(INVESTORS BUSINESS DAILY) -The Hobby Lobby case now before the Supreme Court will test whether private, for-profit corporations, acting through their owners, can claim a religious exemption from ObamaCare’s mandate to cover contraception as part of employee health insurance.
The economic rationale for health insurance (and other insurance as well) is to pool individual resources, thereby spreading the risk associated with unexpected events that could impose painful financial burdens on victims. That’s why we don’t insure against running out of gasoline: The event is anticipated and the expense is manageable. We do, however, insure against house fires: The event is unpredictable and the cost could be onerous.
Health-related illnesses and injuries are a mixed bag. Some costs — such as medical care arising out of a major automobile accident — fall into the unpredictable-and-potentially-burdensome category. Other costs — such as contraception — are known in advance and tolerable by nearly everyone. We decide up front if childbirth is a possible and desirable outcome, we are aware whether and when contraception might be needed, and we can afford the cost. Accordingly, rather than pay an insurance company to bear those risks, we typically pay out of pocket.
Are there instances when the need for contraception cannot be forecast? Yes; cases of rape, for example. But inexpensive, ex post birth control is available. Moreover, those cases are infrequent, uncorrelated with one another and, therefore, insurable at trivial cost.
In a rational insurance market, with policies tailored to customer needs, medical coverage would reimburse expenditures associated with such events and the additional insurance premiums would be inconsequential. There’s no need to mandate universal contraception coverage to guard against outlays for unforeseen tragedies such as rape.
What about less-affluent persons for whom the cost of contraception can be significant? Indeed, that could be a problem. ObamaCare’s solution is wealth redistribution — by forcing some people to cover the cost that others might not be able to afford. That’s the reason government-approved health insurance must cover contraception, even though coverage of ordinary expenses is a money-losing proposition for most individuals.
Unfortunately, government has long been a major player in redistributing wealth. Many Americans — myself included — don’t believe that’s a legitimate function of government. But at least there’s been a semblance of transparency so voters could express their preferences.