Today, President Obama unsuccessfully attempted to extricate himself from a political crisis of his own making.
The issue is Obamacare’s requirement that health insurers and employer-sponsored health plans cover federally mandated “preventive services” in their benefit packages—with no co-pays for enrollees—and the Administration’s subsequent regulatory requirement that those mandated preventive services include contraceptive products and services—including abortion-inducing drugs.
The “compromise” the President announced today is that contraception coverage “will be offered to women by their employers’ insurance companies directly, with no role for religious employers who oppose contraception. Insurance companies will be required to provide contraception coverage to these women free of charge.”
There are only two problems with the Administration’s so-called compromise:
(1) It doesn’t remedy the moral and religious liberty objections to this mandate, and
(2) As a practical matter, it simply doesn’t work.
On the first point, the Administration says that an employer won’t have to offer contraceptive coverage, but the employer’s insurer will have to offer it “free of charge.” What it doesn’t say is who will pay the premium for those “free” benefits—the employer or the worker? If the insurer simply adds the cost of those benefits to the employer’s total premium, then nothing changes, and the employer is still paying for those services.
On the second point, under the 1974 Employee Retirement Income Security Act (ERISA), employers can design their own “self-insured” or “self-funded” health benefit plans for their workers and don’t need to buy coverage from an insurer. So an employer with a self-insured plan has no “insurer” to provide the required coverage under the President’s “compromise” formulation. Yet Obamacare’s preventive services mandate applies (by amending ERISA) to both health insurers and employer-sponsored health plans, including self-insured ones.
Currently, 60 percent of workers covered by employer-sponsored health plans are in self-funded plans, some of which are religiously affiliated. For example, most universities, regardless of their religious affiliation are—like most other large employers—probably self-insured.
So, how will this apply to self-insured employer health plans? Will a self-insured employer be exempt because it doesn’t buy coverage from an insurance company? Or will a self-insured employer have to go buy separate, supplemental coverage for contraception from a commercial insurer (as many now do for dental and vision care plans)?
Furthermore, to dismiss a possible red herring before it is raised: Yes, many employers with self-insured plans do contract with health insurers to administer their plans for them (that is, to handle enrollment, claims, etc.), but that is both legally and financially a different arrangement. Moreover, there are also many other employers with self-insured plans who contract with a “third-party administrator” (TPA) that is not an insurer. Because those entities are not licensed or regulated as “risk-bearing entities,” they are legally prevented from offering insurance plans without first obtaining regulatory approval as an insurance company. So if the Administration tries to say that, in the case of self-insured plans, the responsibility to provide contraception will fall on the TPA instead, that won’t work either.
Even before the Administration has filled in these crucial details, its so-called compromise appears to be an unworkable non-solution—just like the rest of Obamacare.
On Monday, Feb. 13, Senator Roy Blunt (R-MO) will speak at The Heritage Foundation at 11:30 about how Obamacare tramples on religious liberty and freedom generally, and what can be done about it. Join us live or tune in to watch online.