The Obama Administration's tangles with religious groups over its free-contraceptives mandate for private health insurance has been widely framed as a clash between health policy and religious freedom. This is unfortunate, in my view, as the substantive issues involved are much wider and deeper.
Who should pay for contraception? The Administration's position is that prescription oral contraceptives are so vital to a woman's health and welfare that she should pay nothing for them (at least if she has health insurance). Democratic Senators Jeanne Shaheen, Barbara Boxer, and Patty Murray defend the policy by explaining that such contraceptives "can cost $600 a year," which is "a lot of money."
Well, yes indeed, to the extent that a basic cell phone plan is also "a lot of money." But what is the principle they are defending? That the cost of a drug itself justifies requiring someone else to pay for it? If oral contraceptives cost $6,000 a year, rather than $600, does it thereby become even more essential that someone else provide it for free?
Why, I would ask the senators, is the "high" cost of oral contraceptives not an argument for using, and developing, less costly alternatives? Condoms are routinely distributed free of charge by government agencies and private organizations. Yet the Administration's policy clearly promotes a shift away from condom use and towards the use of "free" pills.
No doubt, the policy's supporters would deny that making the pills free will also generate more of the activity that gives rise to the demand for them, though this should be a matter of concern given that the pills do not, unlike condoms, prevent sexually transmitted diseases. This puts the Administration in a further logical bind, as the policy is clearly grounded in the notion that monetary incentives work: make a desirable thing free, and people will demand more of it.
In fundamentally changing the economics of birth control, the Administration is also discouraging innovation in the technology used to deliver it. What business sense is there now in drug manufacturers developing cheaper pills, or male versions of them?
Also notable is that oral contraceptives are singled out, among thousands of drugs, for special treatment through the ban on co-pay requirements. Women will continue to bear co-pays for antibiotics and other pharmaceuticals whose use bears a far more imminent relationship with their health – not to mention public health, when we're dealing with infectious diseases. This again raises important questions about the principles at play. The Shaheen-Boxer-Murray argument was that oral contraceptives were prohibitively expensive for some women, yet banning co-pays clearly goes well beyond making them affordable.
The Department of Health and Human Services and Obama Press Secretary Jay Carney each insisted that such a ban was necessary to ensure "access," but this is playing fast and loose with language. A $10 co-pay for penicillin does not deny women "access" to it; if they're on an employer-sponsored health plan, they can almost surely afford it, and can acquire it at any pharmacy. If this had truly been about ensuring "access" to effective birth control for the poor, expanding free-condom programs would have done the trick. But the policy's supporters know that the politics of federally funding condom distribution are much worse than just declaring pills "free." This is about implementing social policy – stimulating wider use of birth control pills – through health insurance regulation.
Of course, someone has to pay for the pills. The Administration's first choice is to dump this on employers, but it has run up against a vocal Catholic conscientious-objection movement. Bad news in an election year. So the president contrived the ultimate political "compromise." Neither the employee nor an offended religious employer will pay for the pills. The cost will now be buried with the greedy insurance companies themselves, who will be required to provide them "free of charge" directly to the employee. No one in the Administration will dare acknowledge publicly that this necessarily means higher aggregate insurance premiums, but that is par for the course when it comes to federal mandates.
This brings me to the wider point, which is about using government mandates to create individual "rights" to free goods and services that no one has the duty to provide. Private institutions cannot be made to employ anyone. Private insurance providers cannot be made to insure anything or anyone. To be sure, government can prevent companies from hiring and selling by attaching mandates and price controls to the activities. The problem with such mandates is that they do not create rights for some so much as levy burdens on others, many of whom would be considered more deserving under more compelling criteria, in a manner hidden behind the veil of higher prices and fewer choices.
Benn Steil is director of international economics at the Council on Foreign Relations and co-winner of the 2010 Hayek Book Prize.
This article appears in full on CFR.org by permission of its original publisher. It was originally available here.