Health plans and employers are paying increasing attention to recent administrative and judicial developments relative to contraception coverage. Whether self-funded or insured, plans that offer prescription drug benefits may no longer be able to exclude prescription contraceptive drugs or devices.
Thirteen states require insurance policies specifically to cover contraceptive drugs or devices. For individuals covered by group insurance policies in other states or for those who are covered by self-funded, employer-sponsored benefit plans, these developments indicate that limitations on contraceptive benefits may be on the way out, though in most of the country, providing contraceptive coverage is not yet legally required.
The first recent contraceptive coverage development was a Dec. 14, 2000, decision by the Equal Employment Opportunity Commission. The EEOC found that an employer-sponsored medical benefit plan that excludes coverage for prescription contraceptives is in violation of Title VII (Civil Rights Act of 1964) as amended by the Pregnancy Discrimination Act (PDA).
While the EEOC decision applies only to the involved parties (who remained anonymous in the published decision), it is, nevertheless, a statement of the EEOC's official policy.
Among other things, Title VII prohibits discrimination in the terms and conditions of employment "because of sex" and "on the basis of sex." The PDA amended Title VII to include pregnancy, childbirth, and related conditions in the definition of those terms.
In this decision, the EEOC reasoned that because the U.S. Supreme Court had made clear that the PDA prohibitions cover a woman's potential for becoming pregnant, as well as pregnancy itself, and that contraception is a means by which a woman controls her ability to become pregnant, "the PDA's prohibition on discrimination against women based on their ability to become pregnant thus necessarily includes a prohibition on discrimination related to a woman's use of contraceptives."
Two aspects of prescription contraceptives were key to the EEOC's analysis. First, prescription contraceptives are available only for women so that their exclusion from coverage inevitably creates greater burdens on females than males.
Second, oral contraceptives are effective in treating a variety of conditions that exclusively affect women — not just the prevention of pregnancy — but the plan here excluded contraceptive coverage for all purposes. Because the plan in the case provided prescription drug coverage for preventing or controlling a wide range of medical conditions, its failure to cover a treatment that is both unique to women and essential for treating a range of female conditions, including pregnancy, was a violation of the PDA.
The next major development caused many to sit up and take notice. The first federal court to address this issue, in Washington State, directly agreed with the EEOC and concluded that the failure of an employer-sponsored medical plan to provide coverage for contraceptives violated the PDA. In Erickson v. Bartell Drug Company, the court held that Congress, in passing the PDA, had adopted a broad view of Title VII protection for women.
Congress recognized that because there are sex-based differences between men and women employees, employers might have to provide women-only benefits or incur additional benefit expenses to provide equal treatment.
Because the contraceptives at issue are only prescribed for women, their exclusion from coverage under the employer's otherwise comprehensive prescription drug program constituted impermissible discrimination.
In reaching its decision, the court directly rejected a number of arguments commonly made by employers to justify the exclusion. The employer contended that treating contraceptives differently from other prescription drugs is reasonable because their use is voluntary, and not aimed at treating an illness or disease.
To this, the court responded that controlling pregnancy is not simply a voluntary decision, as the availability and affordability of effective contraception is a crucial element in helping to prevent a host of physical, emotional, economic and social consequences to women.
The cost of unintended pregnancies exacts a direct toll on the health status of women, and the court concluded that "identifying and obtaining an effective method of contraception is a primary health care issue throughout much of a woman's life."
Catholic Charities decision
In a lesser-known case, a Catholic charity challenged the scope of the "religious-employer" exemption in California's Women's Contraceptive Equity Act. Under the Act, insurance coverage that included prescription drugs also had to include coverage for contraceptives, unless this violated the employer's religious beliefs.
To qualify for the exemption, however, the employer's purpose had to be to instill religious values and it must primarily employ and serve people who share those religious beliefs. It also had to be a not-for-profit organization.
In Catholic Charities of Sacramento v. Superior Court of Sacramento, a Catholic charity that did not qualify for the religious-employer exemption challenged the constitutionality of the act and lost. The court held the law was neutral towards religion. The state's interest in preserving public health and eliminating gender discrimination was "compelling." Moreover, the basis for exempting only certain religious employers burdened all religions equally, and so did not violate the establishment clause of the First Amendment.
So what do these decisions mean to an organization? They do not necessarily mean that all employers, insurers, or MCOs are now required to provide contraceptive coverage. As it is "official policy," the EEOC will likely seek to get other courts to support and enforce its analysis that not providing contraceptive coverage is impermissible discrimination under Title VII. The EEOC and Erickson decisions are well reasoned, and courts that are confronted with this issue could very well reach the same results.