Insurers see costs in Obama birth control rule

Thu Feb 16, 2012 5:29pm EST

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(Reuters) - The Obama administration maintains that its plan to have health insurers pay for birth control offered to employees of religious groups won't end up costing the industry. But insurers aren't so confident.

Last Friday, President Barack Obama sought to placate outraged leaders of the Catholic church, which opposes contraception, by making insurers responsible for providing the free birth control.

Obama's 2010 healthcare law mandates free contraception. The administration exempted houses of worship from the rule, but requires coverage be made available to employees of religiously affiliated organizations such as hospitals and universities.

The administration has said insurers should ultimately make up any initial costs by avoiding expenses associated with unintended pregnancies. But a new survey of 15 large health plans shows they are dubious of such savings.

Asked what impact the requirement will have on their costs in the year to two years after it goes into effect, 40 percent of the participants said they expect the requirement will increase costs through higher pharmacy expenses.

The survey of pharmacy directors at the health plans was conducted on Wednesday by Reimbursement Intelligence, which advises pharmaceutical, medical device and other companies on reimbursement issues. The firm did not name the insurance plans it surveyed.

Of the health plans, 20 percent said costs would even out because they already budget for contraception in the premium, 6.7 percent said it would drive up pharmacy costs but decrease medical costs, while 33.3 percent weren't sure. None said it would lead to net savings.

"They think it will raise pharmacy costs and won't lower medical costs," said Rhonda Greenapple, chief executive officer of Reimbursement Intelligence. "The idea that preventative care is going to reduce overall healthcare costs, they don't buy it."

Last week, insurers including Aetna Inc questioned the precedent set by Obama's plan that would force them to pay for coverage with no clear way of recouping the expense.

But insurers may still seek ways to pass through such costs, either by increasing premiums to the same employers or to other corporate clients.

The U.S. Conference of Catholic Bishops said its concerns were not addressed by Obama's compromise, and noted that insurance plans would likely cover the birth control costs out of the larger pool of revenue they make from their contract with a religious employer.

(Reporting By Lewis Krauskopf; Editing by Michele Gershberg and Gerald E. McCormick)

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Comments (12)
TomMariner wrote:
What costs? Free money. And if the health insurance shareholders don’t like the reduced (or non-existent) profits, they can just direct the company to go into something our government likes, like green energy or “community” anything.

Besides we are talking about health insurance companies — they are too evil to survive. We really ought to give the job of insuring health to our federal government so we won’t have decisions like the recent free contraception, but good luck with cancer that support an agenda. (That’s sarcasm folks.)

Feb 16, 2012 5:06pm EST  --  Report as abuse
CPFftw wrote:
The cost of a full term pregnancy and first year of a childs life far outwieghs the cost of cntraceptives over years of time. Factor in healthcare costs of a child to the age of 18 and you are looking at the equivalent of several decades worth of contraceptives. Just the appearance of giving something away even though profits will be made from it scares the crap out of board members at stockholders meetings. this is legislation that the Health Ins industry didn’t lobby and pay for s of course they are against it there was no collusion to be had by anyone.

Feb 16, 2012 5:42pm EST  --  Report as abuse
inverse137 wrote:
Gee, if the insurance companies said it then it MUST be true!!

They are always looking at ways to save me money!1 I really appreciate how they’ve decreased coverage while increasing premiums and increasing deductibles.

Thanks for having my back, guys!!

Feb 16, 2012 5:56pm EST  --  Report as abuse
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