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July 07, 2014

Now It Can Be Told: HHS' "Free Contraception" Isn't So Free After All

More than a year ago, I wrote about how HHS was proposing to create free contraception via regulation, essentially magicking it out of thin air.

The Obama Administration accomplished this feat of financial witchery by making two magical claims. First, it declares that for insured group health plans, the cost of contraception and abortifacient coverage with be "cost neutral, and may result in cost savings" once all other benefits are considered. (Pardon me for a minute while I flash back to Obama making the same false claim about Obamacare's own impact on the federal budget.)

The rule cites a study that finds the cost of contraception is cheaper than the cost of unplanned pregnancy, which is idiotically beside the point, since no one, not even the Obama Administration, is suggesting that people who do not get free contraception will necessarily fail to use any contraception at all. This pathetic, financially dubious dodge is the fig leaf that the Obama Administration has hung on the religious employer exception. It gets worse though.

Second, for self-insured health groups, like some corporations, the proposed rule says the cost of contraception and abortifacients will be offset because the ultimate issuer of the objectionable coverage (the rule contemplates a third party) will get to deduct the cost from the federally-mandated exchange fees that all such insurers will have to pay to continue operating under Obamacare. Essentially, Obama is saying to these insurers: "You must pay me a fee to stay in business, but you can deduct the cost of contraception from the fee, so that makes the contraception coverage free."

I also wrote that this wouldn't work, obviously. And wouldn't you know, more than a year later, tucked away at the end of an article in Saturday's NYTimes comes word that the magic is unraveling.

But employee benefits experts said it was not working well, in part because insurers and third-party administrators have had to foot the bill for contraceptive coverage without any immediate offset or reimbursement.

“They are not being paid, and they have no prospect of being reimbursed,” said Christopher E. Condeluci, a lawyer for the Self-Insurance Institute of America.

The Obama administration says the cost of providing contraceptives will be offset by savings that result from greater use of birth control, “fewer unplanned pregnancies” and improvement in women’s health. But, Mr. Condeluci said, “It may be years before the savings are realized.”

HHS' original goal was that contraception would be "free" for women. This one dubious policy goal is the reason for all the contortions and lawsuits that followed. Stupidly, HHS failed to immediately realize that the people who would be forced to pay for this contraception might object. Hence, the late-promulgated contraception mandate regulations that declared that something totally false—specifically, that contraception will also be free for employers, insurers, and third-party administrators—is true notwithstanding. It's not a fiction that can persist forever and folks are finally noticing.


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posted by Gabriel Malor at 10:00 AM

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