Would Defunding Planned Parenthood Cause a Women’s Health Crisis?

Editor's note: This article was originally published by the Charlotte Lozier Institute and is reprinted with permission.

In a radio interview on the Diane Rehm Show on July 30, Terry O’Neill of the National Organization for Women made a series of claims regarding Planned Parenthood that deserve a much closer look. O’Neill asserted, “The claim that we can somehow replace Planned Parenthood overnight—you shut down all the Planned Parenthood’s [sic] clinics and that they could be replaced overnight, is silly and specious.”

It is indeed silly and specious because none of the proposals pending in Congress would shut down Planned Parenthood clinics and replace them, overnight or anytime. Instead, the discussion is about shifting the $528.4 million of total government funds away from Planned Parenthood and to the thousands of existing community health centers (CHCs) and other providers. As the following points make clear, Planned Parenthood can absorb the cut considering its relationship with private donors and its excess revenue, while on the other hand, CHCs have the capacity to acquire and serve new patients. Proposals in Congress to “defund” Planned Parenthood, therefore, merely reallocate women’s health expenditures to agencies that offer women a full menu of primary care.

1. Funding for Women’s Health Care Services Is Not Reduced by a Single Penny

Proposals in Congress to either impose a one-year moratorium on Planned Parenthood funding while it is under investigation or end that funding permanently repurpose the full amount of federal dollars involved and make them available to federally qualified health centers (FQHCs).[1] The proposed legislation that would have defunded Planned Parenthood at the federal level, and failed in the U.S. Senate on August 3 by a margin of 53-46 (60 votes being necessary to invoke cloture and proceed to a direct vote on the measure), would have shifted $528.4 million, if fully reallocated and if all state and local government sources had followed suit, to CHCs. That sum is sufficient to support 1.56 million new CHC patients at an average family planning patient cost of $339 per year (using Planned Parenthood’s 2013-14 expenses for medical care, management and general, but not direct fundraising expenses[2]) and 880,000 new CHC patients using the higher $600 per patient per year community health center cost[3], though CHC patients would receive a much fuller range of women’s primary care services they are either presently receiving at a third site—neither Planned Parenthood nor a CHC—or not receiving at all).

2. Planned Parenthood Would Remain a Well-Funded Nonprofit

O’Neill notes, accurately, that Planned Parenthood currently reports 2.7 million women and men as clients. First, it would be difficult if not impossible, especially given the states that support Planned Parenthood wholeheartedly with public funds, to remove all of Planned Parenthood’s federal, state, and local funding, much less to do it simultaneously. But even if every penny of the group’s $528.4 million in government funding ended tomorrow, the group would retain 59% of its current baseline income. One could grant a slight loss in client load due just to lower economies of scale, but even so, an estimated 1.6 million of Planned Parenthood’s current clients would remain covered by the group’s budget—without taking into account any internal reallocation of funds to low-income women, lower-cost centers, or lower-cost services.

3. The Average Increase in Health Center Client Load Would Be Two Women Per Week

With a potential net change of just over 1 million women in its clientele, the scale of the shift comes into clearer focus. There are approximately 9,000 FQHC service sites in the United States that provide primary care services and preventive health services,[4] including contraception, prenatal care, and mammograms in many locations. In addition, there are another 300 “look-alike” FQHC sites that provide similar medical services, as well as another 4,000 rural health centers[5] that provide a range of women’s health care. The FQHC sites alone already care for nearly 23 million patients yearly.[6] If Planned Parenthood could no longer “afford” to care for 1 million women, the net change in patient population per FQHC service site is approximately 110 women—that is, two additional women per week for basic well woman care, STD checks, family planning if desired, Pap smears, and so forth.

4. Planned Parenthood Is Not Spending Millions in Net Revenue It Already Receives

This does not assume what would seem obvious as a matter of taxpayer priorities: Planned Parenthood is one of the best-funded nonprofits in the country with routinely positive balance sheets. Over the past decade its excess revenue over expenses has totaled three quarters of a billion dollars.[7] In the last year for which data is available (2013-14), Planned Parenthood and its affiliates had net income of $127 million.[8] At Planned Parenthood’s annual per patient cost of approximately $339, the organization could serve an additional 375,000 women annually with this net income. The organization would still have a balanced budget. Moreover, it undoubtedly has access to donor gifts of a size other nonprofits cannot rival due to its appeal to elite individuals and institutions.

5. Planned Parenthood Has Access to the World’s Richest Donors

In 2013 when Congress last considered, but did not adopt, a significant reduction in Planned Parenthood funding, the national office received a one-time anonymous gift of $62 million from a single donor. Warren Buffett, the world’s third richest man, gave Planned Parenthood $230 million between 2010 and 2013. Few if any national nonprofits can command private funding of this magnitude—merely on a prospect of income reduction (much less what PP could do with a genuine reduction in public largesse). A gift of $62 million allows another 183,000 women to be served—if these women were to choose to forgo the richer array of services available at CHCs and remain at the local PP.

6. Planned Parenthood’s Salary Costs Are Exorbitant

There is another deep disparity of which Congress should be aware, and that is in salaries at PP. Consider, for example, the top three salaries at Planned Parenthood of Minnesota: $374,000, $372,000, and $238,000—or a combined $1,205,207 if income from other related groups is included.[9] If the top salary of $374,000 were merely reduced to $100,000, an additional $274,000 would be available without further budgetary change, serving an additional 808 patients at this Planned Parenthood affiliate alone. The top salary at the average FQHC in the Minneapolis-St. Paul area is $59,000.[10] Planned Parenthood facilities are very top-heavy from a salary standpoint, a serious concern in an era of crimped reimbursements for other medical service providers.

In short, another way to look at congressional reprogramming of Planned Parenthood funding would be to see it as a move from a high-profit, high-cost boutique supplier to a true-nonprofit, low-cost approach. Moreover, the actual changes in service involve improvements in access to primary care and other services from which women will benefit. The cost to the individual patient (and therefore to the government or private insurance) of family planning services will not change, and the availability of other primary care services not currently accessed (the real crisis for these women) will be solved. In fact, it may devolve that Planned Parenthood becomes a specialty provider of certain types of birth control not preferred or offered elsewhere. The ability to concentrate on what it does uniquely should make Planned Parenthood a financially stable participant in a niche it has chosen to occupy.

7. Planned Parenthood’s Client Load Is Declining for Other Reasons

It should be noted that a decline in clients at Planned Parenthood may already be well underway as women acquire more plentiful options regarding both providers and services, thanks, somewhat ironically, to the Affordable Care Act (ACA). As Reuters reported on September 8, the generous preventive services mandated under the ACA are making women “less reliant” on Planned Parenthood.[11] In fact, Lori Carpenter, the president and CEO of Planned Parenthood of Mid and South Michigan, said, “Some people relied on us because they were uninsured prior to the Affordable Care Act. Now they can go anywhere for care, and some of them have been.”

8. Planned Parenthood Can Suspend Offensive Practices

Finally, Planned Parenthood has the option to suspend and withdraw from the activities that have proved very controversial—abortions. If, as Planned Parenthood claims, abortions constitute “only three percent” of its services (with the organ trade activity tied to abortions even more controversial and, the organization says, not a net contributor to its other work), there is little or no sacrifice involved in jettisoning this activity in order to keep delivering other medical services that have drawn little or no opposition. Two decades ago, Planned Parenthood conducted an intense internal debate on this topic when its then-president, nurse Pamela Maraldo, proposed that the organization move into primary care in order to survive coming changes in health care. As reported by the New York Times,[12] this stance produced a firestorm within the group, with internal accusations that her plan focused too little on abortion. Maraldo resigned in the wake of the controversy, and Planned Parenthood eschewed a national strategy of providing primary care.

In summary, it is altogether unclear, apart from the current controversies in which it is embroiled, why Congress should expend half a billion dollars of taxpayer funds a year to maintain a network of agencies whose services will largely continue if privately funded and that is declining thanks to patient empowerment and the basic truth that women’s medical needs, like men’s, involve much more than their reproductive systems.

Notes

[1] S. 1881 reads at Section 1(3): “All funds no longer available to Planned Parenthood will continue to be made available to other eligible entities to provide women’s health care services.”
[2] See page 22 of 2013-2014 Planned Parenthood annual report, http://www.plannedparenthood.org/files/6714/1996/2641/2013-2014_Annual_Report_FINAL_WEB_VERSION.pdf
[3] https://www.nachc.com/client/A%20Local%20Prescription%20Final%20brief%203%2022%2011.pdf
[4] http://bphc.hrsa.gov/about/healthcenterfactsheet.pdf (accessed September 15, 2015).
[5] https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/rhclistbyprovidername.pdf
[6] http://bphc.hrsa.gov/about/healthcenterfactsheet.pdf
[7] https://lozierinstitute.org/planned-parenthood-shows-%C2%BE-billion-of-excess-of-revenue-over-past-decade/
[8] http://www.plannedparenthood.org/files/6714/1996/2641/2013-2014_Annual_Report_FINAL_WEB_VERSION.pdf (accessed Sept. 14, 2015).
[9] http://www.guidestar.org/FinDocuments/2013/410/948/2013-410948382-0ae646ab-9.pdf
[10] http://www.indeed.com/salary?q1=Community+Health+Center+Director&l1=Minneapolis%2C+MN (accessed Sept. 14, 2015).
[11] Jilian Mincer, “INSIGHT-Planned Parenthood faces unexpected challenge from Obamacare,” Reuters (Sept 8, 2015) at http://www.reuters.com/article/2015/09/08/usa-plannedparenthood-idUSL1N11A1JD20150908.
[12] Tamar Lewin, “Planned Parenthood President Resigns,” The New York Times (July 22, 1995); at http://www.nytimes.com/1995/07/22/us/planned-parenthood-president-resigns.html. Among the events that led to Maraldo’s resignation, Lewin wrote, “Ms. Maraldo’s first draft of a reinvention document, suggesting that every affiliate become a broad women’s health-care provider, was unpopular. In a confidential letter sent to affiliates nationwide, some Planned Parenthood officials complained that ‘never has a document seemed so out of touch with our mission,’ and pointed out that abortion was mentioned only eight times in 68 pages, and never in the context of discussing the future.”

As with so many other pieces written by longstanding opponents of Planned Parenthood, Chuck Donovan’s “Planned Parenthood and the Public Purse” is most notable for its total failure to grasp the fundamentals of public health care financing, health care safety net clinic operations, or the rudiments of medically underserved communities function in the health care system. For Donovan, everything is fungible. If one provider goes away, the money and the people can simply be shifted elsewhere.

To bolster arguments such as these, opponents attempt to reinforce their arguments with misleading computer-sized maps that lack any scale legend while purporting to show geographic proximity. In Washington, D.C., where public transportation is good, it can take over an hour and several dollars to travel from the Northwest to the Southeast quadrant of the city. Furthermore, maps claiming to show the accessibility of substitute care sites could be dozens of miles apart from one another, even though on a computer screen they look like white clumps of dots. And even the slickest maps cannot conceal the impact of closing Planned Parenthood sites in the western half of the country, where, even without a scale, it is obvious from these maps that that there are simply no white dots.

Donovan makes two basic claims about money and access: (1) There will be no reduction in funding because Congress simply is moving $528.4 million from one part of the budget to another, and funding will flow out uninterrupted; and (2) there will be no reduction in access because there are plenty of substitute health center locations, and at most each health center will have to absorb only a couple of patients.

Here are the problems with his arguments.

1. The Funds Being “Moved” Are Medicaid Funds. Medicaid Funds Don’t Simply Get Reallocated.

Donovan claims that “the proposed legislation that would have defunded Planned Parenthood at the federal level … would have shifted $528.4 million, if fully reallocated and if all state and local government sources had followed suit, to community health centers.” Note all of the qualifiers (if fully reallocated and if state and local government sources had followed suit). Donovan has to qualify his statement because the “reallocation” he refers to is simply not how Medicaid works.

Unlike a grant program, Medicaid operates like insurance. Participating providers get paid once they furnish covered services to program beneficiaries. There is no money to “reallocate.” If covered services in fact are not furnished, there is no funding and no reallocation. A study of a similar reallocation assumption by the state of Texas following its decision to defund Planned Parenthood clinics showed a 26% decline in Medicaid claims and a 54% drop-off in contraception claims following clinic closures. The funds simply disappeared; they were not “reallocated” anywhere. The $528.4 billion touted by lawmakers is simply an accounting assumption by the Congressional Budget Office, which assumes that eventually the same number of claims will get paid at alternative locations because services are covered. When one is talking about Medicaid and access to care however, the mere fact of coverage is simply a starting point.

2. Even If the $528 Million Allotment Were Treated Like Supplemental Health Center Grant Funds, Money Would Not Simply Flow out the Door Overnight.

Maybe by some miracle, Congress, in final legislation, will give the Department of Health and Human Services (HHS) the authority to treat the $528 million generated by excluding Planned Parenthood as grant funds that can be deployed in the form of supplemental health center grants rather than paid only as billable claims for services. If so—and nothing suggests that Congress plans any sort of radical transformation to the bedrock rules by which Medicaid operates—it takes between six and nine months on average for HHS to actually move grant awards out to eligible health centers. The award funding must be established in federal accounts. Grant conditions must be developed. A notice of funding availability must be prepared, reviewed, and released. Health centers then have to apply for funds. Even if the application process is expedited, it takes months to process funding requests. Moreover, given competing priorities, not all health centers might choose to apply for supplemental funding; perhaps they could be ordered to do so, but this would be unusual to say the least.

Putting all of this together, it is simply absurd to assume that if a Planned Parenthood clinic is shuttered on December 31, a nearby health center (assuming one is available) would have the grant funds in hand and would be ready for expanded business on January 1. Even if the local health center participated in a supplemental funding program aimed at increasing onsite family planning capacity, funds could not be expected to materialize for months, at which time the health center would then have to begin the job of hiring additional staff and adjusting operations to absorb additional patients.

3. Access Is Much More Complicated Than Distributing Patients over Dots across a Computer Map.

This of course brings us to the most incredible part of the assumptions that underlie Donovan’s arguments. The Guttmacher Institute, one of the nation’s leading women’s health research programs, reports that in 491 counties across the country, Planned Parenthood clinics serve half of all women who depend on safety net clinics. In one out of every five counties in which they are located, Planned Parenthood clinics are the sole source of safety net family planning services. So much for closely spaced dots on a computer-generated map.

Health centers are an indispensable part of the nation’s primary care system, serving more than 23 million patients in over 9,000 locations. But our research into health centers and family planning has documented the fact that many health centers offer only basic family planning services and do not replicate the comprehensive range of services frequently offered at Planned Parenthood clinics. This is because the mission of health centers is to provide the full range of primary health care services to all patients in a community, ranging from well-baby care to health care for the frail elderly. Our previous research into family planning capacity at health centers suggests that health centers run the gamut when it comes to the comprehensiveness of their family planning services and, furthermore, that not all health center sites offer all services (yet another faulty assumption on Donovan’s part).

Perhaps the most demeaning and absurd assumption made by Donovan is that women losing services will simply redistribute themselves conveniently and evenly over 9,000 health center locations across the country. Maybe in Donovan’s world it is easy to travel hours to find care to replace community services that have been lost. This is obviously not the case for low-income medically underserved women, particularly those living in counties where Planned Parenthood is the sole source of affordable and accessible family planning services, potentially for scores of miles around. The millions of women who could lose their health care are not decks of cards that can be reshuffled and assigned to new locations.

When examining the impact of a major policy shift on access to services considered among the most effective in all of public health, nothing is more important than realistic assumptions. Unfortunately, reality appears to be in short supply where the Planned Parenthood Medicaid debate is concerned. Health centers are a vital part of the U.S. health care system. They are not magic.

In her article “Planned Parenthood’s Opponents Don’t Get How Health Care Works,” Sara Rosenbaum of George Washington University spends a great deal of time talking about three specific areas of health care: the intricacies of the fundamentals of public health care financing, health care safety net clinic operations, and the rudiments of how medically underserved communities function in the health care system.

She states, “A study of a similar reallocation assumption by the state of Texas following its decision to defund Planned Parenthood clinics showed a 26% decline in Medicaid claims and a 54% drop-off in contraception claims following clinic closures.”

We are supposed to conclude that this is a bad thing. But maybe it isn’t.

Unethical Business Practices

Over the last decade, numerous whistleblower cases by former Planned Parenthood employees have documented the outrageous business practices of Planned Parenthood. One such case was filed by a former employee, Susan Thayer, in Iowa. Thayer charged that Planned Parenthood submitted “repeated false, fraudulent, and/or ineligible claims for reimbursements” to Medicaid.

In her sworn testimony before Congress on October 6, 2015, Thayer explained this in more detail:

Planned Parenthood has a negotiated price of $2.98 per cycle of birth control pills. But in Iowa and many other states they are allowed to bill Medicaid at the high rate of $35, receiving over $26 in reimbursement every month. This made birth control a high profit margin item for us and we were required to increase birth control billings. In addition to filling prescriptions without a prescription since we usually had no medical professional on-hand, leadership also implemented a “C-Mail program” by which birth control would be automatically mailed—eliminating the need for the woman to return for refills. Given our lower income and younger clientele this often meant that patients who had stopped using the pill, gotten pregnant, moved, or gone off to college would continue to receive pills in the mail automatically. Sometimes pills would be returned to us undeliverable or refused. They were just rebilled to Medicaid and sent out again. Planned Parenthood would automatically mail—and bill—a three cycle set of pills every 63 days, resulting in a surplus of 21 extra pills every three months. All this meant extra revenue to Planned Parenthood.

With business practices like this in place, it is certainly plausible that the switch from Planned Parenthood to other providers would result in a lowering of Medicaid and contraception claims. This may be not because fewer women received services but because (one would hope, at least) the new providers would not engage in fraudulent billing as Planned Parenthood appears to do.

Defunding Causes Disruption?

In her article, Rosenbaum creates an incredible switch in logic to try to make her second point. After insisting that Medicaid is reimbursement for services and not a block grant, Rosenbaum then immediately turns around and argues that money that was going to Planned Parenthood can’t possibly be immediately available to other clinics because the “reallocation” process takes at least six to nine months. “Putting all of this together,” she writes, “it is simply absurd to assume that if a Planned Parenthood clinic is shuttered on December 31, a nearby health center (assuming one is available) would have the grant funds in hand and would be ready for expanded business on January 1.”

The fact is that, if the recipient has established her eligibility for Medicaid, she is free to choose her Medicaid provider. Therefore, if her Planned Parenthood clinic closed one day, she could easily go to another Medicaid qualified clinic the next day and receive services.

For example, on Friday, June 26, 2009, Planned Parenthood in El Paso, Texas suddenly announced it was closing all six of its clinics in the city the following Tuesday. The reason given was financial problems, which actually turned out to be financial mismanagement. Although this sudden closing certainly caused some short-term problems as patients at the six clinics had to find new places to go, the transition posed no lasting problems. Women were apparently happy with their new providers, as Planned Parenthood never reopened any of these clinics. Now, over six years later, the closest PP facility to El Paso is over 200 miles away—in Albuquerque, New Mexico.

No Major Access Problems

In her third major argument against defunding Planned Parenthood, Rosenbaum states that Planned Parenthood clinics are crucial in rural areas and that women need local access to their family planning services. She said it is not easy “for low-income medically underserved women, particularly those living in counties where Planned Parenthood is the sole source of affordable and accessible family planning services, potentially for scores of miles around” to travel hours to find care to replace community services that have been lost.

She then laments, “The millions of women who could lose their health care are not decks of cards that can be reshuffled and assigned to new locations.”

Nice rhetoric, but it simply does not match the facts. The Texas Panhandle consists of the northernmost 26 counties in the state. It covers an area of 25,886.7 square miles and has a population of 427,927 (according to the 2010 census). That’s a population density of only 16.5 people per square mile. Clearly, it is a rural area. In 1997, Planned Parenthood operated 18 clinics in 16 of the 26 counties. Local citizens opposed to Planned Parenthood began a campaign in 1997 to close down all of its clinics. Through a concerted effort, the opposition to PP began having a major impact. In 1999, Planned Parenthood closed five clinics, ending its presence in five counties. More clinics closed almost every year. PP did open one new clinic but closed it down quickly. By the end of 2008, there was not a single Planned Parenthood clinic open in the Texas Panhandle. (See this report, pp. 18-24.)

What happened to the poor women in these rural counties? They found other providers. Existing facilities accepted new customers, and some new, non-PP facilities (such as this one) opened. No panic, no widespread health problems, and no clamor for Planned Parenthood to return. Today, the closest PP clinic is over 200 miles away in Oklahoma City, Oklahoma—and nobody cares.

Other Falsehoods

One of the arguments of support for the existence of Planned Parenthood facilities is that these facilities help reduce teen pregnancy. Yet teen pregnancy in the Panhandle began to fall as PP closed clinics—and it continued to fall after PP completely left. The teen pregnancy rate went from 41.5 in 1998 (the year before PP started closing) to 27.2 in 2008 (the year PP was gone). Clearly, Planned Parenthood was simply not necessary to reduce teen pregnancy in the Texas Panhandle.

Supporters of Planned Parenthood like to cite complicated social formulas on why Planned Parenthood is needed and deserves taxpayer funding. They predict all sorts of doom and gloom if PP were to close.

The fact is that Planned Parenthood is already closing clinics all over the country. In the last 10 years, Planned Parenthood has had a net loss of 157 clinics. It went from 825 at the end of 2005 to 668 at the end of 2014. A total of 30 states now have fewer Planned Parenthood clinics than they did 10 years ago. The annual number of unique customers at Planned Parenthood has fallen by 11 percent. Yet its taxpayer support has gone from $273 million to $528 million. The current fight over government funding of Planned Parenthood seems more about keeping the organization financially healthy than any real concern for women’s health care.

People Don’t Want PP

Let’s face it: The average person does not want Planned Parenthood in her community. Planned Parenthood sex education encourages teen sexual activity, which results in more teen pregnancies, an increase in sexually transmitted diseases (which PP now calls infections), and an increased demand for abortions. My own 30 years of research on Planned Parenthood shows an unmistakable business plan: First, use sex education programs to get kids involved in sex; then, sell the sexually active young people contraceptives at huge mark-ups to make money; then, when contraceptive fails, sell them abortions and make even more profits.

It is time to take all taxpayer money away from Planned Parenthood because, frankly, real world experience shows that it is simply not needed.

In his response to my assessment of the harm being done to women—particularly women living in medically underserved communities—by the unremitting attack on Planned Parenthood, Jim Sedlak serves up the kinds of arguments that make this kind of irresponsible conduct go from bad to worse.

According to Sedlack, the attacks on Planned Parenthood are really a means to curb Medicaid fraud. (The “fraud” here is apparently the testimony of a “whistleblower” witness at a congressional hearing that fraud is being committed when Planned Parenthood bills a state Medicaid program according to the program’s fee schedule or offers patients mail order refill services.)

We are also asked to believe—on the basis of no evidence at all other than Sedlak’s assertions—that the actions of Planned Parenthood opponents, who have dedicated enormous energy to driving Planned Parenthood out of business without regard to the consequences of their conduct, have had no impact on access to care on thousands of affected patients. How does Sedlak know this? Apparently because there was “no clamor” for Planned Parenthood to return. Small wonder such “clamor” never materialized given what anyone trying to resuscitate a woman’s health clinic in regions of the country under attack would have had to endure.

The systematic and unrelenting onslaught that Planned Parenthood is enduring has far-reaching implications for the nation’s medically underserved communities. Please don’t insult people’s intelligence by claiming that these attacks either advance the cause of health care financial integrity or do not exact the highest price on the very communities most in need of expanded access to preventive services.