The ACA and Contraceptive Coverage
The Affordable Care Act (ACA) mandates that private health insurance plans cover all FDA-approved prescription contraceptives with no cost-sharing. A new study in Health Affairs by LDI Fellow Nora Becker and LDI Executive Director Dan Polsky finds that the mandate saved women on average $255 per year for the oral contraceptive pill and $248 per year for the intrauterine device (IUD). With an estimated 6.88 million privately insured oral contraceptive users in the United States, this means approximately $1.4 billion per year in out-of-pocket savings on the pill alone.
Becker and Polsky’s study is the first to systematically quantify how much women saved in out-of-pocket costs because of the ACA’s contraceptive mandate. Using administrative claims data from a large national insurer, they found that, prior to the mandate, spending on prescription contraception accounted for 30%-44% of out-of-pocket health costs for the women using them. Between June 2012 and June 2013 out-of-pocket expenses for the pill declined by 38%, and for the IUD by 68%.
(The release of those study findings quickly generated widespread national media pickup and even a tweet from the White House.)
Becker and Polsky suggest that the reduction in cost is likely to be salient for women, especially the removal of high up-front costs for longer-term methods. By June 2013, the majority of women on private health plans were paying nothing out-of-pocket for their contraception.
Controversies and exceptions
The contraceptive coverage guarantee is part of a broader ACA provision requiring coverage without cost-sharing for recommended preventive care services . Grandfathered plans , which still cover 36% of insured workers as of 2013, are not yet subject to the mandate.
The mandate itself has been challenged by employer groups claiming a religious objection to contraception, culminating in a Supreme Court decision in their favor. There are now regulations on religious exemptions to the mandate for religious employers, as well as for closely-held for-profit corporations. These regulations exempt an employer from paying for contraceptive coverage, but do not exempt a health plan from providing the coverage. In theory, this means that all women still have access to contraceptive coverage without cost-sharing.
Problems with implementation
Not all insurers have interpreted and implemented the mandate in the same way. A report by the Kaiser Family Foundation found that plans were placing restrictions on certain contraceptive methods Similarly, the National Women’s Law Center found widespread violation of the provision. Specifically, some insurance companies were not providing coverage for all FDA-approved methods of birth control, or were imposing out-of-pocket costs on them, limiting their coverage to generic birth control, or failing to cover the services associated with birth control without out-of-pocket costs, including counseling or follow-up visits.
In May 2015 the Departments of Labor, Health and Human Services, and the Treasury issued new guidelines after it became clear that some insurers were not fully in compliance with the rule on covering contraception with no cost-sharing.
What about Medicaid?
Even before the ACA, Medicaid prohibited any copayment for contraception, although states did not cover every method. If a state has expanded its Medicaid program under the ACA, the preventive care requirements, including contraception, apply to this expanded program. That’s not to say that there isn’t work to be done to close loopholes about where and when women on Medicaid can access the contraception that they need.
Other effects of the contraceptive coverage guarantee
- Becker and Polsky’s study shows the important drop in out-of-pocket spending for women to get the contraception that they need, and they hypothesize that this may affect the methods that women choose, specifically opting for longer-term contraception that has previously required a high initial fee.
- A recent initiative in Colorado, where poor women were offered free IUDs and contraceptive implants, seems to support this hypothesis. When offered for free, there was a surge in demand for these longer-term methods, outpacing the growing use of such methods nationwide.
- A report by Express Scripts, one of the largest managers of prescriptions drugs, showed a 29% increase in contraception prescriptions on health insurance exchange plans for new enrollees compared to the same period last year. The report authors take this as a sign that younger women are signing up for the subsidized coverage offered by the ACA, but is also likely related to the zero cost-sharing mandate.
- A cost-effectiveness analysis of the ACA’s expanded contraception coverage, using Oregon state insurance providers, concluded that it saves public funds.
Read Penn Medicine's press release on Becker and Polsky's study here.