Assumptions

I was reading this post by the usually amazing Jodi Beggs about contraceptive coverage in health care.  I was especially struck by the underlying assumptions in this point: 

Since it's mainly a subjective matter, I'm in no position to evaluate moral right-versus-wrong here. I am in a position, however, to point out a critical flaw in the argument. In order for the pro-mandate argument to hold, it must be the case that women are not in a position to choose their employers, their schools or whatever other institutions may be providing them with health insurance. As a woman, I find this assumption to be absurd and more than a little insulting. Since women are free to choose the employers and schools that are best for them, those women who prioritize free access to birth control can seek out institutions that offer that benefit.

If women behaved in this way, employers and schools would have an incentive to offer contraceptive coverage to their female employees. These incentives would come not only from the fact that birth control is likely cheaper than the corresponding amount of prenatal care and maternity leave, but also from the fact that the institutions offering coverage would have a wider pool of applicants to choose from. Of course, some institutions might refuse coverage on ethical grounds, but they would either have to offer higher compensation to make up for it or accept the fact that its female applicant pool is going to be limited to those women who either don't care about birth control or can't get another job or school acceptance letter. (Economists call these outcomes "compensating differentials" and "efficient sorting," respectively. I call it "voting with one's feet.")

I think that there are two assumptions that are made implicitly with these types of arguments that don't necessary hold.  The first, and most critical one, is that labor markets are reasonably tight and that it is easy to change jobs.  Back in the late 1990's that seemed like a realistic assumption.  Today, with unemployment hovering around 10%, that seems far less likely. 

The second assumption is that health care is a free market, which is definitely is not.  Have you ever tried to acquire an antibiotic without a prescription?  Or had to pay the (much higher) uninsured rates for medical visits and procedures? 

If employment is fluid then voting with one's feet might be a realistic option.  If health care was a free market then one could simply rebalance one's expenditures.  But when a market is not ideal, the second best outcome can actually be far from the theoretical ideal.  In this case, the regulation of benefits is trying to deal with two problems that we have: a hyper-regulated health care market and a high unemployment rate.  Now there may be good reasons for these problems (the alternatives could well be worse). 

But the idea of free labor market mobility is not the experience of the median worker right now (in the sense that changing jobs may well be a non-trivial issue).