Ilovebenefits’s Blog

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An Alternative View on Individual Mandates

This comes from Greg Scandlen. If you agree with the position then you might also conclude that insurers desire for the individual mandate is to collect additional premiums from future policy holders.

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Free Riders

Let’s first remember “free riding” is at most a trivial problem, amounting to something like 2 percent of all health spending in the United States. But the “solutions” that have been proposed are massively intrusive on the lives and freedoms of 100% of Americans.

Consider –

  • It is not the uninsured clogging hospital ERs, but the fully insured, especially those on Medicaid.
  • There is indeed a “cost-shift” to the insured from uncompensated care, but it pales compared to the cost shift from underpayment by Medicare and Medicaid.
  • The “cost-shift” would still have to be paid out in the form of subsidies in any event. Money is not saved.
  • The uninsured do in fact pay for a large portion of their own consumption, and would pay an even larger share if they were charged at the PPO rate for services (or Medicare +25%).

Consider also —

  • Getting rid of “free ridership” means massive policing of the insurance status of 100% of Americans – this means substantial administrative costs added to the system.
  • It also involves massive subsidies, including to those who are not currently subsidized, and penalties for those who are not.

Consider finally —

  • There is not yet a proposal that would end “free ridership.” All of the current proposals will continue a large number of people who are uninsured and getting free services, including illegal immigrants and people who simply don’t pay their bills. For all of the contortions and intrusions, the current proposals would at best reduce the problem, not solve it.

My conclusion – The issue of free ridership is a lot of Sturm und Drang about very little. Our time would be better spent on helping reduce the problem with a series of steps to make coverage more attractive and more affordable and prices more realistic for people who self-pay.

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November 14, 2009 - Posted by | Federal Government, healthcare | , ,

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