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How Big is the Health Care “Free-Rider” Problem?

~ The Rebel ~ 2011/02/14 19:16:25

One of the most common arguments for an individual mandate is that “free-riders” – the uninsured who consume emergency room care with no way to pay for it – are jacking up health care costs for everyone else.


The argument begins by pointing out that sickness and emergency can strike anyone at any time, and therefore people don’t have an active choice about whether or not to participate in the health care market. Inevitably, they have to. Thus, so the argument goes, it isn’t fair for people to “free-ride,” charging higher costs to everybody else. A mandate ensures that everyone will pay their fair share.


This is a seductive argument, but it needs to be thought through a second time.


First, estimates in terms of the free-rider problem are somewhere around $43 billion a year. That’s not chump change, but it is small compared to other drivers of health care costs, including undercompensated care resulting from Medicare and Medicaid.


Medicaid reimburses doctors at almost a third less than what private insurers pay, significantly worse than Medicare, which pays about 20 percent less than private insurers. This causes many doctors not to accept Medicaid, driving Medicaid recipients to hospitals to seek basic care. Since hospitals are reimbursed at lower rates same as doctors, hospitals lose money on Medicaid patients, soaring costs by hundreds of billions of dollars for everyone else.


Further, rather than fix the problem of free-rider costs, the mandate would shift those costs and then amplify them. Instead of paying higher premiums people would be paying higher taxes, and more health care would be consumed. Think about it this way: If the uninsured are given free or subsidized insurance, they will end up using more health care – why not use it if it’s paid for? This could be good from the standpoint of their health – but if the argument is saving money it doesn’t work. If someone gets half the health care he needs and sticks you with the bill your premium goes up by, say, $50. If he then gets all the care he needs through government paid insurance, you save $50 on your premium but pay $100 more in taxes. This doesn’t necessarily mean it’s not worth doing if the goal is to help the poor get health care – but don’t pretend it saves money for everyone else.


Finally, implementing the individual mandate as a cure for the free-rider problem is like mandating that government provided food stamps are spent on filet mignon and cabernet: It’s gratuitous. Why must individuals buy comprehensive health care plans as determined by the rules of ObamaCare when emergency care insurance would suffice?


As Avik Roy asks: “Why is spending large gobs of taxpayer money to only partially address a problem costing less gobs of taxpayer money called an improvement?”


If the way to fix the free-rider problem were merely as simple as a mandate, why not fix the hunger problem by mandating everybody buy food? – after all, we’re all paying higher costs for government provided food stamps, school breakfast and lunch programs and other subsidized wellness programs, and we don’t have an active choice about whether or not we eat. In fact, it was then Senator Obama who made this argument during his campaign, scoffing at the idea of an individual mandate: “I mean, if a mandate was the solution, we can try that to solve homelessness by mandating everybody to buy a house.”


The individual mandate is already under siege from a constitutional standpoint; its case for cost control and solving the free-rider problem is just as flimsy.

Read More: http://blog.heritage.org/2011/02/12/how-big-is-the...

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  • Freedom4 2011/04/12 13:45:42
    Freedom4
    +1
    Here in the US anyone can have insurance if it is their priority. Maybe it is time to drive down everyone's costs by actually treating medical bills like student loans and forcing people to pay for them. You do not have to have insurance, but if you do not, you will risk catastrophic consequences. So stop living off the backs of others and take personal responsibility.


    When has the government ever driven down the cost of anything. When people are not responsible for any of their own health care it will obviously become more expensive. It is cheaper to go the the ER than to buy allergy medication of tylenol isn't it?

    Universal health care around the world has resoorted in a sub par health care system.

    The democrats threw around that 45,000 people a year die from a lack of insruance (Of course they could not even find 1)'

    For all cancers, Europe had a much lower survival than the US. Survival for prostate cancer in the US is 91.9% compared to 57.1% in Europe - a 34% difference. The difference for breast cancer survival, however, is 10%. In Europe, the western countries generally had higher cancer survival rates: France led survival for rectum and colon cancers, Sweden led for breast cancer (82%), and Austria led for prostate cancer. Eastern Europe, on the other hand, di...



















    Here in the US anyone can have insurance if it is their priority. Maybe it is time to drive down everyone's costs by actually treating medical bills like student loans and forcing people to pay for them. You do not have to have insurance, but if you do not, you will risk catastrophic consequences. So stop living off the backs of others and take personal responsibility.


    When has the government ever driven down the cost of anything. When people are not responsible for any of their own health care it will obviously become more expensive. It is cheaper to go the the ER than to buy allergy medication of tylenol isn't it?

    Universal health care around the world has resoorted in a sub par health care system.

    The democrats threw around that 45,000 people a year die from a lack of insruance (Of course they could not even find 1)'

    For all cancers, Europe had a much lower survival than the US. Survival for prostate cancer in the US is 91.9% compared to 57.1% in Europe - a 34% difference. The difference for breast cancer survival, however, is 10%. In Europe, the western countries generally had higher cancer survival rates: France led survival for rectum and colon cancers, Sweden led for breast cancer (82%), and Austria led for prostate cancer. Eastern Europe, on the other hand, did not perform as well. Slovakia had the lowest survival rates for rectal cancer in men and breast cancer, and Poland had the lowest survival rates for the other studied cancers.

    http://www.medicalnewstoday.c...

    According to the American Cancer Society there were goong to be 186,320 new cases of prostate cancer diagnosed in the USA in 2008


    186,320 * (91.9% - 57.1%) = .348* = 64,839 more men a year would die from prostate cancer alone if we had cancer survival rates like those in other countries with Socialized health care.

    That is prostate cancer alone.

    So stop with that BS 45,000 people a year die without insurance when Obama could nt even name a real one when he has tried on several occasions.

    Here, ANYONE can have health insurance and world class health care. They just have to work for it. I had it at 18 with nothing but a HS diploma.

    You have to ask yourself. If Health Care in countries with universal health care are so great, wWhy would the Prime Minister of France (ranked #2 on the list) come to the Us (Ranked 37th on the list), by flying right past France (Rankes #1 on the list) and by 7 other countries ranked higher than the Us.
    Does that make any sense? Um No.

    Why didn't Ted Kennedy and Sen Dodd fly elsewhere to get their cancer treatment.

    Maybe Dodd could go to the UK (Ranker 18th) to get the treatment from prostate cancer that has a survival rate there of 77% when here in the US the 5 year survival rate is virtually 100%.
    (more)
  • GaPch 2011/02/17 16:49:43
    GaPch
    +1
    If I am a US citizen then it should not be a problem. There should BE a problem with illegal aliens. They should receive care and then be deported. So, the problem is really with border control, not health care.
  • Wild Dog 2011/02/14 21:22:24
    Wild Dog
    +3
    Thirteen million illegal aliens ,really screw things up alone.
  • bsb 2011/02/14 21:10:27
    bsb
    +1
    Look health care is a never ending as long as people live.I've called the White House and made this suggetion;Our colleges,should be used as hospital,this way we get the best of both worlds,people who care(students),plus the saving on cost,building new medicals building,the cost of the billing,because the government could use the education funding to pay these schools.to me Germany had the best Health Care System,during the 80s'.the people working got coupons for 4 dential treatment,per year,and it was free,anything else was co-pay.i could go on and on,maybe later I'll finish this.For now just a glimps.
  • bob 2011/02/14 19:41:50
    bob
    It's the same size as the current emergency room free rider problem, Except it's in the open now, rahter than hidden in my insurance costs.

    it's bigger than the welfare food stamps free rider problem.
  • wicked soda boy 2011/02/14 19:39:53
    wicked soda boy
    +1
    Something they didn't mention, many of these "free rider people" live their entire lives "off the grid" of doctors, hospitals, pills, clinics, etc. and are perfectly willing to die a natural death when their time comes - this means they are NOT FREE RIDERS because they don't ask for medical care, ever. I've never seen stats on how many millions of people live this way, but I've personally known many of such folks. I know other people who are hypochondriacs and taking 7 prescriptions, going to doctors every month for some new imagined ailment. Why should the former group I mentioned have to pay the ENORMOUS COSTS of the latter??? There's a lot of behind the scenes motivation for Obamacare by those who profit from it, and they assign names like "free rider" to people that they wish would spend more time at the physician's office and spend more on prescriptions. Why do you think the huge Wall Street corporations are THRIVING under Obama's WH admin, while small businesses are having a terrible time?
  • ~ The Rebel ~ 2011/02/14 19:18:19
    ~ The Rebel ~
    +1
    Why do we even have a federal government if all they're going to do is screw things up?
  • Lord of... ~ The R... 2011/02/14 19:57:01
    Lord of War
    +1
    They all ready did

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