The new birth control mandate has caused uproar from both sides of the spectrum. Church officials argue that employers should not be required to cover birth control products. The other side contends that women should be covered to promote maternal and child health.
I’m not going to comment on either side of this social debate. However, the economic debate seems to be fairly one-sided.
This isn’t an argument about spirituality, fairness or women’s rights. The debate should be focused on costs, and why anyone in this country should be forced to cover contraceptives as “insurance.”
Insurance at the heart is meant to cover large, unexpected expenses. In exchange for a premium, insurers agree to protect you if your house burns down or if you get into a car accident. Risk-averse consumers are happy to pay a premium on their home, even though they know the chances of it burning down are extremely small, because it’s worth it to ensure they have a home if that tragedy were to ever occur. Both the insurers and the consumer benefit from their arrangement.
However, there’s a good reason your health insurance company doesn’t charge an additional $50, and then agrees to cover Band-Aids. Small, regular and predictable expenses are never covered by insurers, and for good reason. The only result would be less competition in the market for band aids and thus higher prices for consumers. Furthermore, you’d be required to fill out a ton of paperwork every time you wanted a Band-Aid. It’s better for insurers to cover unstable expenses and let the private market handle the predictable ones.
The government argues this mandate allows women to get access to birth control products. Was their some sort of ban on access to these products before? I can get birth control, just like I can get Band-Aids, now because I have a few bucks in my wallet and supplier willing to trade with me.
The focus of this discussion shouldn’t be about access, but insurance and costs. Free pills and condoms sound great, but somebody has to pay the tab. Perhaps it seems your employer is picking up the check, but to cover his increased expenses, he may raise the price of his products or services, or pay you less in salary. Either way, the money has to come from somewhere, and if you follow it enough, you’ll see the consumer always ends up paying.
At a time of fiery debate about public policy and social welfare, let’s turn the focus from religious fanatics and feminists groups to sensible economists. All of these discussions start with money. Let’s make sure this debate ends with it, too.
