Does Contraceptive Coverage Pay For Itself?

Austin Frakt considers the question from the insurer’s perspective:

In part because it is so cost-effective, most people are willing to pay for contraception with their own money, if they can afford to. (Many Medicaid-eligible individuals perhaps cannot, but most employed people probably can.) Insurers benefit from this, because every pregnancy avoided is one less they have to pay for. Therefore, when employer-sponsored insurers pick up the tab for contraception, not very many more pregnancies are avoided — most people were already using and paying for contraception.

According to the IMS Institute for Healthcare Informatics, though the proportion of Americans with no cost-sharing for contraceptives rose in 2013 to 50 percent from 20 percent, prescriptions written for contraceptive medications increased only 4.6 percent.

But when they begin to fully cover contraception, insurers take on its full cost, “crowding out” the willingness of individuals’ to self-insure for it. Therefore, the government’s accommodation of religious organizations’ objections to covering contraception (obliging insurance companies to pick up the cost of the coverage, with no offsetting premiums or cost-sharing from either employees or employers) may impose a cost on insurers, even though contraception is cost-effective for society as a whole.

Daniel Liebman’s two cents:

There is strong evidence that public contraceptive funding for underserved populations is cost-saving, and there is a chance that the cost-neutrality observed following the [Federal Employees Health Benefits (FEHB)] and Hawaii mandates will materialize for other insurers as well. There are undeniable economic benefits of contraception for society as a whole, as well as a multitude of social benefits that could fill many posts of their own. Focusing specifically on the economics of insurance, however, the literature on the subject is sparse. All told, we currently have little evidence to indicate the time frame needed for private insurers to realize cost offsets or savings, if there are indeed any to be had.