Why Would Employers Subsidize Anyone's Birth Control in the First Place?

A blog about business and economics.
Feb. 8 2012 8:54 AM

Why Would Employers Subsidize Anyone's Birth Control in the First Place?

As you may have heard, the Obama administration recently ruled that contraceptive coverage should be part of the "basic" preventive health insurance package that all employers provide and has denied the Catholic Church the right to exempt employees of secular Church-owned institutions from the requirement.

An underplayed angle in all this is that it highlights the extreme awkwardness of trying to build a health care system around a set of subsidies and regulations on employers. If people's health care coverage was instead some blend of things they paid for out of pocket and things the government pays for as a social service, then we'd just be having an argument about whether or not the government should pay for women to get free or discounted contraceptives. One important argument against that idea would be the general fiscal tightwad sense that the government shouldn't spend money on anything. Another would be the religious objections of social conservatives. But since very few Americans have strong moral objections to contraceptives, the social conservatives would lose out and contraceptives would be publicly subsidized to the extent that liberals can persuade people to pay the fiscal cost. In this particular case the economy argument for subsidy would be extremely strong, since obviously the fiscal cost of unplanned pregnancies is much higher than the cost of birth control pills (or IUDs) and on you'd go. The Catholic Church would presumably whine about this, just as they whine about the fact that gay sex is legal, but there would be no particular question of "conscience."

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But that's not the system we have. Instead we have a system where there are large tax benefits to an employer compensating you in the form of health care benefits rather than money, and then a lot of regulations about the details. Which means in this case that a regulatory effort to give people subsidized contraceptives winds up involving employers as a pass-through entity in a basically superfluous way, thus raising an issue of "conscience" that would be completely avoidable in a more normal system.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.