The recent controversy involving “free” contraception advocate Sandra Fluke, talk radio host Rush Limbaugh and the role of “Obamacare” is instructive—but probably not for the reasons you think. If you look past the political posturing of the people and groups involved, the controversy offers some useful insights into how health care reform works and how the kind of coverage you choose affects the cost that you pay.

There are bound to be more controversies involving the implementation of the Patient Protection and Affordable Care Act. And, since this is an election year, these controversies are bound to be used to advance various political agendas. This column isn’t interested in partisan politics—but it is interested in how public policy and laws affect the choices available to consumer of health insurance and medical services.  That is, the choices available to you.

You might be surprised to know that the word “contraception” doesn’t appear anywhere in the body of the Affordable Care Act. What does appear, many times, is the phrase “preventive services.” The Act states repeatedly that “preventive services” include:

1)     diagnostic tests for chronic conditions such as diabetes (which is, essentially how Medicare defines the phrase),

2)     regular check-ups, fairly standard screening tests like mammograms and well-baby visits for small children, and

3)     any other services or items as defined by the Secretary of Health and Human Services.

The Act also makes repeated use of the term “no cost-sharing”—mostly in the negative  (as in, “there shall be no cost-sharing for _____”). In this context, “cost-sharing” means co-payments, co-insurance fees, deductibles or other out-of-pocket payments borne by the patient.

Combining these concepts, the Act states more than once that there “shall be no cost-sharing” for “preventive items and services.” And it creates several task forces that are involved in defining terms like “preventive items and services” in greater detail. These task forces suggest administrative rules, ultimately issued by the HHS Secretary, which define how the Act is implemented.

This puts a lot of power in the hands of the task forces and the HHS Secretary. More to the point, for most consumers: The HHS Secretary determines what’s covered—not only for government-run insurance but also for any private health insurance available in the U.S.

The recent dust-up involving Ms. Fluke and Mr. Limbaugh was preceded almost a year ago by HHS Secretary Kathleen Sebelius’ promulgation of an “interim final rule” that all forms of contraception would be considered “preventive services” for the purposes of the Affordable Care Act. That interim final rule was made finally final in January of this year (though at least one stakeholder complained that the process was completed in a panic: “There was a notification this morning and the rule came out around noon”).

Since the Act states that preventive services shall have no cost-sharing, Sec. Sebelius’ rule meant that all health insurance policies sold in the U.S. after the middle of next year must cover procedures like vasectomies or tubal ligations and items like hormone pills—without requiring any deductible or co-pay.

Sec. Sebelius has described the rule a victory for consumers. In an opinion column published in USA Today earlier this year, she wrote:

One of the key benefits of the 2010 health care law is that many preventive services are now free for most Americans with insurance. Vaccinations for children, cancer screenings for adults and wellness visits for seniors are all now covered in most plans with no expensive co-pays or deductibles. So is the full range of preventive health services recommended for women by the highly respected Institute of Medicine, including contraception.

That’s not exactly right: Nothing covered by insurance is “free.” Someone has to pay for every check-up administered and every pill prescribed. Directly, that someone is the insurance company; ultimately, that someone is the person paying the monthly premiums for insurance coverage.

Using deductibles and co-pays (or the lack of them) to encourage insured people to use certain kinds of medical services is an old cost-containment strategy that HMOs used a lot in their heyday some 20 years ago. Famously, one California-based HMO removed all co-pay requirements if insureds visited chiropractors or acupuncturists—because those alternative care providers cost so much less than conventional doctors.

In effect, the Affordable Care Act will compel U.S. health insurance companies to operate like one giant HMO—encouraging certain types of care by means of low or no out-of-pocket expense when people use those services. And the “no cost-sharing” rules will be the main tool for this encouraging. Sec. Sebelius made this point plainly when she told a congressional committee: “The reduction in the number of pregnancies compensates for cost of contraception.”

Of course, preventing pregnancy is different than preventing diabetes. No one wants to have diabetes; but some people want to get pregnant and have children. Sec. Sebelius’s use of the phrase “preventive health services” blurs that critical difference.

Most health insurance plans have traditionally covered contraception—whether through procedures like vasectomies or tubal ligations or through prescription drugs like hormone pills. This is a rational cost-containment impulse. From a financial perspective, insurance companies would rather pay the relatively small cost of contraception than the relatively large cost of child birth (especially births which involve medical complications or specialized neonatal care afterward).

As a result, for generations, smart consumers have had to pay close attention to whether and how their health insurance policies covered childbirth. Most policies covered the costs of childbirth—or at least most of them—but some pointedly didn’t. And the policies that didn’t usually cost less.

This range of options for the health insurance that smart consumers could buy was made possible by a relatively free market in which insurance companies could offer products with different types and limits of coverage. Here’s an important point to keep in mind: The new “no cost-sharing” rules limit such consumer choice. And raises costs for everyone.

A critical distinction among different types of health coverage has always been how much an insured person has to pay out-of-pocket for various therapies and services. This is major way that an informed consumer can control how much he or she pays in premiums every month. Simply said, the healthier you are, the more cost-sharing (higher deductibles, co-insurance fees, co-pays, etc.) you want—because this usually means lower monthly premiums.

This is the equal-and-opposite rational response on the part of the consumer to rational cost-containment on the part of insurance companies.

It’s a dirty secret of the Affordable Care Act that it limits the availability of lower-premium policies—and of the rational interaction between health insurance consumers and health insurance companies. It limits consumer choice. The recent controversies further obscure this point.