The “Pill” and the HHS contraception mandate have become a (political) football and a symbol of what is wrong with our thinking about health care expenses

The “Pill” has become a political football and a symbol of the difference between liberal thinking and everyone else. Let’s look at a few facts.

Nearly 90% of employer plans already cover contraceptives as they do other prescription drugs. They are subject to normal co-pays and co-insurance. It seems to me a difficult argument that a women (or anyone else) should pay a co-pay for all her prescriptions, but a discretionary drug not treating an illness must be free.

Contraceptives were not always covered by employer plans mostly on the basis they were not used to treat an illness, we’re 100% discretionary and thus not insurable plus they added cost to the plan.  The coverage was added by employers as a benefit improvement, through collective bargaining, and to remain competitive with other employers; all recognizing the additional cost and offsetting that cost in other areas such as wages or other benefits and cost sharing.  Essentially the same evolution of coverage is true for ED medication.

Only because contraceptives were designated as “preventive” health care under the Affordable Care Act do we have the current controversy. This was done by HHS at the urging of the Institute of Medicine (IOM) the organization charged with making such recommendations which also included things like mammograms, blood pressure screening, colonoscopies, etc. We have reached the point where the basic assumption is no consumer can afford basic health care unless it is free (to them).

Virtually all women desiring birth control have access to contraceptives at no cost or very modest cost even if they pay 100% of the cost of a prescription. The annual cost for a brand prescription is $600 or less. The cost of a generic is about $20  per month. Contraception is covered by Medicaid for the very poor.

This is not a matter of affordability at all, it is a matter of priorities and personal responsibility and politics. At the risk of being called sexist, what other purchases does a women make each month that are not essential, but have a higher priority than paying for a contraceptive prescription? I could take a stab at a list, but I’m sure you can easily build your own. Let me note, however, that based on Internet research it appears the average woman spends about $750 a year at the nail salon, more than the total cost of a brand contraceptive for an entire year and far more than the typical annual co-pay under existing coverage. Where is the need to make this “free?”  Exactly what is a lot of money in the scheme of daily expenses?

Here is one perspective:

From an opinion piece in the February 7th Wall Street Journal By JEANNE SHAHEEN, BARBARA BOXER AND PATTY MURRAY

“So let’s remember who this controversy is really about—the women of America. Already too many women struggle to pay for birth control. According to the Hart Research survey cited above, more than one-third of women have reported having difficulty affording birth control. It can cost $600 a year for prescription contraceptives. That’s a lot of money for a mother working as a medical technician in a Catholic hospital, or a teacher in a private religious school.”

Somebody should tell these good ladies about how the poor spend their money.  Consider this from Daily Finance, “The Consumerist recently had an interesting post about a study that shows that poor households, with annual take-home incomes under $13,000, on average, spend $645 a year on lottery tickets, which comes to about 9% of their yearly income.” I’m not sure it’s the unaffordable pill we should be worried about.

We have a penchant for creating policy and long-term obligations based on the lowest common denominator and in isolation from the bigger picture.

In fact, the cost of prescription contraceptives is far lower for most women poor or wealthy. A generic drug covered by the typical employer plan is about $48 a year and for a brand drug about $100 a year. But even at full cost, still less than $600, in the scheme of life’s expenses, it is not a lot of money.

Here is a typical employer plan in effect long before the new health care legislation. In this case contraceptives are only covered via mail order – to save money. However, even at retail the monthly cost would be between $6 and $20. The mail order cost is between $12 and $40 for a 90-day supply. What possibly reason is there for these costs to be mandated to $0 just for oral contraceptives?

Keep in mind also that most workers in medium and large employers have Flexible Spending Accounts (FSA) or Health Reimbursement Accounts (HRA) which can be used for out-of-pocket health care costs on a tax-free basis, including the cost of a contraceptive or its co-pay or coinsurance thus lowering the net cost further. As is the case with many regulations and laws, applying one situation to all employers and workers is a costly and burdensome mistake.

You’ll pay:

$6 copayment for generic drugs; $15 copayment for preferred brand-name drugs plus the difference in cost for a brand-name drug when a generic drug is available;

or $20 copayment for non-preferred brand-name drugs plus the difference in cost for a brand-name drug when a generic drug is available. If you purchase prescription drugs at a non-network pharmacy or don’t use your XXX Copay Card, you must pay full price, then submit a claim form to XXX. You’ll be reimbursed for 75% of the cost, minus the copayment. You must submit your claim to XXX within 12 months of the date you incurred your expense to be reimbursed.

For maintenance prescriptions, after you refill a prescription twice through a retail pharmacy, additional refills of that prescription must be filled through the mail-order pharmacy.
Mail-Order ProgramYou can purchase up to a 90-day supply (brand-name or generic) of long-term maintenance drugs through the Mail-Order Program.

You’ll pay:

$12 copayment for generic drugs;$25 copayment for preferred brand-name drugs; or$40 copayment for non-preferred brands.

Mandatory Mail-Order

For all maintenance drugs, after the initial prescription plus two refills are purchased at the retail pharmacy, additional refills for the same prescription MUST be filled at the mail order pharmacy in order to receive benefits under the Plan. If you try to purchase the prescription at a retail pharmacy, you will be charged the full cost of the drug. Preferred drugs (also known as formulary drugs) can be either generic or brand-name drugs.

Oral contraceptives (NOT including patches or other contraceptive devices) and Erectile Dysfunction (ED) medication are eligible for reimbursement under the prescription drug program through the mail order pharmacy ONLY. ED medication is limited to ten pills per month.

From recently released HHS regulations:

“A 2000 study estimated that it would cost employers 15 to17 percent more not to provide contraceptive coverage in employee health plans than to provide such coverage, after accounting for both the direct medical costs of pregnancy and the indirect costs such as employee absence and reduced productivity.”

This is an interesting perspective because it assumes that because some third-party is not paying for a very affordable life expense, women will have babies. In any case it is a silly spin piece because the majority of employers do provide coverage. In addition, we are not talking about the majority of users being employees in any case, most are the spouses of employees.

We are making nonsense arguments in this debate trying to prove that more and more health care services must be free while ignoring the very purpose of insurance. Of course most people want anything they can get to be free, that does not make it affordable. The myth that all this will be paid for by the insurance company continues to be perpetuated. Coverage mandates are paid for by the insured individuals and employers, not insurance companies.

As for the poor, here is a summary of Medicaid coverage prepared by the Kaiser Family Foundation.

SUMMARY OF KEY FINDINGS

Prescription Contraception: Contraception is at the heart of basic family planning, and by and large, most states offer broad coverage for prescription contraceptives in their Medicaid programs. The majority of surveyed states cover most forms of prescription contraception (oral contraceptives, intrauterine devices (IUDs), implants, injections, and diaphragms) as a family planning service in all cases and draw down the 90% match.

Over-the-Counter Contraceptives: Fewer state Medicaid programs cover over-the-counter supplies and drugs under the family planning benefit. Of the 44 states responding to the survey, 30 states and DC always consider condoms a family planning service, as do 31 states and DC for spermicide, and 30 states and DC for sponges. Emergency contraceptive pills became available for sale over the counter in 2006. Only 26 of the 44 surveyed states always cover emergency contraception as a family planning benefit.

Sterilization and reversals: Sterilization is generally covered as a family planning service and receives the 90% match, with 36 states and DC always covering tubal ligations and vasectomies under the family planning benefit. None of the surveyed states routinely cover vasectomy reversals as a family planning service, and only Connecticut and Oklahoma consider them in some cases.

Does cost sharing prevent people from using prescription drugs? Studies have shown some reduction in use when cost sharing increases, but mostly among the elderly and poor; neither category is directly affected by these regulations.

As for this requirement not costing plans more, that is a spurious argument. A study in 1999 claims that when the federal government added contraceptive coverage it costs did not increase. Others claim that the new requirement will not add to insurance costs because the cost of contraception will be offset by fewer pregnancies. Think about this for a minute, we are talking about working women and the spouses of male workers, many, if not most, who are also working. These are not the elderly or poor in the vast majority of cases. Are we to believe that because a health plan has a modest co-pay for contraceptives (or indeed the full cost of less than $50 a month must be borne) more women become pregnant than when the drug is “free?”

Just where on the list of necessities, niceties and wants does family planning stand among these families (or single women)? To accept that the monthly co-pay for this group of people is unaffordable is absurd.

Given the current state of coverage for contraceptives, it is not a far stretch to say such coverage should be part of required coverage for all, but to make the leap to “free” tells you much about the mindset of policymakers and individuals when it comes to dealing with health care costs and that portion of life’s expenses that are at the very least a shared responsibility.