(Centennial Fellow) Legislators talk frequently about the Law of Unintended Consequences but rarely seem to recognize when a bill they support will, if passed, inevitably collide with that law.
Such is the case with House Bill 1021, which would require individual insurance policies to cover a normal pregnancy, childbirth, maternity care, pregnancy management and contraception.
At first glance, that sounds like a reasonable idea: women who buy their own health insurance ought to be able to purchase coverage for pregnancy.
Now stand in the shoes of another woman – one who isn’t pregnant, or plans not to become pregnant, or is beyond childbearing years, or is unable even to have children: if state law requires all policies to cover pregnancy, then state law requires everyone to pay for pregnancy coverage, whether they want it or not.
Why is it necessary for the state to require women in the latter group to pay for something they don’t want, won’t use, or cannot afford?
This bill is sponsored by Reps. Jerry Frangas and Beth McCann, both Denver Democrats. Frangas is one of the nicest people in the legislature, and McCann has demonstrated in other cases that she clearly understands the economics of insurance, both for consumers and insurers. Their sponsorship, while undoubtedly well-intended, is nonetheless frustrating.
Two years ago, my wife and I had our first child. We are both self-employed and buy policies through the individual market. We specifically chose not to buy pregnancy coverage, although coverage for “complications of pregnancy” were standard with our Assurant Health policy.
The reason we didn’t want to buy coverage for a normal pregnancy is the same reason everyone should have that choice – a normal pregnancy is not an “insurable event.” An insurable event is defined as something that occurs without warning, is unlikely to occur, and is unwanted.
Consumers understand this concept well in every situation except health insurance. We buy home insurance to pay for losses due to fire, hail storms, tornadoes or theft – not to pay for repainting the family room or updating the kitchen. We buy auto insurance to pay for accidents, storm damage or vandalism – not to pay for a new set of tires or an oil change.
Over the years, health insurance has moved away from the concept of insurance and become a complicated financing scheme for everything related to health. That’s why it’s so expensive.
Pregnancy isn’t a complete surprise, most of the time, so my wife and I had saved money to pay for it. (Yes, it’s costly, but not nearly as expensive as buying a car and people manage to pay for that without “insurance.”)
We visited two hospitals to ask about costs if we paid the bills ourselves. When our son was born, he decided to show his posterior first, so a C-section was necessary. We paid for everything associated with a normal delivery, plus our deductible – about $7,500 in total. Our insurance paid some $8,300 for the surgery and extended hospital stay.
Everyone understands that one way to reduce costs is by eliminating the middleman. That’s what we did by paying for normal costs of pregnancy ourselves.
HB 1021 would eliminate that choice for everyone by requiring that every procedure related to pregnancy be financed through an insurance company – the very insurance companies for which so many legislators profess profound disdain.
Worse still, the bill encourages cost-shifting and irresponsible behavior by prohibiting insurers from denying coverage for pregnancy as a “pre-existing condition.” Translation: a woman can wait until she learns she is pregnant, buy insurance for a few months to cover pregnancy, and then drop the insurance.
Who pays the bill for that? Everyone else who pays their premiums month after month and year after year – including those women who need affordable coverage for serious illnesses and conditions which, unlike pregnancy, are undesirable and unavoidable.
While HB 1021 will likely help the handful of pregnant, uninsured women who can buy their own coverage, it’s unintended consequences are costly and destructive for everyone else.