Religious Objection Not the Only Problem With Obamacare Contraception Mandate

A debate in the media is currently swirling around the objection of Catholic and other religious institutions to a new requirement to pay for insurance plans that cover contraception for their employees. However, this narrow focus has obscured the larger problem of government insurance mandates in general.

One of the primary justifications for the Obamacare (and Romneycare) individual mandate is that there is a “free-rider” problem: people without insurance get into an accident and get brought into the emergency room. The hospital treats them and ends up eating the cost. Therefore, the argument goes, individuals need to be mandated to have insurance to cover these costs. However, the main reason so many people don’t have health insurance in the first place is because it’s too expensive. Why? Because the government has made affordable health insurance illegal.

Many people—especially young healthy people—really only want an insurance plan that covers “catastrophic” costs: if they get cancer, or are in an accident, etc. However, the government likes to pretend to be compassionate by mandating on both the state and federal level that health insurance pay for all kinds of elective or routine expenses: acupuncture, substance abuse treatment, wigs and hairpieces, contact lenses, in vitro fertilization, chiropractors, mammograms, etc. There is nothing necessarily wrong with any of these treatments, but it is a problem when the government requires every plan to pay for these things when many people would rather have less expensive, less comprehensive plans. These mandates make insurance less affordable. If the “free-rider” emergency room situation is the argument for the individual mandate, why would the government mandate that everyone’s insurance cover all sorts of treatments and procedures that have nothing to do with emergency room care?

The new contraception rule will make the cost problem worse. What about people who are not sexually active, don’t believe in contraception, or would rather pay for it out of their own pocket, rather than through insurance? They will have no choice now but to pay higher premiums, or go without insurance entirely. If the insurance is through their job, the employers will be faced with the higher premiums and will either drop coverage or pay the higher premiums at the expense of lower wages.

Demonstrating that they have completely crossed into fantasyland, the administration argues that this regulation will not result in higher costs to anyone. Contraception is a multi-billion dollar a year industry, yet we are supposed to believe these costs will be completely invisible? They argue that the savings from covering fewer childbirths will more than offset the extra expense of handing out free birth control. If that is true, why doesn’t health insurance already cover free birth control? Their argument makes no sense on even the most basic level.

To enforce the silly expectation that premiums won’t rise, the government will likely try to use price controls to prevent insurance companies from raising premiums. The inevitable result will be that insurance companies will look to cut costs in other ways that will be even more harmful to their customers, or they will get out of the health insurance business entirely, further reducing choice and competition in the marketplace.

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Update: Peter Schiff has posted a video blog on this issue making some of the same points, as well as several other good points.