Momentum builds for employers to provide insurance coverage for prescription contraceptives

Since late last year, several developments have added momentum for employers to provide insurance coverage for prescription contraceptives. In December 2000, the Equal Employment Opportunity Commission ruled that an employer health plan that excludes contraception violates the Pregnancy Discrimination Act. That ruling, which did not have the force of law, involved two unidentified employers. In June of this year, in Erickson v. The Bartell Co., a Washington federal district court ruled that a self-insured Seattle company engaged in sex discrimination by excluding prescription contraceptives from coverage under an employee benefit plan.

In addition to proposed federal legislation mandating coverage, fourteen states, including California, have already approved legislation requiring insured health plans and health maintenance organizations that provide prescription drug coverage to cover contraceptives. Legislation is pending in another sixteen states, including New York. However, these state laws do not apply to self-insured employer plans. The California legislation recently survived a legal challenge. In July 2001, a California appellate court in Catholic Charities of Sacramento, Inc. v. The Superior Court of Sacramento County ruled that the California law requiring employers to offer contraceptives as part of their prescription benefit plans does not violate the constitutional rights of a Catholic charity. Catholic Charities of Sacramento, Inc., with the support of other organizations with ties to the Roman Catholic Church, sought injunctive relief against the state coverage mandate. The appellate court disagreed with Catholic Charities' argument that requiring the organization to provide contraceptive coverage "impermissibly burdens" its religious beliefs. The court reasoned that a ruling in favor of the charity would allow the employer to impose its religious views on its employees when nearly 75 percent of the employees at Catholic Charities of Sacramento are not Catholic.

One state insurance commissioner has ruled that health insurers in his state must not exclude or reduce coverage under any health plan on the basis of sex. On July 18, 2001, Washington Insurance Commissioner Mike Kreidler filed a new rule, effective January 1, 2002, providing that it is "an unfair practice for any health carrier to restrict, exclude, or reduce coverage or benefits under any health plan on the basis of sex and will apply to all health benefit plans regulated by the Office of the Insurance Commissioner." Commissioner Kreidler stated that "in effect, the Bartell decision takes care of contraceptive coverage with the [state's] employers and my rule takes care of the [state's] health insurers."

Prior to the Insurance Commissioner's ruling, the Washington state affiliates of the American Civil Liberties Union (ACLU) and the National Abortion Rights Action League (NARAL) had filed a lawsuit against Regence BlueShield for failing to provide coverage of prescription contraceptives in the health insurance policies it sells to the ACLU, NARAL and other small employees in Washington state. The Insurance Commissioner's rule will force Regence BlueShield to provide coverage for prescription contraceptives if it also provides prescription drug coverage. However the ACLU planned to proceed with its lawsuit in order to get a court mandate for the coverage to stay in place.

There are three other factors that may lead employers to consider offering insurance coverage for prescription contraceptives. The first factor is a recognition that, no matter what contraceptive coverage might cost, the costs associated with unwanted pregnancies are likely to be significantly greater. According to data compiled in May by The Segal Co. of New York, oral birth control pills, the most commonly used prescription contraceptive, have a projected total annual retail cost of $300 per user. An increasing number of employers now recognize that this expense is far outweighed by the total cost to an employer of an unwanted pregnancy, in terms of lost time, reduced productivity, turnover and medical costs. Planned Parenthood claims that every 1,000 unintended pregnancies will cost businesses $542,000 this year.

The second factor is a basic sense of fairness for women, because many plans already cover Viagra, a drug used to treat impotence in men. The Washington-based Women's Research and Education Institute claims that contraceptive costs are one of the chief reasons women spend 68 percent more out of pocket than men on health care. Employers claim that prescriptions are leading to sharp increases in health insurance costs. However, a 1998 report from the Alan Guttmacher Institute, a New York-based health research organization, reported that when employers add birth control pills and other forms of prescription contraceptives to health plans, their costs rise less than 1 percent, or about $17.12 per employee.

Finally, employers may consider offering coverage for prescription contraceptives to avoid employee lawsuits. In mid-2001, an American Airlines flight attendant filed a complaint with the Los Angeles office of the EEOC to force her employer to cover contraceptives, pap smears and infertility treatments for all employees. American Airlines covers contraceptives prescribed for medical conditions but not for birth control.