Everything an insurance companies pays for increases the premiums people pay. It makes no sense to give rich people “free” birth control since part of the payment for that is coming from premiums paid by poor people. We don’t have to worry about rich people having too many kids. They can figure out how to keep their families small all by themselves.
It’s like giving everyone “free” food because poor people can’t afford food.
ETA: Change “rich people” to “rich and middle class people”.
So you’re saying that if covering a procedure cost an insurance company X, and saved them Y in claims compared to not covering that procedure, and X > Y, the insurance company shouldn’t do it anyway, because of some philosophical point about what insurance should mean? By definition, at that point, the extra cost in premiums incurred by covering the procedure will be outweighed by the savings in reduced claims, so premiums would stay the same and could even be reduced.
The distributional aspect is a red herring: risk pooling incurs the distributional impact regardless of what is covered. Why should a poor person in the same risk pool as a millionaire pay higher premiums to cover the appendectomy that the rich person could have paid for out of pocket?
I beg to differ with this. I don’t think it’s true that most can afford $60 a month for a medication. When I was a college student and in my 20s, I had insurance and my BC pills still cost $30-something, and even that was hard for me to swing at times. I don’t think that $60 is easily affordable for minimum and low-wage workers, young people and college students. And these are the people who can least afford unwanted children and most need birth control.
I reallize that you’re addressing a different matter with John Mace, but I do wonder if the insurance company comes out ahead by offering hormonal birth control at a reduced price. My hunch is that it does not, but I’m not sure how to even being finding this out.
Well, one way to get a handle on this, though it wouldn’t be perfect, would be to compare the coverage decisions of insurance companies that operate in states with mandates to cover contraception to those in states without. I don’t know if you could filter out confounding variables (such as the fact that many employers probably want their insurers to cover birth control regardless of mandate), but if significantly fewer insurance companies cover birth control in mandate-less states, then that might be an indication that the analysis I proposed militates against covering contraception.
Not really. Insurance company A takes in $X and pays out $Y, in what scenario does that company stay in business?
I guess I have a different perspective of cost. Clearly the company must take in more than they pay out. That doesn’t mean the insured takes a loss. Insurance simply wouldn’t exist if that were so.
No. I’m saying that if rich and middle class people don’t get “free” birth control that there will be a negligible increase in in the number of births. So, giving them this benefit does not reduce overall health care costs. It’s just welfare for people who don’t need it. Most people will be glad to take something for “free” that they would normally buy if it wasn’t “free”. I would.
You’re confusing the effect of offering a smaller subset of society (ie, the poor) subsidized birth control with offering that subsidy to people who can afford it on their own.
By definition, the insured as a whole take a (monetary) loss; else the insurance company doesn’t make money. What insurance buys you, though, is risk management. You pay a (relatively) small cost on a regular, predictable basis to guard against the risk of paying a large cost at an unexpected time. Certain individuals with insurance might wind up with a positive monetary outcome, because their claims outweighed the costs of their premiums. But they must necessarily be counterbalanced by other individuals who pay more in premiums than they receive in claim payouts.
And in such a situation, my proposed analysis would argue that it does not make economic sense for an insurance company to cover contraception. The cost X in covering birth control would not be offset by the savings Y in reduced claims.
No I’m not. All I’m doing is arguing against the premise that it never makes sense for an insurance company to pay for routine procedures. There can be an economically rational reason for insurance companies to cover predictable costs.
You’ll note that my original post specifically stated, “I’m not saying that this calculus implies that it is necessarily economically rational to pay for birth control.”
Sure. I take a monetary loss at grocery stores, barbers, and the doctor, too.
Regular maintenance of your vehicle saves money in the long run. Should the auto insurance companies pay for your oil changes and tuneups, and if they refuse, should the government force them to do it?
First of all, you mean X < Y.
Second, if the insurance company does not pay X, and the people pay 0.8X themselves to buy the same benefit, and that saves 0.8Y to the insurance company, then only if X < 0.2*Y will it be cost effective to the insurance company to pay X. Which is not a certainty.
On the average, the insured takes a loss. In individual cases, some insureds take a loss, some are even, some come ahead.
Insurance would not exist at all if this were true.
Insurance would not exist at all if this were not true.
You’re right that I meant X < Y. But my definition of Y is that it is the amount the insurance company saves in claims versus not covering the procedure, not versus their customers not getting the procedure at all; Y factors in the likelihood that people would get the procedure anyway if it weren’t covered. As to whether X is indeed less than Y, well, that’s a matter for the actuaries to try and figure out.
Well, auto insurance companies don’t cover fixing your car when things go wrong due to wear and tear, just due to accidents, so this is not really an analogous situation (health insurance does cover procedures that are necessary due to “wear and tear,” after all). If providing oil changes and tuneups on your car for free made you sufficiently less likely to get into an accident such that the savings in reduced claims covered the costs of providing the benefit to you, then yes, it would be economically rational for the insurance company to provide the benefit to you.
Government mandates are neither here nor there in my argument. Note, though, that if it was economically rational for insurance companies to provide you with benefit B, then it stands to reason that not providing benefit B would increase your premiums (or decrease insurance company profits, but let’s assume, arguendo, an efficient market). If the only reason that B was not being provided to you was because your employer had some moral objection to your getting B, then your employer is forcing higher costs on you to satisfy his moral code. That seems unreasonable to me.
That’s not a relevent analogy since insurance companies don’t have to pay for conked out engines. They have to pay for “accidents”.
OTOH, it is in insurance companies’ interests that people are forced to wear seat belts.
Who would buy insurance if the benefit they received were not worth the cost?