Could Dual Pools for Abortion Save Health Care?

Though the Nelson amendment, which attempted to restrict federal insurance funds for abortion, failed in the Senate Tuesday, the issue of abortion's role in health care is far from settled. While the Senate version, if passed as now written, would allow federal funding, the House version, thanks to the Stupak amendment, does not even allow private purchase of a rider. Democrats are still divided on this issue, and without Democratic unity, health reform fails. Fortunately, the point of contention is not the thornier one of whether abortions should be legal, but rather how to accommodate both those who want to provide federal coverage and those who refuse to vote to earmark government funds to do so.

Both views can be accommodated by the simple step of establishing two insurance pools, one covering abortion and one not. Each would have the same premium, and people would sign up for the pool of their choice, depending on whether they wanted abortion coverage or not. To fully understand why this math works despite the extra cost of abortions, you must first understand abortion financing and rates in general. (What's the best way to take the passion out of the abortion fight? Turn it into an insurance equation).

One of the many frustrating things about the debate over federal insurance funds going to abortion is that the funds in question are so small: abortion spending represents less than one 10th of 1 percent of total health-care spending. Among every 1,000 women and teenaged girls who do not qualify for Medicaid, and therefore would potentially be eligible for the new plan, there are 10 to 15 abortions. The cost of a first-trimester abortion averages $413, or roughly $6 per non-Medicaid-eligible female per year. (Second-trimester abortions cost much more, and congressional consensus that they should be covered is unlikely in almost any scenario.) Despite having coverage, some women pay cash for privacy reasons, though the exact percentage is unknowable for the same reason.

At the same time, covering abortion does not raise overall insurance premiums—in a sense, it pays for itself by preventing the higher medical costs involved with birth events down the line. Most health plans and self-insured employers—including the Republican National Committee until last week—cover abortions because their job is not to enforce a moral code of conduct but rather to pay claims as cost-effectively as possible.

Mathematically speaking, abortion coverage offsets about the same dollar amount of avoided birth-event claims, so covering it costs taxpayers nothing, even in federally subsidized health care. But that doesn't by itself address the pro-life objection that the tax dollars spent on federally subsidized health plans should not go toward abortions, period.

So what's the solution? In order to accommodate this demand, abortion-coverage dollars themselves can be segregated into a separate pool, within the context of a "dual pool" compromise.

Even if we make some very generous projections about who might self-select into a pool with abortion coverage because they fear they (or their dependents) are at risk for needing an abortion someday, and that no one will pay cash for privacy reasons, the $6 per year it would cost per person to cover abortions would likely rise to no more than $36 per year, or $3 per month. Logistically—since abortion lowers other health-care costs associated with birth—the pool with abortion coverage would cost $3 less per month to begin with. People choosing that pool would have to pay that same $3 separately into a segregated pool used just for abortion coverage. A birth event costs about $6,000 on average if you include neonatal expense. No one knows the exact statistics, but it is fair to assume that about one in 15 more babies would be carried to term absent coverage.

Abortion coverage is therefore "free" to subscribers, but with no federal funds involved. It is also possible that ongoing claims experience will require repricing the pools in future years, as one may turn out to be more expensive than the other, as with any insurance policy. But future price differentials, if any, will be a small fraction of that already small $3 per month.

This "dual pool" solution should satisfy most Democrats. Pro-life House Democrats, plus Nebraska's Sen. Ben Nelson (the only vehemently pro-life Democratic senator), can tell their constituents: "We win because no federal funds will be used for abortions, period." Abortion supporters can tell their constituents: "We win because access to abortion is covered, free."

Yes, this solution will add a few paragraphs of complexity to the 1,000-page bill. Yes, subscribers would write two checks. Yes, the segregated $3-per-month pool could run out before year's end in any given year. Yes, in future years claims experience might require a very small price differential between the two insurance pools. There are more unanswered questions regarding who will participate and how that participation will affect costs—on paper, it makes sense for all pro-choice women of childbearing age, or with children of childbearing age, to participate. In reality, most women don't anticipate needing an abortion until after they find themselves pregnant. It doesn't address some of the messy realities of abortions and the divisions that can occur within families and marriages. It doesn't address the overarching moral concerns from those who think abortion is murder. When it comes to abortion, there are no easy answers or perfect solutions. But this plan isn't about messy morality—it's insurance policy. This framework should create a face-saving consensus for both sides, allowing Democratic unity on this aspect of health reform and increasing the likelihood of its passage.

Al Lewis is credited with inventing disease management and is the author of the forthcoming OOBonomics: 12 Great "Outside-Of-the-Box" Economic Policy Solutions No One Has Thought Of. Until Now. His idea factory blog, OOBonomics.com, offers, seeks, and analyzes original social and economic policy ideas.