How much is contraception coverage and costly violations for BNP Paribas

July 8, 2014


1. Does health insurance covering contraception actually cost anything?

In this article about a renewed fight at the U.S. Supreme Court just days after its decision about whether the owners of the Hobby Lobby retail chain had to buy insurance covering certain forms of contraception, the New York Times’ ace court reporter Adam Liptak wrote:

The majority opinion there, written by Justice Samuel A. Alito Jr., seemed to suggest that the forms could play a role in an arrangement that was an acceptable alternative to having employers pay for the coverage. Under the arrangement, insurance companies that receive the forms pay for the coverage on the theory that it costs no more to provide contraception than to pay for pregnancies.

Read the sentence I put in italics.

Obamacare was only passed after President Barack Obama and the bill’s lead sponsors in the House of Representatives and Senate agreed to a compromise to assuage religious groups opposed to contraception.

U.S. Supreme Court nominee Judge Sotomayor answers questions during final day of testimony at her confirmation hearings in WashingtonUnder the compromise, religious organizations could not be forced to pay for insurance that included contraception. Instead, the insurance companies would include the coverage separately, at their own cost. The Hobby Lobby case was about whether privately owned businesses with the same qualms about contraception could claim the exemption.

At the time the law was passed, and then after the Hobby Lobby case was brought, I wondered why an insurance company would agree to provide some coverage for free.

Liptak’s offhand sentence in this article seems to provide the explanation: offering contraception doesn’t really cost the insurance companies anything because covering the bills of its customers when they get pregnant always costs so much more.

Is that true? Does this mean that no one actually “pays” for contraceptive services when they buy insurance — because the insurers would be glad to provide it for free?

Have these legal fights actually been about nothing?

Have I got that wrong?

Could someone please explain the economics of contraceptive coverage and how that fits into this legal battle?

2. BNP’s New York State budget bonanza:

The conclusion of the saga in which French banking giant BNP Parabis was pursued and ultimately nailed by U.S.  prosecutors with $8.9 billion dollars in fines for systemic violation of U.S. trade sanctions was announced on June 30 with this press release:

“Cuomo administration announces BNP Paribas to pay $8.9 billion, including $2.24 billion to NYDFS”

But it was federal prosecutors who initiated and drove the investigation.

This was heralded in their own press release, which was distributed at a news conference that included Attorney General Eric Holder, the head of his criminal division, FBI Director James Comey and U.S. Attorney for the Southern District of New York Preet Bharara (who got off the best line of the day when he called BNP’s processing of $190 billion in illegal transactions around the world a “tour de fraud”).

The only New York official listed as participating in the Washington announcement was Manhattan District Attorney Cyrus Vance Jr., whose office was said to have “conducted its own investigation alongside … the Department of Justice.”

BNP Paribas logo is pictured on the building of the bank in GenevaSo, this other announcement from the office of the ever-ambitious New York Governor Andrew Cuomo touting the role of his New York Department of Financial Services must have generated a lot of grumbling about credit-hogging among the feds who saw it. New York’s Financial Services Department was thanked at the end of the federal press release — but its head, Benjamin Lawsky, was never mentioned.

Yet the New York announcement also reported that, as part of the deal, BNP was going to pay the state’s Department of Financial Services “a civil penalty of $2.24 billion. This penalty is part of an overall $8.9 billion payment being made to [the Department of Financial Services], as well as other state and federal authorities.”

In other words, the taxpayers of New York are getting nearly a quarter of the giant check that BNP Paribas is writing.

That $2.24 billion falling out of the sky is about 2.5 percent of New York’s entire annual budget.

It’s 10 percent of what the state spends on its largest budget item — aid to local school districts, which is constantly fought over.

It’s about 120 percent more than Cuomo is going to spend on his most publicized new initiative — early childhood education. And the $1.5 billion to cover that is going to be spread over five years, whereas BNP’s payment comes in one shot.

It’s 66 times what the state spends on grants to arts and cultural organizations.

And it’s about 5 percent of the state’s  income tax receipts.

So where’s all this suddenly available money that no one could have budgeted going to go? Who gets to decide that, given that the legislature has already passed the state’s budget for the year?

More important, it would be great to get the inside story of how New York’s take from the BNP fine was negotiated. Sure, the entire BNP fine of nearly $9 billion is a drop in the $3.9- trillion federal budget bucket. But it’s still real money. Which lucky federal agency gets to keep its $6.5 billion share?

We know that New York banking regulator Lawsky had a lot of leverage because following the bank’s guilty plea, he could have suspended or lifted BNP’s license to do business in New York. Let’s get a behind-the-scenes look at how that leverage was converted into a bonanza for his state — and that press release for his governor.


PHOTO (TOP): (L to R) Justice Elena Kagan. REUTERS/Jonathan Ernst; Justice Ruth Bader Ginsburg. REUTERS/Larry Downing; Justice Sonia Sotomayor. REUTERS/Mike Theiler. 

PHOTO (INSERT 1): Supreme Court nominee Judge Sonia Sotomayor answers questions during her fourth and final day of testimony at her Senate Judiciary Committee confirmation hearings on Capitol Hill in Washington July 16, 2009. REUTERS/Jason Reed

PHOTO (INSERT 2): BNP Paribas logo is pictured on a building of the bank in Geneva July 1, 2014. REUTERS/Pierre Albouy


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“offering contraception doesn’t really cost the insurance companies anything because covering the bills of its customers when they get pregnant always costs so much more.”

Coverage without contraception will always cost more than coverage with contraception. Hundreds can get contraception for the cost of one normal pregancy. Add in the occasional difficult pregnancy and the additional coverage for the child as it grows up and you can cover thousands with contraception for the cost of one pregnancy. There is no question rhetoric about “being forced to pay [extra] for contraception” was always complete nonsense.

Posted by QuietThinker | Report as abusive

1. Ten seconds to think of keywords, and then to Google. 4/07/01/supreme-court-ventures-into-heal thcare-minefield/

The short answer is that nobody really knows.

Posted by OkieRedux | Report as abusive