The White House explains its contraceptives compromise

(Pablo Martinez Monsivais - AP)

Earlier today, I wrote about how how the White House’s contraceptives compromise, where insurers will provide no-cost contraceptives to workers whose employers have a religious objection — could come with a catch. Insurers might be able to use revenue from all the premiums it collects — Catholic institutions included — to pay for the birth control pills that it cannot charge to the employees.

A senior administration official reached out shortly after to make the case for why this won’t happen. Here’s the example we walked through.

“The way this works [right now] is, I’m a Catholic hospital, and I say I’m going to offer insurance,” said the official. “I’m going to say, ‘Aetna, I don’t want contraceptives covered.’ Aetna is going to look at the benefits I cover, set a premium for the anticipated costs. Then they charge that premium, which goes into Aetna’s reserves.”

And here’s how it works after the compromise: “Our policy is saying that the Catholic hospital doesn’t want to cover contraceptives, and they don’t include that in their policy. It also says that Aetna needs to provide contraceptive services for free to workers in the plan. Aetna sets the premium, but it cannot be higher than it would have been without birth control. The premium does not include contraception.”

And, in the end, that leaves Aetna with the bill. “There is a sort of bank account,” says the official. So, in this particular hypothetical, “Aetna is sucking it up.”

And in the administration’s view, this satisfies the three demands from those who had objected to the health reform provision: They don’t have to create a policy that covers contraceptives, they don’t have to pay for the services and they don’t have to advertise contraceptive services to their employees.

I asked whether there would be objections from Catholic hospitals if health insurers would draw from the same reserve fund that they paid into to go to Bayer and purchase birth control pills.

“Do they object to paying taxes for family planning?” the official says. “We’re getting into a level of gradation that’s in the eye of the beholder. The Catholic Hospital Association is saying this works for them.”

The point was that insurance companies use their reserve fund to pay for a lot of things, from medical procedures to administration to wellness services. “They have a reserve fund to pay for all the things they cover,” says the official. “We’re saying, ‘This is a legitimate cost of doing business.’ That cost is covering contraceptives, and they’re paying for that from a reserve.”

To the White House’s point, the reaction to today’s announcement has been notably muted. The United States Conference of Catholic Bishops, which many had expected to oppose the agreement, is calling it a “first step in the right direction.” Catholic Health Association’s Carole Keehan is backing the accommodations, as are Democrats for Life.

It’s the industry left footing the bill — the health insurance companies — that seem most anxious about the new provision. Covering contraceptives could prove cost-effective. But American’s Health Insurance Plans has just come out with a statement saying it’s “concerned about the precedent this proposed rule would set,” with the federal government mandating what insurers cover and how they pay for it.

The administration official I spoke with had expected these concerns but, on balance, thought that health plans would see enough gain from the new provision.

“From the insurer perspective, are they happy with the precedent? Probably not,” the official says. “But do they agree that this is going to be a cost-neutral benefit? I think they’re going to say yes.”