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Are the Contraception Accommodations for Religious Groups “Cost Neutral” for Insurance Companies?

May 05, 2014
The contraceptive mandate in the Affordable Care Act requires all insurance plans to include contraceptives and women’s health services at no deductible cost or co-pay to women.   Religious groups, including many Catholic organizations and employers, challenged the mandate in state and federal courts because they claimed that being required to provide women with some forms of contraception violates their religious beliefs, and threatens religious freedoms guaranteed by the first amendment.

Author: Jonelle Lesniak, W’14

The contraceptive mandate in the Affordable Care Act requires all insurance plans to include contraceptives and women’s health services at no deductible cost or co-pay to women.   Religious groups, including many Catholic organizations and employers, challenged the mandate in state and federal courts because they claimed that being required to provide women with some forms of contraception violates their religious beliefs, and threatens religious freedoms guaranteed by the first amendment (Merica and Bohn, 2013).

In February of 2012, the White House responded by giving non-profit religious employers an exemption from having to provide contraceptive coverage or being required to refer their employees to organizations that provide contraception to female employees.

On December 31st of 2013, Supreme Court Justice Sotomayor granted a stay to the Little Sisters of the Poor, an organization of Roman Catholic nuns that provide care to the poor and elderly, in order to protect the sisters from having to sign the accommodation form that Obama offered in February of 2012.  The Little Sisters of the Poor objected to the accommodation form, asserting that signing the form that exempts them from providing contraceptives still makes them complicit by authorizing the insurance companies to provide contraceptives.  The stay also applies to 200 other organizations that are covered by the Christian Brothers Employee Benefit Trust (Kenny & Pear, 2013).  The Supreme Court is now considering whether for-profit corporations with religious owners should be able to claim the same exemption, having heard two cases on the topic — Hobby Lobby v. Sebelius and Conestoga Wood Specialties v. Sebelius.

When the White House announced the accommodation for religious non-profits, it claimed the accommodation would be cost neutral for insurance companies. According to the White House, “Covering contraception is cost neutral since it saves money by keeping women healthy and preventing spending on other health services.  For example, there was no increase in premiums when contraception was added to the Federal Employees Health Benefit System and required of non-religious employers in Hawaii.  One study found that covering contraception saved employees $97 per year, per employee.” (The White House, 2012).

While the White House was open to religious exemptions, they still required insurance companies to “directly offer … contraceptive care free of charge.” (The White House, 2012).  The White House cites studies to back up its cost-neutrality claim, but critics question whether the accommodation is really cost neutral for employers or insurers.  For example, thirteen state Attorney Generals commented on the Department of Health and Human Services’s failure to address the faith and conscience-based objections regarding contraception coverage.  Attorney General Patrick Morrisey, of West Virginia, stated, “We all know that insurance companies do not provide anything for free; the employers are still going to be paying for these services through increased premiums or otherwise even if the insurance company technically covers those products through a separate ‘free’ policy…” (State of West Virginia Office of Attorney General Patrick Morrisey, 2013).

The evidence cited by the White House supporting its cost neutrality argument is dated. The Federal Health Plan that the White House referred to was enacted in 2001, and the Hawaii study cited was also published in 2001 (Finley, 2012).  Numbers that are over 10 years old may not be  accurate enough to command today’s policymakers to make meaningful changes, especially in the face of rapidly changing healthcare technologies and costs.

Certainly more recent studies would provide more accurate and timely insights.  Here is some evidence from the last couple of years:

  • In a 2012 survey by Reimbursement Intelligence, a consulting firm, 15 anonymous insurance companies were asked their expectations of the costs of the contraceptive mandate. The result: none of them expect to see cost savings from avoiding costs of unplanned pregnancies; six expect costs to rise and three expect cost-neutrality. The remaining six companies were unsure of the effect the mandate would have (Reimbursement Intelligence, 2012).
  • A 2010 University of Connecticut study found that premiums would rise $17.28 per year as a result of Connecticut’s prescription contraceptive mandate (2012).

These studies may suggest that the contraceptive accommodation might not be cost-neutral for insurance companies.

The evidence is mixed, and each side can cite legitimate studies that favor its position. I think there is a need for more abundant and timelier data analysis in order to draw any final conclusions.

The accommodation says that religious organizations will neither be required to subsidize the contraception nor will insurers be able to charge for contraceptives. That means there will be no costs for the religious organizations. So the question is whether the mandate is actually cost neutral for the insurers that will have to provide contraception to women directly. If the accommodation is cost neutral, then insurers should have few qualms about the accommodation affecting profits. If it is not cost neutral, then insurers may have reason to object.

In economic terms, if insurers bear extra costs to provide contraceptives, and they cannot charge higher premiums to women or to religious non-profit employers, then the added costs will either come out of the insurers’ bottom lines if they’re not paid for by some revenue source, or will result in higher premiums to those insured. After all, some party must absorb the costs, whether it is the insurance companies or the customers they insure.

The Brookings Institute drafted a report in February of 2012 that gave some helpful recommendations for policy makers to move forward with this debate, concluding that policy makers should “shift the debate onto a more productive path” (Galston & Rogers, 2012). The report can be read in its entirety here.

I do not believe any hard or fast recommendations are clear yet. I think the Obama Administration and Health and Human Services would do well to utilize new research studies to show how the economic mandate on insurance companies will actually produce cost-savings for the insurance companies.  Only then will the administration have a compelling case.


Finley, B. (2012). Cloudy Contraception Costs. FactCheck.org. Retrieved March 20, 2014, from http://www.factcheck.org/2012/02/cloudy-contraception-costs/.

Galston, W. A., & Rogers, M. (2012). Health Care Providers’ Consciences and Patients’ Needs: The Quest for Balance. Washington, DC: Governance Studies at Brookings Institution. Retrieved March 20, 2013, fromhttp://www.brookings.edu/research/papers/2012/02/23-health-care-galston-rogers.

Kenny, S., & Pear, R. (2013). Justice Blocks Contraception Mandate on Insurance in Suit by Nuns. The New York Times. Retrieved March 20, 2014, fromhttp://www.nytimes.com/2014/01/01/us/politics/justice-sotomayor-blocks-contraception-mandate-in-health-law.html?_r=1.

Merica, D., & Bohn, K. (2013). Finalized rules let religious groups opt out of contraception mandate. CNN.com. Retrieved April 10, 2014, fromhttp://www.cnn.com/2013/06/28/politics/obama-contraceptives/.

Reimbursement Intelligence. (2012). Payer survey: Current Contraception Benefit Structure and Anticipated Impact of Mandated No-Cost Access for All Members. Madison, NJ: Author. Retrieved March 20, 2014, fromhttp://www.reimbursementintelligence.com/wp-content/uploads/2012/02/Contraceptive-Report_V3FINAL.pdf.

State of West Virginia Office of Attorney General Patrick Morrisey. (2013). Press Release: Attorney General Morrisey Calls for Broader Religious Exemptions. Charleston, WV: Author. Retrieved March 20, 2014, fromhttp://www.wvago.gov/print.cfm?fx=press&ID=681.

University of Connecticut Center for Public Health and Health Policy. (2010).Connecticut Mandated Health Insurance Benefits, Reviews, (Volume II, Ch. 4), 80. East Hartford, CT: Author. Retrieved March 20, 2014, fromhttp://www.ct.gov/cid/lib/cid/2010_CT_Mandated_Health_Insurance_Benefits_Reviews_-_Volume_II.pdf.

The White House Office of the Press Secretary. (2010). FACT SHEET: Women’s Peventive Services and Religious Institutions. Washington, DC: Author. Retrieved March 20, 2014 from http://www.whitehouse.gov/the-press-office/2012/02/10/fact-sheet-women-s-preventive-services-and-religious-institutions.



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