We have the best readers and commenters. Bar none. Earlier this week, Nate Ogden provided us much-needed perspective on the dramatic cost of the birth control/abortifacient mandate. Today, he offers a terrific take-down of Maggie Mahar's silly thesis that "Free Birth Control Will Not Hike the Cost of Your Insurance." Here's a sample of Maggie's "logic:
"If my married daughter lays out a $15 co-pay for birth control pills, she doesn’t save a dime ... in terms of the costs to give birth to the child, she is not much better off, because if she does become pregnant, her insurer, like many, would pay the bills above and beyond the co-pay."
Take it away, Nate:
This argument is wrong in both logic and fact. The cost of deductibles and co-pays for child birth is thousands of dollars, not the same as the monthly Rx copay. The new SBC (Summary Benefit) reporting requirement uses birth as one of the two examples of cost. I'm looking at the government issued sample SBC now and it says the patient would expect to pay $2,050. That is 136.6 months of birth control co-pays - 10 years worth of birth control. Major miscalculation by Maggie. Further this does not include lost earning potential and other costs related to being pregnant.
"By contrast, if an insurer makes birth control totally free for all of its customers, it avoids having to reimburse them for countless unplanned pregnancies and births. Overall, then, it’s cheaper for the insurer to pay a little upfront to save a ton down the line."
Maggie makes the mistake of not understanding how insurance works in this argument. Insurers charge overhead over expected claims. Their profit is a percentage of revenue, so the higher the claims, the more money they make. In reality Maggie is 100% wrong: insurers make more money if their members become pregnant because premium would be higher and their 5% would be of a higher number.
"There’s some indication that co-pays serve as a barrier to using birth control."
More than an indication, its accepted fact that unaffordable premiums are a barrier to insurance. If you can't afford the insurance policy that covers birth control at 100% you're no better off than the person with affordable insurance that covers birth control with a $10 co-pay.
"employer-sponsored insurance plans have increased considerably over the past decade to $49 in 2010 for ‘non-preferred’ brand-name drugs and $28 for brand-name drugs.”
Why would Maggie fail to mention generics in a discussion on cost [ed: that's rhetorical, right?] ? Generic birth control can be purchased for less then $9 per month. If cost is an issue, why not look at the numerous generic options instead of brand name?
Where Maggie's argument really falls apart is the unintended consequences: she fails to acknowledge any. The bill as written says birth control must be paid at 100%, but we still don't know exactly what that means. Right now millions of women take generic birth control that cost less then $10 a month because cost matters. What if they can now get the brand name drug for free? We already know Pharma is very successful in pushing the latest and greatest drug regardless of effectiveness. If the $9 generic is "free" and the $300 brand is "free" why would women not fill more of the brand? This alone would cause costs to skyrocket.
But there is more. Right now Pharma is sensitive to price; members and plans will only pay so much. Take the IUD Mirena, which might now have to be paid at 100%. When it was just an IUD subject to stricter cost control, it cost $515.85. When it was approved for the treatment of heavy bleeding and prescribed as a treatment, they raised the cost to $742.42. Now that insurers might have to cover it at 100% why not raise it to an even $1000?
"This is why the notion that President Obama’s proposal will lead to higher insurance premiums is ... just plain silly.”
Who seems silly now?
Thanks again, Nate!
Oh, and one more nail in Miss Maggie's thesis. Even HHS Secretary Shecantbeserious disagrees:
"There would be no consideration of cost effectiveness. That was the explicit condition that the Department of Health and Human Services imposed on the ... mandate that will require virtually all health-insurance plans in the United States to cover sterilizations and contraceptives—including those that cause abortions." [emphasis added]
Ooopsies.
"If my married daughter lays out a $15 co-pay for birth control pills, she doesn’t save a dime ... in terms of the costs to give birth to the child, she is not much better off, because if she does become pregnant, her insurer, like many, would pay the bills above and beyond the co-pay."
Take it away, Nate:
This argument is wrong in both logic and fact. The cost of deductibles and co-pays for child birth is thousands of dollars, not the same as the monthly Rx copay. The new SBC (Summary Benefit) reporting requirement uses birth as one of the two examples of cost. I'm looking at the government issued sample SBC now and it says the patient would expect to pay $2,050. That is 136.6 months of birth control co-pays - 10 years worth of birth control. Major miscalculation by Maggie. Further this does not include lost earning potential and other costs related to being pregnant.
"By contrast, if an insurer makes birth control totally free for all of its customers, it avoids having to reimburse them for countless unplanned pregnancies and births. Overall, then, it’s cheaper for the insurer to pay a little upfront to save a ton down the line."
Maggie makes the mistake of not understanding how insurance works in this argument. Insurers charge overhead over expected claims. Their profit is a percentage of revenue, so the higher the claims, the more money they make. In reality Maggie is 100% wrong: insurers make more money if their members become pregnant because premium would be higher and their 5% would be of a higher number.
"There’s some indication that co-pays serve as a barrier to using birth control."
More than an indication, its accepted fact that unaffordable premiums are a barrier to insurance. If you can't afford the insurance policy that covers birth control at 100% you're no better off than the person with affordable insurance that covers birth control with a $10 co-pay.
"employer-sponsored insurance plans have increased considerably over the past decade to $49 in 2010 for ‘non-preferred’ brand-name drugs and $28 for brand-name drugs.”
Why would Maggie fail to mention generics in a discussion on cost [ed: that's rhetorical, right?] ? Generic birth control can be purchased for less then $9 per month. If cost is an issue, why not look at the numerous generic options instead of brand name?
Where Maggie's argument really falls apart is the unintended consequences: she fails to acknowledge any. The bill as written says birth control must be paid at 100%, but we still don't know exactly what that means. Right now millions of women take generic birth control that cost less then $10 a month because cost matters. What if they can now get the brand name drug for free? We already know Pharma is very successful in pushing the latest and greatest drug regardless of effectiveness. If the $9 generic is "free" and the $300 brand is "free" why would women not fill more of the brand? This alone would cause costs to skyrocket.
But there is more. Right now Pharma is sensitive to price; members and plans will only pay so much. Take the IUD Mirena, which might now have to be paid at 100%. When it was just an IUD subject to stricter cost control, it cost $515.85. When it was approved for the treatment of heavy bleeding and prescribed as a treatment, they raised the cost to $742.42. Now that insurers might have to cover it at 100% why not raise it to an even $1000?
"This is why the notion that President Obama’s proposal will lead to higher insurance premiums is ... just plain silly.”
Who seems silly now?
Thanks again, Nate!
Oh, and one more nail in Miss Maggie's thesis. Even HHS Secretary Shecantbeserious disagrees:
"There would be no consideration of cost effectiveness. That was the explicit condition that the Department of Health and Human Services imposed on the ... mandate that will require virtually all health-insurance plans in the United States to cover sterilizations and contraceptives—including those that cause abortions." [emphasis added]
Ooopsies.
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