Religious leaders, most notably Catholic leaders, are taking criticism for refusing to pay for birth control pills* with funds from their church-affiliated organizations. On the other hand, many young women would like to know why health insurance they pay for (at least indirectly through their employer) does not cover an item that is a considerable expense for them, often in the range of $1000 per year, while others can obtain drugs they need under the same insurance plan.

It appears there are two sides in a conflict and that one must lose. But I see a compromise that would allow both religious organizations and women to have justice. It involves re-examining the notion that health insurance should be provided through employers. If women were in a position to buy their own health insurance, they could decide if it was worthwhile to cover birth control pills given the costs of policies with and without the birth control benefit. And if individual employees purchased their own insurance, religious organizations would be relieved of the conflict between providing fair benefits for their employees and respecting the organizations’ moral precepts. The organizations would simply pass the money now paid for health insurance on to their employees.

It is reasonable to ask why health insurance was ever tied to a place of employment to begin with. Of course it seems efficient to let an employer write one check for insurance for all its employees. And some would claim as a matter of social justice that employers owe health insurance to their employees. But there are other considerations which do not receive much attention. A short history of health insurance may help illustrate some of these motives.

The Great Depression of the 1930s revealed serious problems with the funding of hospitals and cut many physicians’ incomes to a trickle. No matter how grateful people might be for medical help, when money was tight the landlord, the electric company and the grocer got paid before a physician or a hospital could hope to see a nickel. Hospitals and health care providers began to set up health insurance plans in the hope that a pool of insurance money would tide them over difficult financial times. In the 1940s employers began adopting company-provided health insurance plans in a big way. The plans were purchased from hospital and health-provider-controlled insurance groups like Blue Cross and Blue Shield.

Because American health insurance plans were originally designed from the provider’s perspective, they had some unique features compared to other types of insurance. To begin with, health insurance sold on a group basis through employers would be more attractive to a provider-controlled insurer than policies sold to individuals, even if group and individual policies were equally profitable. Because health providers and hospitals were painfully aware of their low standing in consumers’ bill-paying priorities, they could probably picture people buying nice cars and vacation trips before buying individual health policies. If consumers’ opportunity to spend money on non-insurance purchases was postponed until health insurance was funded (as happens with payroll deduction), it stood to reason that there would be more money in the health care pot.

Since health providers wanted a pot of money to dip into as needed, perhaps they weren’t particularly concerned with the fairness of the insurance plans to individual employees in different stages of life. Providers served the whole community, and it probably never occurred to them that consumers within that community deserved to be treated as anything but interchangeable insurance-premium-paying units. So the second peculiarity of health insurance came into being: the risk pool was very large. Companies selling most types of insurance “underwrite” policies to slice and dice the market into smaller groups that will find their best bargain by joining a risk pool containing people like themselves. But health insurance underwriting within group policies is practically non-existent: a thirty-year-old employee pays the same premium as a sixty-year-old employee despite the fact that older people consume more health care on average. Of course older employees pay another price for the extra health care they consume: employers tend to shy away from hiring people who are apt to have high health expenses which could raise premiums for the entire firm. But one can also understand the frustration of young women who are paying higher premiums than their health condition would warrant and can’t even get birth control pills with their expensive insurance.

It seems better to develop a system where all people with an income are required to pay into their own individual account that would pay for health care.  Any money in the account that was not spent on health insurance or co-pays could be used to provide extra retirement money. Each person would be required to buy health insurance of some sort but they would be able to choose their health insurance plan. Insurance companies could do what they are designed to do: divide large risk pools into smaller groups that are attractive to various purchasers. Needless to say, a gigantic government one-size-fits-all plan would make conflicts like the birth control issue even more desperate and damaging to the country.

*the proposal to which the religious groups objected included providing not only true contraceptives, which I refer to as birth control pills, but also some “emergency contraception” products that can eliminate an embryo that has already formed — functioning in some instances as abortion drugs.

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