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The real issue with the contraception mandate

Conor Durkin | Sunday, December 8, 2013

This past week, Notre Dame made national headlines when it announced that for the second time in two years, it will be suing the federal government over the Affordable Care Act’s contraception mandate, which forces employer-provided health insurance to cover birth control as a part of its standard package of benefits. The University argues that such a mandate imposes an undue burden on their religious freedom and that they and other religious organizations should be exempt from the law. I really have no idea how the courts will rule in the matter, but I am confident of this: the contraception mandate is simply bad policy, for an entirely different reason – an economic one.  
To understand why, you have to begin with an understanding of the real purpose of insurance. Fundamentally, the point of insurance is to protect people against risk. An individual gives up money each month in the form of premiums to make sure than when and if something bad happens to him, he won’t have to bear the brunt of the cost – the insurer will. Insurance thus makes perfect sense to buy in order to protect oneself against big unexpected risks, since most people would absolutely prefer not to be vulnerable to big negative financial shocks.
But what about for small, predictable expenses like birth control? Here insurance makes far less sense. As University of Chicago economist John Cochrane put it in the Wall Street Journal, “there are good reasons that your car insurance company doesn’t add $100 per year to your premium and then cover oil changes … markets would become much less competitive, and you’d end up spending more.” When insurance companies have to provide more benefits, they end up passing these costs back to their customers through higher premiums, and if the cost of your employer-provided health insurance goes up, your employer will likely reduce your salary accordingly. If instead of spending $50 a month on birth control an individual’s birth control becomes free, but their salary is reduced by $50 per month due to a rise in the premiums paid by their employers, are they really any better off than they were before? 
Providing health insurance that doesn’t provide free contraception isn’t denying access to birth control any more than providing health insurance that does provide free contraception is denying access to the other goods an employee could have purchased with the wages they gave up to pay for their higher premiums. As anyone who’s taken economics knows, there’s no such thing as a free lunch, and pretending there is only worsens the debate about an important issue.
Now, none of this is to say that access to quality birth control isn’t an important health issue. It is, and there are a number of ways we should work to make access easier for women. To begin, the government can make birth control available over-the-counter instead of requiring a prescription from a doctor. The American College of Obstetricians and Gynecologists has already endorsed this idea, which is how women in some 50 other countries around the world – including South Korea, Portugal, Argentina, Mexico, India, and China – are able to get birth control. Even socially conservative Republican Bobby Jindal, governor of Louisiana, thinks this is a good idea, and it would certainly expand access by reducing hurdles most medical professionals don’t think are necessary, thus giving women more control over their health decisions.
There are other ways to give individuals more control over their health decisions, too. However, the solution isn’t forcing businesses to provide more in benefits, it’s letting individuals buy insurance policies on their own instead of receiving them from their employer. Coincidentally enough, the Affordable Care Act can actually help with that, with its exchanges creating a market in which individuals can purchase their own insurance and decide for themselves how generous or stingy their benefits should be. Transitioning more fully towards a system in which employers provide fewer benefits and higher salaries will give people more autonomy in regards to how they spend their money, which will leave us better off. Incidentally, this would also solve Notre Dame’s woes, since employees would be responsible for their own insurance and the University could simply boost employee pay by the value of the healthcare they used to provide.
Birth control is an important part of healthcare, and figuring out how to expand access is an important issue, but mandating employer coverage ignores the economics of the situation and is simply the wrong answer to the problem. Instead, we should focus on solutions that actually give individuals more autonomy over their economic and healthcare decisions and remove hurdles to contraception access. We’ll all be better off for it.