The new regulation is a bigger blow to Planned Parenthood than anything establishment Republicans have ever done. But much more action is needed.

President Trump’s administration is bringing back a Reagan-era rule that would pull federal birth control funds from clinics that sell abortion. Planned Parenthood, which is by far the nation’s largest and wealthiest abortion provider, has the most to lose. It is the largest single recipient of Title X funds, to the tune of about $80 million per year.

The new regulation is a good start. It is a bigger blow to Planned Parenthood than anything the establishment Republicans have ever done. But more action is needed to take PP down.

How Trump’s New Rule Works

In 1970, Congress created Title X as a grant program to provide birth control and sexually transmitted disease treatment to low-income women. The program has always been banned from funding abortion. But in the 1970s and ‘80s, the law was interpreted to allow the entity giving birth control to be the same entity selling abortion or referring patients for abortions.

In 1988, President Reagan issued a regulation that said no Title X funds could go to a birth control provider that was “co-located” with an abortion clinic or that referred patients for abortion. The regulation was challenged and went all the way to the Supreme Court, where it was found to be legal in the case Rust v. Sullivan.

When Bill Clinton was elected president in 1992, he reversed Reagan’s regulation, and George W. Bush’s administration never brought it back. President Trump’s regulation brings back the co-location prohibition, but it does not bring back Reagan’s ban on abortion referrals (although it does remove the radical and illegal requirement that a recipient of Title X funds must make abortion referrals, which precluded many pro-life clinics from receiving Title X funds).

The New Rule Doesn’t Hurt Planned Parenthood Much

The reinstated regulation won’t heavily affect Planned Parenthood because most Planned Parenthood locations don’t provide surgical abortions. Yes, many provide abortion pills, and all clinics refer for abortions, but because the new regulation doesn’t disallow abortion referrals, most Planned Parenthood clinics receiving Title X should be fine.

Because of this, more action is needed. First, the Trump administration should disallow Title X funds from any provider that makes any abortion referrals. This would totally cut Planned Parenthood off from Title X funding.

If there are far too significant legal and political hurdles to such an action, the regulation needs to be enforced so that both surgical and chemical (pill-induced) abortions are included in the co-location prohibition. That would dent many more Planned Parenthood facilities, although the organization would probably find a work-around, albeit at a higher cost.

To understand why the co-location rule doesn’t go far enough, let’s overview Planned Parenthood’s business model.

How Planned Parenthood Makes Money

Planned Parenthood is a nonprofit organization, but any business-savvy person would tell you nonprofits that sell things still care about “profit.” Instead of going to the shareholders, or an owner, greater profitability at Planned Parenthood goes to higher salaries for its employees, bigger benefits, or nicer amenities.

Planned Parenthood operates a franchise model. The national organization is flush with cash, but the franchisees—the “affiliates”—must be financially self-sustainable. That makes affiliates highly cost sensitive, and by far the affiliates’ most profitable service is abortion.

Only a few affiliate locations offer abortions. These are usually the affiliate’s largest location and located in highly populated areas. They are designed to leverage economies of scale to make the procedure as quick and profitable as possible. Former Planned Parenthood facility director Abby Johnson says the “goal at Planned Parenthood was to get a woman on the table and off the table in 5 minutes.” Affiliates’ locations that don’t do surgical abortion make abortion referrals to the central hub.

National Planned Parenthood often touts how low its abortion sales are as a percent of its total sales. But at the affiliate level, 15 percent of sales come from abortion services. The rest comes from Title X grants, Medicaid reimbursement for mostly birth control, and out-of-pocket payment for mostly birth control.

Fifteen percent of sales coming from abortion seems small, but Planned Parenthood affiliates barely break even after providing birth control and other services that taxpayers send them through Title X and Medicaid. Medicaid is notorious for its low reimbursement rates. Title X, meanwhile, is a grant-based program, so it helps cover Planned Parenthood’s fixed costs of doing business (the building, maintenance, etc.) and the costs of handing out some birth control.

Abortion, on the other hand, is incredibly profitable. Women usually pay about $500 for abortion with cash. Assuming the margin for abortion is between 20 and 40 percent, the percent of affiliates’ revenue after expenses that comes from abortion is between 35 and 75 percent of an affiliate’s overall “profit.”

About Planned Parenthood’s Customer Base

A hugely disproportionate number of Planned Parenthood facilities, especially those that provide surgical abortion, are located in poor and densely populated neighborhoods that are disproportionately black compared to the national population.

After the landmark 1992 Planned Parenthood v. Casey decision, states were allowed to regulate abortion for the first time after Roe v. Wade, which had said abortion was such a fundamental right that states couldn’t even enforce basic safety codes.

Planned Parenthood brags about how the women it counts as customers have little choice aside from Planned Parenthood.

Before Casey, the American abortion market was fragmented. Clinics were incredibly dirty, even unsafe. After Casey, states began implementing basic safety regulations. This pushed out the low-end providers, and provided Planned Parenthood an entry barrier against competition. Because of this, the organization saw its abortion market-share grow significantly after the 1992 decision.

Because the business of providing birth control to low-income women is so unprofitable, and because Medicaid usually shortchanges normal medical providers to the point that many poor women in urban areas cannot access an OB-GYN or general practitioner because the provider won’t accept Medicaid, much of Planned Parenthood’s customer base is captive. Just ask Planned Parenthood, which brags about how the women it counts as customers have little choice aside from Planned Parenthood.

The rest is down to incentives. If providing birth control to this captive customer base does very little for the bottom line, but providing abortion is a boon to the bottom line, the incentive is clear: Focus less on providing birth control, and more on abortion. Planned Parenthood facilities even have “abortion targets” for employees to meet, just like a car dealer has targets for cars sold but probably not cars serviced (selling cars makes the dealer more money; it is what the car dealer is there to do).

The end result is a much higher abortion rate for America’s disproportionately black urban poor than for the country as a whole. The same was seen in 1990s Romania, where government medical providers receiving high payouts for abortion and no incentive to provide birth control resulted in miserable outcomes for women: abnormally high unintended pregnancy rates, which led to high rates of abortion (Romania at the time had 2.2 abortions for every live birth).

In other words, the ultra-high rate of unintended births and abortions among poor black American women can be substantially explained by this population’s disproportionate reliance on Medicaid, which uniquely inhibits accessing a normal OB-GYN or non-emergency medical provider.

How to Destroy Planned Parenthood

Many states fund abortion in their Medicaid budgets. Medicaid is a federal program that subsidizes health care for people who earn less money than other Americans, but it is administered by the states, and states can cover services the federal government doesn’t. My home state of Minnesota, for example, pays for abortions in our Medicaid program. Look up whether your home state covers abortion and contact your legislature if it does.

Many think government-provided birth control is the problem, but regardless the abortion rate among America’s poor—and Planned Parenthood’s sales—would go down if the money currently used for Title X went to a voucher program for OB-GYN care. In other words, just like vets would abandon the Veterans Administration if they had a choice card, low-income women would go to a normal OB-GYN if they didn’t have to go to Planned Parenthood.

The abortion rate among America’s poor would go down if the money currently used for Title X went to a voucher program for OB-GYN care.

Make the cost of abortion higher for Planned Parenthood. This approach, taken to its logical outcome, is counter-intuitive to many pro-lifers. The best example is Planned Parenthood’s lack of ultrasound use during abortions. Ultrasound allows the abortionist to “see” what he or she is doing, instead of just feeling around. Using an ultrasound is much safer.

If the abortionist feels around too much, he or she risks puncturing the womb; too little and pieces of the baby are left inside the mother, which leads to a life-threating septic pregnancy (a medical provider I know encountered two post-abortive women suffering from sepsis in just one night in the emergency room).

Planned Parenthood doesn’t like to use ultrasounds because this increases the time of doing abortions. Instead of one abortion every five minutes, maybe an ultrasound slows the procedure to 10 or 15 minutes. That increases cost, and lowers revenue unless Planned Parenthood increases prices commensurately (which a smart legislature could meet with price controls).

So, at the state level, require that every abortion be done with an ultrasound. Arguing against such a measure would put the abortion lobby in an incredibly uncomfortable position, and such a law would almost certainly be upheld by the courts. This would also do more to dent Planned Parenthood than any 20-week abortion ban (such bans are wonderful, but most abortions occur at around six weeks of gestation).

Finally, combat fatherlessness and family breakdown. There are huge penalties to marriage in our social-safety net. The program with the largest penalty is child-care assistance. It and others could be tweaked to stop penalizing two biological parents who live with their children. State policymakers should raise the income level for the program’s eligibility cutoff for poor married couples. In just the childcare assistance program, the penalty for marriage in Minnesota can be as high as $20,000 per year. Every state in the nation could follow suit and curb marriage penalties in welfare.

This final point is by far the most important. Often, conservatives and pro-lifers think about the “supply-side” of the abortion equation. The demand side is just as important, and we need to try policy remedies. The government caused the problem of family breakdown, after all. The real end to abortion starts with sounder families, especially among America’s poor.

Update: Contrary to pre-release reporting from which this article was written, the actual rule released includes a ban on Title X recipients making abortion referrals, but does not ban abortion counseling. It remains to be seen whether this distinction will significantly affect all Planned Parenthood locations, not just those that practice abortion.