Guess who’s cashing in on contraception?

David Catron writes that the “central issue of the public debate over the Obama administration’s contraception mandate” has been that of religious freedom, a focus that is “hardly surprising.” But why, he asks,

would the Obama administration, having won the legislative struggle to get Obamacare passed and fought a brutal legal battle to prevent it from being overturned by the Supreme Court, risk another visit to that fickle tribunal by insisting on this egregious mandate?

As the old saying goes, “Follow the money!”

Contraception is big business, and the HHS mandate promises to turn it into a cash cow for companies like Barr Laboratories. How? Avik Roy explains: “Under the current system, drug companies have an incentive to compete on price.… Under the new mandate, this price incentive disappears.” Insurance policies that covered contraception prior to the mandate encouraged patients to forego pricey products by charging higher co-pays than for generic equivalents. The HHS mandate forbids such co-pays, so there is no incentive to choose “Brand X.”

Roy goes on as follows: “Drug companies will be able to market ‘branded’ contraceptives at premium prices, knowing that women are free to choose the most expensive, designer product because it will cost them the same as the cheapest generic.” In other words, the contraception mandate is a license to steal for Big Pharma. Does that explain why President Obama and his Commissar of HHS, Kathleen Sebelius, are willing to endure another round of legal battles? Yep. The fix was obviously in at least as far back as 2009.

Read Catron’s entire column on the American Spectator site. Roy, in his March 2012 piece for The Atlantic, highlights the fiscal insanity of the situation, which essentially boils down to the Big Government artificially driving up costs so that both Big Government and Big (Drug) Businesses benefit:

Under the current system, drug companies have an incentive to compete on price. If you have health insurance that covers birth control today, your insurer is likely to charge you a higher co-pay for expensive, “branded” versions of birth control over cheaper, generic ones. If you don’t have health insurance, and you’re buying the Pill directly from the pharmacy at Wal-Mart, you have even more incentive to shop on price.

Under the new mandate, this price incentive disappears. Insurers will be required to pay for any and all oral contraceptives, without charging a co-pay, co-insurance, or a deductible. This “first dollar coverage” of oral contraception kills the incentive to shop based on price.

If history is any guide, this significant change will drive up the price of oral contraception. Today, Tri-Sprintec costs $9 a month. In 2020, don’t be surprised if it costs $30. Drug companies will be able to market “branded” contraceptives at premium prices, knowing that women are free to choose the most expensive, designer product because it will cost them the same as the cheapest generic. Prepare yourself for multi-million-dollar Super Bowl ad campaigns from competing manufacturers.

If you were surprised that PhRMA, the pharmaceutical trade group, backed Obamacare, now you can see why: the HHS contraception mandate alone will be a multi-billion-dollar boondoggle for the pharma industry. If your health insurance plan allowed you to buy a television, of any price, without any cost-sharing on your part, would you buy a 13-inch CRT or a 60-inch flat screen?

Roy concludes, “The contraception contretemps is a case study in how thoughtless laws and policies drive up the cost of health care, making it less accessible to those who are most in need. The path to truly affordable health care involves moving in exactly the opposite direction: restoring the notion that health insurance is meant as protection for catastrophic costs, and letting people buy birth-control pills for themselves.”

But how “thoughtless”, really, are these laws and policies? Most people associate “crony capitalism” with Republicans, and not without good cause in many cases. However, cronyism really knows no bounds in D.C., a town that thrives on power, which ultimately boils down to controlling as many aspects and details of citizens’ lives as possible. Aaron M. Renn, in a recent essay for City Journal, examines the current prosperity enjoyed in D.C., writing:

But what solidifies Washington’s emerging status as America’s new Second City isn’t its economic performance or its emerging global-city profile. Both of those are secondary effects of the real change in Washington: the increasingly intrusive control of the federal government over American life.

Traditionally, Washington thrived through a “leaky bucket” model, redirecting some of the gigantic money flow through the federal pipeline to itself. The 2000s were an especially good time for the region, as two wars, plus 9/11-related defense and homeland-security procurement, fueled the boom. These days, about a third of the Washington-area economy depends on the federal government. But with $16 trillion in national debt and large deficits projected as far as the eye can see, the gravy train may be coming to a halt. Some, like Steven Cochrane of Moody’s Analytics, think that fiscal retrenchment would spell the end of D.C.’s new prosperity. “The days of Washington being the leader in terms of job growth and economic strength are really over,” Cochrane told the Washington Post in early 2011. “I think there’s no way that [the pace of job growth] could be kept up any longer, particularly now that the federal government is undergoing pretty strict [budget] scrutiny.”

The leaky-bucket model may indeed be nearing its limits. But Washington has discovered a new way to extract value from the federal government, based not just on spending but on an ever-expanding regulatory state. An array of programs—the Sarbanes-Oxley and Dodd-Frank acts governing finance; the government’s auto-industry takeover; the EPA’s declaration that carbon dioxide is a pollutant—takes regulation to new levels of detail and intrusiveness, even extending to the micromanagement of particular companies. The trend began long before President Obama took office, but its quintessence is Obamacare, an annexation by the federal government of one-sixth of the American economy via 2,000 pages of byzantine legislation, not counting the thousands of pages of implementing regulations still to come.

All this intrusion emanates from the legislative and especially the regulatory machinery in Washington. The city has become, in effect, the Brussels of America.

Read the entire piece. The bottom line of all this is that those who think the battle over contraceptives and the mandate is all about “religious liberty” (which they might dismiss as either silly or of no consequence to them) are missing the elephant and donkey in the room: it’s about liberty, period. And the problem is not just an overly aggressive State or greedy businesses, but the power-lusting embrace of the two. In the words of G.K. Chesterton: “Big Business and State Socialism are very much alike, especially Big Business.”

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About Carl E. Olson 1197 Articles
Carl E. Olson is editor of Catholic World Report and Ignatius Insight. He is the author of Did Jesus Really Rise from the Dead?, Will Catholics Be "Left Behind"?, co-editor/contributor to Called To Be the Children of God, co-author of The Da Vinci Hoax (Ignatius), and author of the "Catholicism" and "Priest Prophet King" Study Guides for Bishop Robert Barron/Word on Fire. His recent books on Lent and Advent—Praying the Our Father in Lent (2021) and Prepare the Way of the Lord (2021)—are published by Catholic Truth Society. He is also a contributor to "Our Sunday Visitor" newspaper, "The Catholic Answer" magazine, "The Imaginative Conservative", "The Catholic Herald", "National Catholic Register", "Chronicles", and other publications. Follow him on Twitter @carleolson.