Wednesday, July 9, 2014

Gleanings from a not unincidental economist

Pinned angel, from CraftyB (not a Hobby Lobby rival, I think, but an independent artist).
I may need to offer an "I changed my mind" over the question of whether covering contraception in the health insurance policy lowers the insurance costs, by saving the costs to the company of unintended pregnancies, or not, which I chewed over most recently here, because Austin Frakt, the Coincidental Economist, has warned readers of the New York Times Upshot that this may not be the case: because among the sources cited by my source (the HHS Issue Brief of February 2012) is a study from Hawaii whose conclusions are "not unambiguous":
Based on an examination of just four health plans, the state’s insurance commissioner concluded that the mandate “did not appear to have a direct effect on an increase in the cost of health insurance.” However, this conclusion is hedged; the detailed results from each of those four plans do not unambiguously support it.
Well, mercy! They just said
Health Plan A’s data.... correlates with the statement by Health Plan A that since contraceptive coverage was offered prior to the mandate, the mandate has had minimal or no impact on Health Plan A members or employer groups. 
the impact of the mandate on Health Plan B’s members and employer groups has been minimal.
the mandate has had little effect on Health Plan C members or employer groups. However, Health Plan C’s membership did increase during this period, and prior to the mandate only 29% of the members were covered for contraceptive services. Therefore, evidence of an impact, if any, may not be apparent for one or two more years. 
Health Plan D’s contraceptive coverage appears to have very little or no impact on its members and employer groups. 
That doesn't sound very not unambiguous to me. I don't know what Frakt is up to, but they plainly do support it, as does the other main source, much more decisively:
A 2000 study estimated that it would cost 15 to 17 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. Consistent with this finding, when contraceptive coverage was added to the Federal Employees Health Benefits Program, premiums did not increase because there was no resulting net health care cost increase [per Dailard, C., Special Analysis: The Cost of Contraceptive Insurance Coverage, Guttmacher Rep. on Public Policy (March 2003)].
A point Frakt makes that I certainly failed to see is that most policy holders who will use family planning if their policy covers it will also use it if the policy doesn't. They'll just pay for it out of their pockets:
In part because it is so cost-effective, most people are willing to pay for contraception with their own money, if they can afford to. (Many Medicaid-eligible individuals perhaps cannot, but most employed people probably can.)
In this way the insurer saves the cost of pregnancies either way, so covering the contraception is a net loss to them. This could well be true, except that paying for your own contraception may lead to using less than ideal methods which may fail. This could make a real difference, suggests Wikipedia not unindirectly:
Contraceptive failure accounts for a relatively small fraction of unintended pregnancies when modern highly effective contraceptives are used.[8]
But we don't know how much of a problem. How small is that fraction, and how much larger is the fraction when old-fashioned, somewhat ineffective methods are used (or unused when you really meant to use them, for reasons that I need not dwell on, except to note  that they are reasons that never happen with an IUD)? Not seeing any numbers on that, I'm afraid, but if I do I'll let you know.

My own point, though, remains unchanged, because whether Dr. Frakt there is right or not, the basic fact is that the insurers have elected not to charge higher premiums for including mandatory contraception coverage (in the 2003 Guttmacher report cited above, the government had invited insurers to come back and demand compensation for any additional costs, but they just didn't have any).

So that whatever incidental or nonincidental or not unincidental economists may opine about the issue, the bottom line is that the additional premium businesses are forced to pay to take care of their slutty employees' needs may not be minus $97, that's what I was definitely wrong about, but is in fact $0, which is really not enough to make a difference to any wallets except those of the angels dancing on pinheads around Justice Scalia's splendidly robed person. There is no way for an employer to know whether he's paying it or not!  Frakt is just trolling, because however much it costs it isn't enough for those cheese-paring actuaries to bother with. The premium is the same!


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