This blog is so important and so profound that it should be turned into a
    piece that can go into publications read by the target markets.

    First dollar coverage is pernicious.

    The most disturbing thing is the way Obama and his delegatees feel it is their right to take people and companies to court to force moral positions on them.
    It illustrates that the ultimate revelation of Obamacare is how corrupt our government is.

    Wanda J. Jones
    New Century Healthcare Institute
    San Francisco

  21. Gitmoray says:

    John, if Medicare did not have small benefits for the healthy, there would be major resistance to the program. By the way, in the interest of keeping your articles factually correct (they usually are), the following statement is deeply flawed.

    “When the federal government began regulating Medigap insurance (which fills the gaps in Medicare), Congress forced insurers to follow the same pattern. Medigap must pay small bills, but seniors can still experience thousands of dollars in out-of-pocket costs. ”

    The most utilized Medigap plan by far is Plan F that covers 100% of everything not covered by Medicare, which is a bad idea, as people have little skin in the game, and thus allow doctors and other providers to grossly overuse, since there is little pushback from the patient. There are various Medigap plans that have co-payments and deductibles in exchange for lower premiums, and these plans are barely ever used by seniors. This is a clear case of the free market at work, and the result is that people vote overwhelmingly for first dollar coverage.

  22. John R. Graham says:

    I would add that most people want to engage in the activity for which contraception is used. So, when a politician campaigns on this, he is inducing people to have pleasant fantasies.

    If he campaigns on insurance that protects people from expensive costs from catastrophic illness, he is campaigning on something that brings up unpleasant reactions. Therefore, he avoids it unless he has to confront it.

  23. Bob Hertz says:

    Obama used contraceptive coverage to reward the women who voted for him, and also to reward the highest ranking women in the administration and the Democratic party.

    The 2009 stimulus had similar goodies for the democratic base.

    I am not so sure that Bush or Reagan did anything different, they just had a different base to reward. George W Bush gave huge rewards to cheap labor construction companies and military/mercenary contractors. I wonder if this may have been worse for the nation than contraceptive coverage.

    Note to Wanda:

    You say that first dollar coverage is pernicious. Call me a skeptic on that.

    In fact call Dr Goodman a skeptic on that. His wonderful essays on ‘ideal health insurance’ actually recommended first dollar coverage for non-discretionary serious illnesses.

    • Ron says:

      This type of relativistic tripe that liberals always use. “Our crooks are no worse than their crooks.” “Our cheats are no worse than what they did before us.” God help us as we slide down the slope to a relativistic compost. They always blame G.W. Bush and Reagan at their worst to justify what they believe is Obama at his best.

      Instead of relativistic nonsense, maybe you should try comparing actions to a set of core principles that you can live by.