Does Congress have its Economics Twisted?

The House recently cut a provision in its economic stimulus package that would include family planning services for low income populations via Medicaid. This decision House Speaker Nancy Pelosi(D-CA) had argued for including the contraception provision because it will "reduce costs to the states and to the federal government" resulting from unplanned pregnancies. (CBS)

Contraception and Economics

In addition to conservative ire, Pelosi's argument seems to stir up a heady mix of Malthusian theory, issues regarding birth spacing, and the aging population. Thomas Malthus argued that there is the potential for rapid population growth that would create demand that exceeds the existing resources (in his example, food supply). Malthus believed that in addition to natural causes, misery, and vice; moral restraint (such as marrying at a later age) could check population growth. Malthus would have loved modern contraception. In the case addressed in Congress, the limited resource is governmental funds for social programs to assist low income populations. The population in need is growing (more people find themselves in the Medicaid-eligible group due to lost jobs) while the available resource has decreased. The cost of regular birth control for one couple is much lower than the cost of a child born to a couple.

If a couple makes a set income, it follows that they could afford to better meet the needs of their family if they have one child than if they had two. Having the choice to limit unwanted pregnancies through contraception becomes particularly important for low income populations who may not be able to afford the resources needed for that additional child. Can you afford the average $11,000 it takes for the first year of a child's life?

Birth spacing is a concept that takes family planning further, using contraception to ensure a minimum number of years between each child. Studies have shown that having 3-5 years between births increases survival rates and health outcomes for the born child, the older child, and the mother. In addition to the devasting impact a lost child or mother has to a family, it is possible that a family, especially one without health insurance, could never recover financially from the burden of medical and funeral costs.

Freakonomics readers will recall an argument by Donohue and Levitt that attributes the decline in crime to the legalization of abortion. While this argument has been criticized for many angles, it does bring up possible social consequences resulting from changes in access to family planning services and products.

And then there is the elephant in the room- the baby boomer population who is rapidly becoming the retirement age. A young, working population is needed to help the government and employers meet financial obligations to baby boomer retirees on pensions and Medicare. Economists have also pushed that population growth is a source of economic growth (the larger the population, the more purchasers demanding products).

So we must ask ourselves, does the government want us to have babies or to not have babies?

What does the government incentivize: more babies or fewer?

Since it is tax season, a look at the 1040 form list of exemptions gives us a better idea of what the US government has wanted us to do. We get exemptions for the number of dependents (such as children) we have. The exemption does not cover all of the expenses related to raising a child, but it does ease the burden in the balance between demand and resources for families.

We can also look at what health insurance companies cover and not cover. For many, contraception is NOT covered by their insurance carrier, yet the same carrier will cover prescriptions for Viagra. While birth spacing is a PROVEN way families can maintain good health of mothers and children, most families do not have access to the contraception that helps couples better time births. Meanwhile, older men can continue to have an active sex life and perhaps, if their female partners are using fertility treatments or are younger, they can also have children. Governmental bodies have the option of regulating change in what insurance companies cover, yet it does not seem to be a priority. As birth spacing is linked with better health, it is likely in the financial interst of insurance companies to include contraception as part of their preventitive health package. A little governmental kick in the rear here could go a long way.

Ethics

Nancy Pelosi has since taken on criticism based on the group the contraception provision was intended to benefit: low income women. Some have said who is to say that the pregnancies that this provision would prevent would not develop into highly productive children. While they make a good point, offering contraception as an option does not mean that it is mandatory. The answer should be to offer all women access to more affordable birth control. Women who are not Medicaid eligible are still in need of the choice of birth spacing.


Ways the government could better stimulate the economy in both the short term and long term

It made sense that contraception was kicked out of the economic stimulus package. Yet there is a need for some change sooner or later.

1. Just as we provide tax exemptions for dependent children, educator expenses, and student loans provide an exemption for out-of-pocket birth control costs.

2. Act legislatively to get health insurance companies to include birth control in their standard coverage package.

3. Work with pharmaceutical companies to negotiate the price down for birth control options.

4. If having a younger, working population is needed to balance the baby boom retiree population, modify immigration laws to allow more of the young, professional population to immigrate to the US.