The intersection between religion and business is a heated one, with the most recent flare-up sparked by a provision in the Patient Protection and Affordable Care Act that mandates employers cover the cost of contraception in their health plans. Although the Obama administration exempted houses of worship from the rule, it still requires coverage be made available to employees of religiously affiliated organizations such as hospitals and universities.

The administration has said insurers should ultimately make up any initial costs by avoiding expenses associated with unintended pregnancies. But a survey of 15 large health plans shows they are dubious of such savings.

Asked what impact the requirement will have on their costs in the year to two years after it goes into effect, 40% of insurers said they expect the requirement will increase costs through higher pharmacy expenses.

The survey of pharmacy directors at the health plans was conducted by Reimbursement Intelligence, which advises pharmaceutical, medical device and other companies on reimbursement issues. The firm did not name the insurance plans it surveyed.

Of the health plans, 20% said costs would even out because they already budget for contraception in the premium, 6.7% said it would drive up pharmacy costs but decrease medical costs, while 33.3% weren't sure. None said it would lead to net savings.

"[Insurers] think it will raise pharmacy costs and won't lower medical costs," says Rhonda Greenapple, chief executive officer of Reimbursement Intelligence. "The idea that preventive care is going to reduce overall health care costs, they don't buy it."

In addition to health insurance companies, lawmakers also have questioned the precedent set by Obama's plan that would force insurers to pay for coverage with no clear way of recouping the expense. "The idea that insurance companies are going to provide free coverage for items contained in the administration's order reflects a misunderstanding of the business of insurance," says Rep. Dan Lungren (R-Calif.). "Under its 'accommodation,' the religious employer continues to pay premiums that contribute to the revenues of the insurers. The money paid by religious employers for what will inevitably be higher premiums thereby frees up insurer funds to pay for abortion-inducing drugs, sterilization and contraception in violation of their strongly held beliefs."

The guidelines require insurers to do away with copayments on coverage of preventive care services for women in all new plans beginning in August. A poll from the Kaiser Family Foundation in February showed nearly two-thirds of Americans favor the policy requiring birth control coverage for female employees, including clear majorities of Roman Catholic, Protestant evangelical and independent voters. Sixty-three percent of Americans overall supported it, according to the data.

But Catholic leaders, Protestant evangelical groups, Republicans and other social conservatives rejected the compromise, saying it still violates religious freedom under the U.S. Constitution and would cause economic hardship for self-insured institutions. The controversy has spawned a rancorous debate in Congress as well as a handful of Catholic lawsuits, including a federal suit in Nebraska joined by seven U.S. states.

 

Employer response

Some employers have voiced support for the rule, including one reader of EBN's blog Employee Benefit Views, who said his/her employee population consists mainly of lower-income employees "who make $10 to $15 an hour who may not use birth control - not because of religious reasons, but because they cannot afford the cost of the birth control and keep a roof over their heads. I work for a self-funded employer, and this would create additional costs for us. However, these could possibly be off-set with the savings from births, disability leaves and the like."

That cost savings may be attractive to employers constantly looking to reduce health care cost burdens. "I understand the issue of 'religious freedom' here, but just because this coverage is offered by your insurance company, does not mean that you have to use it," wrote another EBV commenter. "I would think that each adult can make their own choice on whether or not this is a benefit [they] want to use. But the coverage is there, then, for those individuals who want and need that coverage. Better than the alternative of unwanted pregnancies, abortions and the like."

Other readers likened the coverage of contraception to coverage to treat chronic conditions. "I do understand the perspective of the employer not wanting to pay for a benefit they do not condone," a third EBV commenter wrote. "I don't condone many of the activities that lead to diabetes or heart disease. But I still have to pay for the people that have those habits."

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