Don’t socialize health care through private insurance

Four senators have introduced the “Supporting Healthy Moms and Babies Act,” which would mandate full coverage, no copays, no out-of-pocket costs for beneficiaries for every aspect of prenatal care including ultrasounds, delivery, and postpartum care for up to one year after the birth.

This would cause costs to rise for everyone, and the federal government would further ensconce itself as the arbiter of health care decision making.

Proponents estimate that the policy would raise premiums for everyone who has commercial insurance by $30 per year. There are two reasons that estimate is as low as it is. First, it would be a substantial redistribution of costs borne by a small population across a much larger population. Annually, there are 1.8 million births in the US and 180 million people covered by private health insurance. This bill would spread the costs of childbirth across everyone with commercial insurance, regardless of age, family status, or desire to have their own children.

The second reason the estimate is that low is because under the current system, cost-sharing compels potential parents to consider the costs of the services they use when they’re deciding where to get diagnostics done and where to obtain care at every stage of childbirth both before and after pregnancy. If that incentive is removed, costs will escalate, and premiums will rise higher than currently estimated.

Spreading individuals’ costs across society, i.e. socializing costs, looks better on paper than reality. Not included in the estimates are the reduced incentives for parents to pick lower-priced health care providers. If every dollar of spending on childbirth were covered by the other 98 percent of the population, why wouldn’t everyone choose the most state-of-the-art hospitals with equipment that is repurchased every six months with integrated, gold-plated ultrasound machines boasting more features than a high-end BMW?

The bill’s proponents argue that the mandate’s cost would be borne by employers and government, not everyday Americans. That’s not quite accurate. Employers count their share of health insurance premiums as a labor expense, the same as salary. The employee will still bear that cost, even if it’s paid by the employer on their behalf. Obamacare subsidies are paid by taxpayers, so that cost is still as high, it’s just spread out over even more people.

Policies such as these are often considered on their own, as if this is the first and only policy the government has implemented to promote child births and reduce health care costs. But in the real world, that’s not how mandates work – they pile on. For instance, Congress has already increased the child tax credit to $2,500 through 2028, when it will drop to $2,000 and then grow with inflation. That alone takes a sizeable bite out of the out-of-pocket costs of childbirths.

Also objectionable is the hijacking of private insurance as a conduit to pass social policy. If eradicating all out-of-pocket costs is good social policy, it should be done directly, not smuggled through private contracts. Whether it’s even good social policy is debatable, considering it is very unlikely to increase fertility in the country, which is the only social benefit it might confer.

Health insurance is not meant to cover everything, it is meant to cover the unpredictable. The more the government packs into insurance and the more it financially distances consumers from the products they purchase, the worse and more costly health care will become. This legislation is a backdoor to socialized medicine and bad policy.