FOR THE PAST COUPLE of months, Planned Parenthood has been beating the PR drums on behalf of a class-action suit it has filed against Bartell Drug, a Seattle-based chain that doesn’t cover contraceptives in its health plan. The “historic lawsuit,” as People magazine dubs it, argues that the policy of many companies not to reimburse their employees’ birth control expenses is an outrageous double standard that violates Title VII of the Civil Rights Act. “It is sex discrimination when male employees get their basic health care needs covered by insurance, but women are forced to pay for theirs,” declares Planned Parenthood president Gloria Feldt.
Planned Parenthood and its backers make two key claims. The first is that women of child-bearing age pay far more in out-of-pocket medical expenses than do men. The second is that covering contraceptives in health plans wouldn’t cost employers much — in fact, it would actually save them money by reducing the number of women who become pregnant.
Let’s start with the claim that women pay much more than men. The statistic that Planned Parenthood invariably cites — and journalists report — is that women pay 68 percent more out of pocket for their health care than men. This makes it sound as if insurance is a lousy deal for women.
But that’s hardly the case. While women do pay more out of pocket, they also spend more on health care — 67 percent more, according to a 1994 study by the Women’s Research & Education Institute (WREI), on which Planned Parenthood relies for its out-of-pocket figure. Employers, then, actually pay far more to cover the health expenses of women employees. WREI estimates the average annual health expenditure for women ages 15-44 at $ 2,123, while the average expenditure for men is $ 1,272. Out-of-pocket spending for women averages $ 573 a year, while for men it’s $ 342.
Thus, while the average woman spends substantially more each year on health care than the average man, most of that extra spending is paid for by her private insurance or Medicaid. This means that it is women (who are also more likely than men to have health insurance in the first place) who benefit disproportionately from our health insurance system. The idea that insurance plans discriminate against them is the opposite of the truth.
Also dubious, though harder to disprove, is Planned Parenthood’s suggestion that employers and health insurers are making a big mistake by not covering contraceptives, because paying for the medical care of a pregnant woman is far more costly. This argument is unconvincing. It assumes that some significant percentage of women who hold jobs and have private insurance get pregnant simply because their health plan doesn’t pay for contraception. It further assumes that employers fail to recognize this and so pass up easy savings on health expenses — savings that employers aren’t financially savvy enough to discern but that the political activists at Planned Parenthood are.
The biggest problem with Planned Parenthood’s campaign, though, isn’t the weak evidence that employers are foolishly discriminating against women. It’s that requiring contraceptives to be insured subverts the purpose of insurance, which is to cover unpredictable expenses that would otherwise cause great hardship.
A monthly bill of $ 25 or $ 30 for birth control pills simply doesn’t fit into that category. And, so long as the woman who’s using contraception is married, as is the drug company employee named in Planned Parenthood’s suit, the expense is effectively being borne by a man and woman in any case, so it’s hardly discriminatory.
But, many people figure, why not require health plans to cover birth control anyway? Surely there’s no harm. But if consumers don’t pay for contraceptives directly, they’ll be less sensitive to price. And if they’re less sensitive to price, prices will eventually go up. This isn’t mere speculation. Economists agree that one of the big reasons the cost of health care in the United States is so high is that most people don’t pay their expenses directly. Instead, insurers pay. As a result, people don’t pay much attention to price. This isn’t a problem that is limited to health insurance, but one that arises whenever something is insured.
In some cases, of course, insurance is worth it. We don’t want people forced to pay for heart transplants out of pocket, even if knowing they might have to would lead them to eat better, exercise more, and do other things that make a heart transplant less likely. But in plenty of other cases — like contraceptives — the fact that insurance lowers people’s sensitivity to price is something we ought to worry about.
Or is it? One could argue, after all, that requiring insurance coverage of contraceptives would actually help consumers, because big insurers wield more market power than do consumers. But the market for birth control is already competitive on the producer side. And while a buyer monopoly might lower prices in the short run, over time it would erode incentives for manufacturers to invest and bring new products to market.
There is nothing historic about Planned Parenthood’s birth control lawsuit. Much the opposite: It’s just another in a long line of efforts by people to get something for nothing.
Ira Carnahan is a freelance writer in Washington, D.C.
