Question

One policy of the ACA was to mandate insurance providers introduce zero cost-sharing (0 out-of- pocket cost for the consumer) for the cost of at least one version of each form of prescription contraception. A recent study found that this policy reduced condom use and increased sexually transmitted infections (STIs), more specifically chlamydia and gonorrhea. Using economic theory, explain why this policy caused the decrease in condom use and increase in STIs.

Answer 1

From an economic point of view, the demand supply concept and that of supplementary goods clearly defines what happened in the case study mentioned.

In the above case study, the mandate of the insurance providers to provide for a no cost contraception for people meant that they ditched the conventional contraception method of condoms for other prescribed medication that looks to do the same job.

As a contraceptive, prescription medication is equally effective as condoms are. However, they do not help in controlling Sexually Transmitted diseases but they indeed act as replacement goods to conventional contraceptive devices i.e. condoms.

Thus, the higher the demand for prescription medication the lower the demand for condoms. Added to this the fact that prescription medication is available for free would give consumers the edge to buy them instead of spending money.

If an alternative product is made free as per economics, the demand for the other product would most certainly fall. As a result of which negative effects may follow which is exactly what has happened in this case. The consumers are substituting condoms and they do not have proper knowledge which is the reason for the increase in cases of chlamydia and gonorrhoea respectively.

Please feel free to ask your doubts in the comments section if any.