The Religious Exemption To Contraceptive Coverage In Obamacare

This note has to do with today's (Friday, June 28, 2013) ruling by the U.S. Department of Health and Human Services regarding the mandate for employers to provide coverage for contraception and the limited religious exemption as reported in this article from Bloomberg and the actual ruling, which is linked in the Bloomberg article.

First of all, why did it take so long for the HHS to make a final ruling, especially since they were ordered by the court to stop stalling and make a ruling?  I think it is because of the timing of the renewal of insurance policies, specifically those that renew during the summer (July 1 and August 1 come to mind) and the employers not having a sufficient amount of time to self-certify that they are an eligible employer to opt out of providing the coverage.  Their failure to self-certify in the first year of the law might even be used against them if they try to self-certify at a later date.

Secondly, it seems that there was no compromise on the definition of a religious employer as promised by the HHS.  The actual ruling states "Based on their review of these comments, the Departments are finalizing without change the definition of religious employer in the proposed regulations."

Thirdly, what insurance law allows for an insurance company to provide a coverage to the policyholders without collecting anything for the coverage?  I cannot think of any insurance company or state department of insurance that would approve of doing what is stated here:

"A nonprofit associated with a religious group that doesn’t want to pay for the coverage must inform its insurer or the company that administers its health plan, if it is self-insured, the government said. The insurer then pays for the services without using any money received from the nonprofit."

The actual ruling discusses this this in more detail.  It still does not appear to be actuarially sound on its own.  Rather, it relies on the cost savings in the insurance plan and allows the insurer to offset these payments with the cost savings.  This cost savings is only realized when one combines the payments for contraception coverage with the insurance policy that specifically excludes contraception coverage.  No matter what the ruling states about not using premiums from these policies to pay for contraception coverage, this is the only way the insurer can offset the losses for providing the contraception coverage free of charge.

If the federal government will be reimbursing third party administrators (TPA) of self-insured companies for this coverage, doesn't this mean the government is paying for it?  And how much will this reimbursement cost?  The government has no idea:

"Third-party administrators, who won’t financially benefit from reduced births, will be reimbursed for the coverage by the government. The administration offered no estimate of what those reimbursements would cost."

In regards to the first sentence of the quote in the last paragraph, why should the TPA's benefit from this?  TPA's contract with the self-insured companies.  The TPA gets their income simply for being the administrator and their fee is negotiated and spelled out in the contract.  The supposed savings would be for the self-insured company, not the TPA.

Keep in mind from where the HHS feels the cost savings will come:

"“We do strongly believe that the cost of contraceptive services will be absolutely cost-neutral and offset by improvements to women’s health as well as reduced pregnancies,” she (Chiquita Brooks-Lasure, deputy director of policy and regulation at the Center for Consumer Information and Insurance Oversight at HHS, which is implementing much of the Affordable Care Act.) said at a briefing with reporters."

The overall impact on women's health of providing contraception may actually increase costs.  Some forms of contraception actually have negative impacts on women's health, such as  increased risk of cancer, so that may cause a net increase.  As with the federal government, I am not providing estimates on this, but I will refer you to the National Cancer Institutes Fact Sheet on Oral Contraceptives and Cancer Risk.

If the offset is in reduced pregnancies, then we are in trouble as public policy is being made on the cost of one's life.  It may cost less to the government, an employer, an insurance carrier, and the family (or in some cases, just the woman) to not go through a pregnancy.  The family should be the one making the decision on whether they can afford another child before going through the act of doing something that could conceive a child.  This should NOT be a decision of the government, an employer, or an insurance carrier.  Using the reduced number of pregnancies resulting from providing another coverage is a dangerous precedent in public policy and can lead to the government making such decisions for all people.

And how is the federal government going to determine how much a company saved by providing contraception coverage for them even though it goes against the beliefs of the employer?  How deep into one's health insurance claims will they dig to determine the cost savings of an insurer providing this coverage?

Finally, there is no way for an individual working at some non-religious employer to opt out.  It is simply up to the employer to decide whether to even offer an option to opt out of having the contraception coverage provided.

This ruling was intentionally delayed to make it difficult for eligible employers opt out, did not compromise on what constitutes an eligible employer, forces insurance companies to pay for contraception coverage out of their own pocket while only offering to make this actuarially sound by violating this ruling, does not have an estimate in the cost to the federal government for reimbursing TPA's for providing this coverage, relies on reduced pregnancies to justify this requirement, and does not allow for all individuals to opt out of the coverage.