Who are you trying to subsidize? At whose expense? And why?

Unfortunately, sometimes discussions of healthcare get pointlessly gender-baited and identity-politicked. As a general principle, you should be paying for routine medicine out of pocket. You should finance these things through savings, not an insurance policy. A straightforward logical implication of this very general principal is that things like birth control, mammograms, and pregnancy should be paid for out-of-pocket. (Unless, of course, your insurer decides it’s worthwhile to pay for these things because it saves future costs. But I kind of doubt this will happen much.)

If I’m trying to argue that it should be legal to issue a strictly catastrophic health insurance plan that doesn’t cover these routine expenses, it doesn’t move the conversation to say, “So, you’re against paying for women’s medicine?” But rather than criticize the shrill sanctimony implicit in these kinds of responses, I’ll take on the premise that mandatory coverage for birth control is a subsidy for women to purchase medicine.

Take pregnancy, for example. Who is subsidized if you force insurance to cover pregnancy costs? Take a married man and woman. They are subsidized in the year they have a pregnancy, but they pay higher premiums every year for the expense. It’s kind of a wash. These people aren’t getting a net subsidy. They could finance the pregnancy out of a combination of saving and borrowing over their lifetimes.

Or take a single working mom with a health insurance policy. Sure, she’s getting a subsidy in the sense that a big expense is being paid for by the other policyholders. That’s probably better than making her pay it out of pocket. But is the intent to subsidize single motherhood? If so, does it make sense to do this through insurance mandates rather than, say, an on-budget direct government program with an official mission statement?

If it’s mandatory that health insurance cover pregnancy, then people without children are subsidizing people who do have children, and the more children the bigger the subsidy. Is this fair? Do families with fewer children have more or fewer resources? Higher or lower incomes? How regressive/progressive is this redistribution? Once again, is the intention to subsidize having more children?

Take birth control. (Please.) Suppose you go from un-mandated to mandatory payment for birth control. If it’s a married man and a woman, it’s a total wash for that household. They both get the benefit of the birth control, but their premiums go up by the cost of that provision. Or suppose there is gender-based risk-pricing. The woman’s insurance premiums would go up in this case, but the man’s would go down. Again, a wash. Effectively, households that don’t use birth control are subsidizing those that do. Is that anyone’s intent? Why?

Supposing we’re talking about a single unmarried female. In this case, her birth control is being subsidized by women who don’t use birth control and by the men on the plan (unless there is risk-pricing, in which case she’s only subsidized by other women, or perhaps not subsidized at all if “takes birth control” is one of the pricing factors). I could probably make a strong argument for subsidizing single women to purchase birth control. The point is to make this argument explicitly, not to let it happen incidentally and not as some kind of knee-jerk gender-issues reflex.

Or take the example of limits on risk pricing by age. Under the ACA, old people cannot be charged more than 3 times as much as young people, even though the actual risk differential is much larger than 3-to-1. Is this fair? Old people are richer and have had a lifetime to accumulate savings, while young people are generally poorer and have had less time to accumulate assets. This is a very regressive redistribution. Is it fair to load the incredibly predictable healthcare costs of the elderly onto the young? Shouldn’t we just tell people, while they’re still young, that they will be expected to cover their predictably higher expenses in their old age? If the problem is that people won’t save even though they should, wouldn’t mandatory health-savings accounts be a more efficient way to tackle the problem? Insurance, in every other context (life, auto, homeowners) is usually about protecting your assets against very large and unpredictable costs. The very predictable high cost of healthcare is not an insurable risk in the traditional sense. It might make sense to insure against the possibility of having atypically high health costs in your old age, but it makes zero sense to "insure" against, say, having a surgery and multiple prescriptions at some point in your 60s. The limitation on risk-pricing makes no sense on its face.

Maybe some of these subsidies make sense and should be continued. But if that’s the case they should be explicitly justified by some kind of argument. The subsidy should be direct and on-budget, not indirectly accomplished by hamstringing our insurance markets.