What Contraception and Government Health Benefits Tell Us about the Health of Our Pluralistic Society

The current debate over the coverage of contraception tells us much about the state of our society in ways that have little to do with how we approach the issue of contraception, but much to do with how we view the role of government in our daily lives.  This issue also spells out a lesson about the pitfalls of designing large, uniform, national programs for an increasingly pluralistic society.

This controversy arose within the context of the Obama administration’s decision to include contraception as a mandated benefit that all employers would be required to offer employees. As we’ve learned once again, many employers, particularly faith-based organizations, are repulsed at the prospect of having to fund something that runs so counter to their religious and moral beliefs. 

The Administration’s policy remedy is to exempt faith-based employers from the mandate on the proviso that insurers will offer a separate policy of contraception benefits to employees of these employers who desire contraception benefits.  This benefit is to be provided by the insurer at no cost to the policyholder.

The remedy itself, as many have pointed out, this remedy is flawed, because objecting employers will not be shielded from paying the cost of these benefits.  The health insurer will act as a convenient intermediary to shield the employer from having to directly purchase a policy of insurance that includes coverage for these benefits.  Nonetheless, these employers will still contribute toward the funding of these benefits through the insurance mechanism. This will socialize the cost of providing contraception benefits across all policyholders through the premium-setting mechanism.

Apart from the weaknesses of the Administration’s remedy, we have much to learn from this episode. 

First, an attempt to provide uniform benefits to all Americans is problematic, particularly when it comes to the charged issue of health care.  The problem worsens even more when done through the employer-based system for financing health benefits.  This issue would have played out much differently if faith-based employers did not have a financial stake in the decision.

And let’s not overlook that the controversy about including contraceptive services in the health care benefit is really an outgrowth of our society’s bias for government-provided benefits.  This bias is fueled by our democratically-elected leaders’ penchant for demonstrating value in the form of legislated benefits, and our appetite for accepting these benefits, especially when we perceive them as being paid for by someone else.  By socializing what economists would describe as a private good, we become parties to decisions made by our policymakers that would have otherwise been our private, personal decisions.

Spending other people’s money has been elevated to an art form under the guise of a social return on investment (ROI).   Our politicians and policymakers often argue in favor of a decision based on the return on investment that will be associated with a proposal.  Forecasting the ROI of a social policy is always problematic.  It’s made even more so when the policy is so morally charged.  The problem with social ROI’s is that we don’t all place the same value on the hoped-for return.

Similarly, policies are often promoted and defended on the basis of the unaffordability of the good that has such high value for society.  This approach is also fraught with danger.  Is most contraception unaffordable, or have we just decided to place a social premium on its use?  Is contraception any less affordable than gasoline?  Only the person making the decision can answer that question, unless of course, the contraception becomes free to the consumer.  We can avoid having to make trade-offs like this between competing goods by making one of the goods less expensive or free.

Long ago, we expanded our view of the proper role of government beyond securing our national defense and building roads.  Our government is now actively and intricately engaged in providing health care to its citizens.  Government programs, by their very nature, strive for consistency and uniformity of implementation and result.  Uniform benefit standards have forced us to debate and defend our various moral preferences in the town square. 

It should come as no surprise then that on issues like contraception benefits, it has been so hard to find a middle ground that accommodates the views and interests of dissenting voices.

Perhaps the most confounding aspect of the current debate regarding contraception is that it could arguably be sold safely without a required prescription.  A Los Angeles Times Op-Ed by Malcolm Potts effectively makes the case for making contraception an over-the-counter product.  If that were the case today, contraception would not qualify as a health-care benefit.

The bottom line is that the Obama decision is a political and policy bias in favor of making contraception widely available at little or no cost to users.  By doing so, the Administration has revealed much about us and our society – beyond the limits of contraception – that should give us pause.

The End of Health Insurance Companies?

Imagine: No more health-insurance companies. That’s what Ezekiel J. Emanuel and Jeffrey B. Liebman, former advisors under President Obama opined in a blog piece posted on The New York Times website on January 30. The two authors boldly predicted the end of health insurance by 2020 in what many might optimistically view as the health-care equivalent of President Kennedy’s declaration that the United States would land on the moon by the end of the ‘60’s. After all, even on their best days, health insurers don’t win many popularity contests.

Emanuel and Liebman accurately depict many of the mega-forces taking place in the health-care market today. Employers are taking on more financial risk for health benefits as they become self-insured. The government is driving reimbursement reform with its Accountable Care Organization (ACO) pilots, and private insurers are following suit.

There’s a lot to like in their arguments, and yes, we have reason to be optimistic that improvements are being made to our health-care system. In declaring the death of health insurers, however, Emanuel and Liebman have fallen into the all too familiar, medical-establishment trap -- oversimplifying the roles insurers play and exaggerating the medical field’s ability to take on these functions.

Let’s start with the premise that health insurers will become extinct by 2020. The hard reality is that health insurance, properly viewed, has been extinct for at least the last 20 years, perhaps longer. The employer purchasing model and previous reforms that placed limits on underwriting and pricing saw to that.

Today, insurers serve as financial intermediaries that provide a variety of services necessary for our health-care system to function properly. Would we feel better if we didn’t know that some doctors practice medicine outside the mainstream of currently accepted practice or science? Insurers help inform us of these instances.

Similarly, would we feel better not knowing that different health systems charge much higher prices for identical services, or that their outcomes place patients in greater jeopardy than if care were delivered at a different health system? Insurers help inform us of these instances.

Having said that, there is much to like about the ACO model, starting with the fact that health systems and practitioners will ultimately be accountable for delivering care outcomes within a predefined cost target. The irony is that thus far, the presence of private and public health insurance programs has helped create a system in which mediocre outcomes have been acceptable and escalating costs have been almost guaranteed.

Emanuel and Liebman look forward to a day when ACO’s are unencumbered by health insurers and have accountability for making decisions that promote health while eliminating barriers to treatment. The risk in predicting the end of insurers, is that we blind ourselves to the fact that many functions insurers perform remain necessary, and must be transferred to another entity.

For example, what will an ACO’s response be when the best medical science points practitioners in a direction that runs afoul of current medical practice and popular opinion? ACOs will have a clear choice: Either continue practicing under the old paradigm and deliver suboptimal care, or become the new gatekeeper that stands in the way of delivering sub-optimal care patients have come to expect.

ACO’s that take the gatekeeper role seriously will provide an important, social benefit. Practitioners are inherently better positioned to manage patients through the evolutionary changes that will take place in how medicine is practiced, and will be more likely to assuage their patients of the value associated with future changes in the way medicine is practiced. On this front, insurers have failed miserably.

Will ACO’s take on this role? Only time will tell.

The problem with predicting the demise of insurers, is that this view risks celebrating the death of the messenger – in this case, health insurers. This outlook also invites a visceral, celebratory reaction from many quarters that we’ll solve all our problems by eliminating insurers. There’s much to dislike about health insurers, but it’s naïve to think that simply moving them off the stage of health care will solve our problems. Unfortunately, our problems are more fundamental and aren’t confined to the insurance function.