News Release
July 7, 2015

Affordable Care Act Results in Dramatic Drop in Out-of-Pocket Prices for Prescription Contraceptives, Penn Medicine Study Finds

Annual Savings Estimated at Approximately $1.4 Billion per Year for Birth Control Pills

PHILADELPHIA - Average out-of-pocket spending for oral contraceptive pills and the intrauterine device (IUD), the two most common forms of contraception for women, has decreased significantly since the Affordable Care Act (ACA) took effect. Using a prescription claims database from a large national insurer, researchers from the Perelman School of Medicine at the University of Pennsylvania found that the average out-of-pocket expense for a prescription for the pill fell from $32.74 in the first six months of 2012 to $20.37 in the first six months of 2013 (a decline of 38 percent), and out-of-pocket expenses for an IUD insertion fell from $262.38 to $84.30 (a decline of 68 percent).

Results of the study are the first to document how prices for all prescription contraceptive methods have changed since the ACA took effect, and are published today in the July issue of Health Affairs.

“Our study found that before the mandate’s implementation, the cost of contraceptives for women using them represented a significant portion (30–44 percent) of total out-of-pocket health care spending,” said lead author Nora V. Becker, an MD/PhD candidate in the Perelman School of Medicine and the department of Health Care Management and Economics in the Wharton School at the University of Pennsylvania. “We estimate that the ACA is saving the average pill user $255 per year, and the average woman receiving an IUD is saving $248. Spread over an estimated 6.88 million privately insured oral contraceptive users in the United States, consumer annual contribution to spending on the pill could be reduced by almost $1.5 billion annually.”

Additional results showed decreases in other, less widely used forms of contraception including spending for emergency contraception (93 percent), diaphragms and cervical caps (84 percent), the implant (72 percent), and the injection (68 percent).  Little change was seen for the ring (two percent) and the patch (three percent).

The Affordable Care Act mandates that private health insurance plans cover prescription contraceptives with no consumer cost sharing. However, the authors found that average out-of-pocket spending for contraceptives remained above zero for two reasons: Not all brands of contraceptive devices are required to be covered with zero cost sharing, and some women in the data were enrolled in grandfathered plans that were not yet subject to the mandate or whose employers did not participate for religious reasons.

Oral contraceptive pills are relatively inexpensive but must be purchased monthly. Though other forms of contraception, such as the IUD, require only a one-time-payment, prior to the ACA mandate, they may have cost patients several hundred dollars.

“It’s possible that by decreasing out-of-pocket expenses, more women will use contraception, or switch to a longer-term method, but additional research is needed to determine both the socioeconomic and health effects for women,” said co-author Daniel Polsky, PhD, executive director of the Leonard Davis Institute of Health Economics and professor of Medicine in the Perelman School of Medicine, both at the University of Pennsylvania. “In the long term, if we do in fact see an increase in the use of contraceptives, that could potentially lead to a lower overall fertility rate, and potentially increased economic opportunities for women and their families.”

The ACA mandate applies nationally to all private health insurance plans, including those offered in the online health insurance marketplaces and by employers. The only exceptions are grandfathered plans and those offered by employers that request an exemption for religious reasons. Grandfathered plans are health plans that have not substantially changed their cost-sharing requirements since the ACA was signed into law in March 2010. These plans are gradually being phased out, but as of 2013 still covered 36 percent of insured workers, meaning that a significant subset of women are likely still enrolled in plans that are not yet subject to the zero cost-sharing mandate.

The study’s findings are based on a sample consisting of 17.6 million monthly observations for 790,895 women ages 13–45 from all 50 states and the District of Columbia who were enrolled in private health insurance for at least one month from 2008 to 2013.

Penn Medicine is one of the world's leading academic medical centers, dedicated to the related missions of medical education, biomedical research, and excellence in patient care. Penn Medicine consists of the Raymond and Ruth Perelman School of Medicine at the University of Pennsylvania (founded in 1765 as the nation's first medical school) and the University of Pennsylvania Health System, which together form a $5.3 billion enterprise.

The Perelman School of Medicine has been ranked among the top five medical schools in the United States for the past 18 years, according to U.S. News & World Report's survey of research-oriented medical schools. The School is consistently among the nation's top recipients of funding from the National Institutes of Health, with $373 million awarded in the 2015 fiscal year.

The University of Pennsylvania Health System's patient care facilities include: The Hospital of the University of Pennsylvania and Penn Presbyterian Medical Center -- which are recognized as one of the nation's top "Honor Roll" hospitals by U.S. News & World Report -- Chester County Hospital; Lancaster General Health; Penn Wissahickon Hospice; and Pennsylvania Hospital -- the nation's first hospital, founded in 1751. Additional affiliated inpatient care facilities and services throughout the Philadelphia region include Chestnut Hill Hospital and Good Shepherd Penn Partners, a partnership between Good Shepherd Rehabilitation Network and Penn Medicine.

Penn Medicine is committed to improving lives and health through a variety of community-based programs and activities. In fiscal year 2015, Penn Medicine provided $253.3 million to benefit our community.

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