One Benefit from Expanded Medicaid: Savings from More Available Contraception

Adam Thomas
Adam Thomas Former Brookings Expert

July 10, 2012

The government’s role in family planning has been a bone of political contention in recent years, and the Supreme Court’s ruling on the constitutionality of the Patient Protection and Affordable Care Act marks a significant moment in this debate.

The court preserved the core of the health-care law by upholding the mandate that most Americans carry health insurance. But it also struck down a provision that, indirectly, would have helped to extend eligibility for publicly funded contraceptive services to a large number of new beneficiaries as part of a broader expansion of the Medicaid program due in 2014.

The court ruled that the federal government can’t withhold funds from states that choose not to expand Medicaid – government-funded health care for the poor – to those earning up to 133 percent of the poverty line (about $31,000 for a family of four). Since the court’s ruling, several governors have indicated they are likely to opt out of that expansion, which was expected to cover a total of 17 million more people.

Even though the federal government will cover all of the expansion’s cost for the first few years and at least 90 percent of  its cost in later years, some governors say their states still can’t afford it. But by opting out of the expansion, states will lose the societal and budgetary benefits of reducing unplanned pregnancies by making publicly funded contraceptive services available to millions more people.

Almost half of all pregnancies in the United States are unintended, and research has shown that unintended pregnancy and childbearing lead not only to increased government spending but also to reduced educational attainment and labor force participation among women. They also diminish educational and health outcomes among children. Expansions in states’ Medicaid programs would help to lessen all of these social problems.

The Guttmacher Institute estimates that more than 60 percent of the public dollars spent on family planning services – i.e., contraception – are disbursed through the Medicaid system. Studies show that previous expansions in states’ Medicaid programs resulted in notable reductions in the number of unintended births and abortions.

Also important for financially strapped states is the fact that expansions in Medicaid contraceptive services are likely to produce budgetary savings.

In a series of recent reports for the Brookings Institution, I show that the government spends billions of dollars every year on unintended pregnancies and that taxpayers save almost six dollars for each dollar that they spend on states’ Medicaid family planning programs. I also find that expansions in these programs reduce rates of child poverty, teen pregnancy, and out-of-wedlock childbearing.

These programs’ beneficial impacts may help to explain why some of the same states that are now opposed to the Medicaid expansion – for example, Texas, Florida, Louisiana, Mississippi, Iowa, and Missouri – have opted in the past to extend access to the family planning portions of their Medicaid programs.

However, most of these family planning extensions expire by the end of next year. The broader expansions of states’ Medicaid programs, if they are implemented, will serve to sustain much of the progress that has been made on this front.

Family planning is but one facet of the sprawling and complex health-care debate, and recent events have demonstrated that this debate is far from resolved. But as the dust settles after the Supreme Court’s landmark ruling, state lawmakers should bear in mind that the accumulated evidence speaks clearly to the broad societal and budgetary benefits that accompany expansions in publicly funded contraceptive services.