The Cost of Insuring Pregnant Women

The argument in favor of making pregnancy a qualifying life event seems so logical, and the support for it is proving so strong, that one might wonder why it hasn’t happened already. The argument in favor of making pregnancy a qualifying life event seems so logical, and the support for it is proving so strong, that one might wonder why it hasn’t happened already. Credit Photograph by Media for Medical / UIG / Getty

Health-insurance companies have a nickname for young adults, in their twenties or thereabouts, who don’t sign up for their own health-insurance policies; they call them “young invincibles,” a term meant to suggest that many of these people forgo coverage out of a brash faith in their own youthful hardiness. The phrase started appearing more often in the press around 2009, when Congress began debating President Obama’s proposal to insure more Americans. The economics of health insurance dictate that, in order to insure large groups of people while remaining profitable, insurance companies have to attract enough healthy people to cover the costs incurred by the ill. Before the Affordable Care Act passed, insurers and some politicians argued that one of the President’s stated goals—making it easier for people with preëxisting illnesses to sign up for health insurance—would be unworkable, partly because of the young-invincible phenomenon: not enough young, healthy adults would sign up to offset the high cost of insuring the ill.

That summer, not by coincidence, several wonkish millennials in Washington decided that people in their age group should have an organization to represent them. They formed a nonprofit around this notion, calling it, cheekily, Young Invincibles. Since then, the organization has, among other initiatives, pushed for programs to make college more affordable and for federal investment in job training. It has also continued to pay attention to Obamacare. Since health-care reform went into effect, it has became clear that, at least so far, concerns about young invincibles seem to have been overstated. Insurers’ costs—and consumers’ premiums—have remained under control, partly because the government put measures in place to reduce the impact of the young-invincible problem, and partly because it turned out that the main reason young people didn’t sign up for private health insurance, pre-Obamacare, was not that they felt invincible but that insurance was so costly. Obamacare, which is subsidized by the government, helps address that. Accordingly, the young-invincible issue fell out of the headlines.

Over the course of the past couple of months, though, Young Invincibles has begun perhaps its highest-profile campaign, one that has again raised questions about how young people choose whether to buy health insurance. The group has requested that officials include pregnancy in the list of life events that qualify a person to sign up for private coverage through the federal health-insurance exchange outside of the normal three-month-long enrollment period. Currently, only a small number of such “qualifying life events” (in Obamacare parlance) exist; they include marriage, release from prison, and childbirth.

In February, Young Invincibles published a brief that cited the high cost of health care for mothers-to-be, which typically ranges from ten thousand dollars to twenty thousand dollars for uncomplicated pregnancies. They also named several costly and risky complications that can arise from pregnancy (including preeclampsia, placental abruption, Graves’ Disease, and complications from diabetes or heart disease), and pointed out that some women may be on health plans that don’t include maternity coverage.

The campaign has attracted some high-profile support. Early this month, Senator Patty Murray and thirty-six other senators wrote to Sylvia Mathews Burwell, the Secretary of Health and Human Services, to request that Burwell “create a special enrollment period to maximize women’s access to coverage.” Days later, fifty-four members of the House of Representatives signed a similar letter. The Department of Health and Human Services has the authority to make these sorts of decisions, and Burwell said last month, after the Young Invincibles report came out, that she is open to this change. (Currently, according to Young Invincibles, no states include pregnancy as a qualifying life event for their own exchanges. Senators Barbara Boxer and Dianne Feinstein, of California, which has the nation’s largest state-run exchange, have written to officials there to urge them to change the rules.)

The argument in favor of making pregnancy a qualifying life event seems so logical, and the support for it is proving so strong, that one might wonder why it hasn’t happened already. There is, however, a sound case against doing so. One reason that the Affordable Care Act provides for only a three-month sign-up period is to prevent uninsured people from enrolling only at the moment that they suddenly need healthcare—after falling off a ladder, for instance, or getting a cancer diagnosis. (Relatedly, a limited enrollment window gives healthy people an incentive to sign up, in anticipation of future need.) The attendant problem, of an unbalanced pool that includes many customers with high costs, is known as “adverse selection.” It not only hurts insurers, but can also, in the long run, drive up premiums, as higher costs are passed along to customers.

To the extent that becoming pregnant necessitates thousands of dollars of health-care spending, expanding enrollment opportunities for pregnant women could, from the perspective of insurers, be a potentially catastrophic example of the adverse-selection problem. Clare Krusing, a spokeswoman for America’s Health Insurance Plans, an industry trade group, told me in an e-mail, “If individuals are incentivized only to sign up for coverage when they need care, then that has a significant impact on affordability for everyone.”

Young Invincibles acknowledged this possibility in its report: “Adverse selection is a real concern in the health insurance industry and can lead to instability and/or increased costs for all consumers in the risk pool.” But the organization argues that adding pregnancy to the qualifying-life-event list wouldn’t increase insurers’ costs much—and for an interesting reason. The vast majority of pregnant women are either insured, eligible for Medicaid (which, in many states, has a higher income cut-off for pregnant women than for others), or covered by state-run insurance programs for pregnant women. A 2012 study, covering the period from 2000 to 2009, found that the percentage of pregnant women who were uninsured was around ten per cent, compared with nineteen per cent of women of reproductive age who weren’t pregnant.

Since 2009, the percentage of uninsured pregnant women has almost certainly fallen, because Obamacare has both expanded Medicaid access for lower-income people and mandated that uninsured people who don’t qualify for Medicaid buy insurance, through exchanges, with improved maternity coverage. Because of these factors, Young Invincibles estimates that a “relatively small number of women” would seek health insurance through the federal exchange immediately after finding out that they are pregnant. From a practical standpoint, then, the organization and its allies are making a surprising argument: they believe that the government should allow pregnancy to count as a qualifying life event not because this would have an impact on large numbers of women but precisely because it wouldn’t.

Health economists I spoke to told me that it’s difficult to estimate just how much of an impact such a policy change would have on insurers, but they agreed that it would likely be minimal. I asked Janet Currie, a health economist at Princeton University, about how many people might sign up for insurance through the federal exchange after learning about a pregnancy. She replied, “There may be a group that’s in the middle—have too much income to be eligible for Medicaid or the state programs and don’t have private health insurance—and those people may be making this calculation, but I don’t think there would be huge numbers of people signing up just for pregnancy.” As a result, she said, any potentially higher costs would probably be kept to a minimum.

There remains another issue—the possibility that, if pregnancy becomes a qualifying life event, advocates for people with various health conditions could take it as a precedent to push for the Health and Human Services Department to add other health issues to the list. One could, of course, make the same argument about falling off a ladder or getting a cancer diagnosis as Young Invincibles is making about pregnancy: treatment is costly; dangerous complications can arise; some insurance plans don’t cover them. But Currie suggested one way in which pregnancy is different from other health events: though the Young Invincibles campaign focusses on women’s health, one can easily make the argument that covering prenatal care is actually a natural extension of healthcare for an infant—in other words, that prenatal care is as much for the unborn child’s benefit as for the mother’s. “Given that one’s intention when one is pregnant is to deliver a live baby,” she told me, “it seems reasonable to start healthcare before the baby is born, for the baby.”