Tuesday, June 08, 2004

Covering birth expenses -- why punish employers of young women?

Thanks to Senator Chris Lauzen's always-thoughtful Voice from the Senate Floor (the current one is here), I had a thought about the way we current cover the medical cost of births.

According to Senator Lauzen, Medicaid (through the State-administered FamilyCare) covers two out of every five births in the state.

What about the other three?

A good chunk come from for-profit insurance companies that make money by charging higher premiums and approving fewer hospital bills. So there are companies making money off of births.

Here's the interesting part. Consider a small business with six or seven employees. They do buy health insurance for workers. Now, the owner is hiring an eigth employee. A man and a woman both apply. Both of them plan to have kids in the next couple of years.

If the company hires the woman, those birth costs will be absorbed by the other seven employees, and all of their premiums will rise.

If the company hires the man, those birth costs will not be absorbed by the other seven employees (assuming the mother has her own insurance, or if not, just change the hypothetical to make the same point to a single man), and premiums will not rise.

So the current way of funding 3 out of 5 Illinois births through for-profit insurance companies is essentially a tax on hiring women.

Right? If that's not right, someone explain it to me.

And if that is right, then it seems to be the best way to promote economic development for small business is to take the burden of covering the cost of births off of the company's balance sheet, and have the state cover every birth.

That takes away the unfair distortions in the hiring market (go ahead and hire young soon-to-be mothers, small business owners, as your premiums will not rise!) and should lower the cost of insurance as the insurance companies will no longer have to pay for births. Of course, government spending will rise, but I'll bet it will either come out in the wash (the amount of government spending on all births will roughly equal the amount of business expenses on births) and potentially the government can do it cheaper because there wouldn't be hundreds of different insurance bureaucracies to navigate through for every birth.

I think I'm going to ask Senator Iris Martinez to put in a bill.

UPDATE (6/11): Senator Martinez is very interested. We're working on researching this issue now to see if there really is a problem of discrimination in the hiring market against women based on the cost of maternity insurance, and also if our proposed remedy makes sense. Any help would be appreciated, both on the research end and with finding more supporters.

This, by the way, would be my dream job. Helping to pass innovative state laws -- models for the nation -- that promote the general welfare and help to form a more perfect union. I'm doing some of that now in my spare time without any financial backers. If I had some backers. . . .

1 comment:

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