Paul Krugman and others on the left routinely sneer at the idea that you can actually increase government revenues by cutting tax rates. (Turns out most of the time you can’t, but in some cases you can.)
But there is a similar myth on the left. It’s the idea that by spending more money on health you can reduce overall health care costs. According to The New York Times, President Obama is using that idea to support free contraceptives for women:
The Obama administration says the cost of providing contraceptives will be offset by savings that result from greater use of birth control, “fewer unplanned pregnancies” and improvement in women’s health.
Here is Matt Yglesias at Slate making the same point:
While birth control costs more than nothing, it costs less than an abortion and much less than having a baby. From a social point of view, unless we’re not going to subsidize consumption of health care services at all (which would be a really drastic change from the status quo) then it makes a ton of sense to heavily subsidize contraceptives…But just on the dollars and cents subsidizing birth control is a no-brainer.
The trouble is: there is no evidence for that claim. In fact, there is no evidence that making contraceptives free leads to their greater use. The ObamaCare mandate requiring contraceptives to be available without deductibles or copayments is apparently not causing women to use more contraceptives according to a report by the IMS Institute. And if the mandate doesn’t lead to greater use, there can’t be fewer births, etc.
Even if the claim were true, why should insurance companies be involved? The out-of-pocket saving for a typical woman because of the ObamaCare contraceptive mandate is less than a dollar a day. For those women who really have problems affording contraceptives, they are available for free or greatly reduced prices from public and private agencies in practically every city in the country.
And remember, while we are forcing insurers to cover services that almost everyone can easily afford on her own, these same plans are free to require thousands of dollars in out-of-pocket spending for patients who require hospitalization for real medical problems.