I’m sure President Obama thinks he’s doing me a huge favor by offering me “free” birth control. Well, Mr. President, thanks but no thanks. The truth is, I’d much rather shell out 20 bucks for a pack of Trojans than deal with the plethora of unintended economic consequences this mandate will inevitably breed.
For starters, the birth control mandate has “moral hazard” written all over it. A moral hazard occurs when people overuse a beneficial resource because they don’t pay for it directly. Currently, when women are deciding what type of birth control to purchase, they likely factor in cost as a major consideration. For example, a woman who isn’t very sexually active might use condoms in lieu of the pill in order to save money. Or she might decide to use the generic version of a birth control pill rather than the name brand version because it’s less expensive.
Once birth control becomes “free,” however, price will no longer be a consideration. If you’re paying for dinner with the company credit card, why order the Caesar salad when you can get the filet mignon? Similarly, if you aren’t footing the bill for your own birth control, why bother with the generic version if you can get the brand name at no additional cost? The point is, whenever something is offered for “free,” people use more of it and they don’t take cost into consideration. This creates a huge problem because consumer goods and services are never free. Ultimately, somebody’s footing the bill, and that person may very well be you.
This leads me to my next reason for opposing the president’s birth control mandate: It will cause the cost of contraceptives to skyrocket. Currently, birth control manufacturers are constantly looking for ways to make their products cheaper so that they can undercut their competitors. Once the mandate takes effect, however, price will no longer be a consideration for consumers. Consequently, birth control manufacturers will be incentivized to raise prices rather than lower them. This, in turn, will decrease women’s access to contraception by limiting the ability of those without employer-provided insurance to purchase birth control out-of-pocket.
Another major problem with the mandate is that it will lead to higher insurance premiums. Sure, the mandate forces insurance companies to offer unlimited contraceptive coverage free of any deductibles or copays, but if you think that insurance companies are just going to sit quietly and take the hit, you’re living in la la land. Insurance companies will simply make up the cost by jacking up premiums. The cost of paying for “free” contraception, therefore, will be automatically built into the cost of your insurance.
If you’re thinking these higher premiums won’t affect you because your employer pays for your insurance, think again. Although you may not pay for your insurance directly, you pay for it indirectly through reductions in your monetary compensation. For example, if it costs your employer $500 annually to provide you with insurance, you’ll simply receive $24,500 a year in monetary compensation instead of $25,000. Let’s say that the Obama mandate causes the cost of your annual employer-provided insurance premium to double to $1,000 annually. Now your monetary compensation will be reduced to $24,000.
In addition to reducing workers’ salaries, employers may also shift the insurance premium burden to consumers by jacking up prices on goods and services. This will hurt the middle class substantially, but it will be particularly devastating for the poor, who already have a difficult time affording basic goods like food and clothing. Therefore, the mandate screws over the most vulnerable members of our society by not only reducing their access to affordable contraception, but also by increasing their overall cost of living.
To boot, the mandate is likely to exacerbate unemployment. By causing the price of insurance premiums to rise and thereby making it more expensive for companies that cover the cost of their workers’ health insurance to hire additional employees, Obama’s mandate will cause companies to employ fewer workers than they would if insurance premiums were less expensive. Also, by increasing the cost of insuring women relative to men, the mandate will inevitably lead to gender-based employment discrimination. To quote American investment broker and financial commentator Peter Schiff, “Women are going to pay through the nose for birth control once it’s free.”
Finally, I would like to address a claim that many of the mandate’s supporters have made, which is that the mandate will reduce net health care costs by increasing women’s access to contraception and thereby preventing unwanted pregnancies. I have several issues with this line of reasoning. First off, women already have access to birth control; they just have to pay for it. If you’re thinking the mandate is designed to increase access for those who can’t afford it, think again. Only the very poor currently have trouble affording relatively inexpensive forms of birth control, such as condoms. However, the mandate does not address the very poor, because it applies only to employer-provided insurance plans. This means that the only women who are being guaranteed “free” birth control are women who not only have jobs, but good jobs that offer relatively generous non-monetary compensation packages.
Additionally, assuming that offering women free birth control will prevent unwanted pregnancies is like assuming that offering people free gym memberships will decrease obesity rates. Birth control is only effective if you use it correctly and consistently. Unfortunately, many women don’t. According to a Cosmopolitan article, a 2008 study found that 27 percent of women who use birth control use it incorrectly. Meanwhile, a Guttmacher Institute Study found that in 2001, contraception was used during the month of conception for 48 percent of unintended pregnancies. The fact is, unplanned pregnancies are pretty easy to prevent. Many of them happen not because women lack access to birth control, but because they choose not to use it or they use it improperly.
I believe President Obama’s contraception mandate is nothing more than a cheap political ploy that will ultimately hurt the jobless, the uninsured, consumers, workers and, most of all, women. Contraception will end up being vastly more expensive, which will hurt those who don’t have jobs or employer-provided insurance plans and who, therefore, have to pay for contraception out-of-pocket. Consumers will end up paying more for goods and services as firms try to pass on the cost of higher insurance premiums. This will act like an implicit consumption tax and will most adversely affect the poor. Higher insurance premiums will also translate into reduced salaries for workers, higher levels of unemployment and gender discrimination.
In sum, the birth control mandate does a hell of a lot more harm than good. If the president really cares about women and ensuring their access to high quality, low cost contraceptives, he ought to repeal this mandate immediately.
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