The problem with health insurance

The central problem with health insurance is simple: everyone in America has had a form of free health insurance since 1986 . But it’s the worst form possible, maximizing both suffering and cost. It comes from the Emergency Medical Treatment and Active Labor Act (EMTALA), which says hospitals that accept Medicare cannot turn people away if they need care, regardless of their ability to pay. So if an uninsured person needs care the hospital has to give it to them. But they have to wait till they need care. Who pays? It’s left to the hospital to figure that out, the law does nothing to cover the costs. It’s a terrible way to get health care. It guarantees that people without private insurance get the least effective, most expensive form of care possible. And while the patient will be charged, anything they can’t pay has to be covered by the hospital, resulting in both crippling debt for the patient and huge losses for the hospital.

So who doesn’t have insurance? Generally two kinds of people: the ones who can’t afford it and the ones who can but choose not to buy it. The second kind are the people the health insurance mandate applies to. By choosing not to buy private health insurance they are relying on the EMTALA, whether they mean to or not. These are generally people who recognize that health insurance is expensive, and that as long as they are healthy they are unlikely to need it. It’s a gamble, and for most young healthy people it pays off. But because they will receive help if they need it, they aren’t just gambling their insurance premium. They’re gambling other people’s money.

If these people lose the bet, if they need treatment they can’t afford, the hospital eats the cost. That cost gets absorbed by the system. This is one of the reasons American health insurance is so expensive. It’s generally, and appropriately, referred to as the free rider problem.

So how do we solve this problem? The Affordable Care Act, Obamacare, says we should charge an additional tax to those people who choose to be free riders. Romney says we shouldn’t, that charging more tax to people for not doing something is unconstitutional. Instead he wants to give tax breaks to everyone who does buy insurance. The Supreme Court just ruled that the two are legally the same, which seems surprisingly reasonable to me. But if you don’t like those solutions, what’s yours? Do you want to allow hospitals to turn away the free riders? Do you think we shouldn’t do anything about free riders?

This is what baffles me most about the outcry against the insurance mandate. It is literally conservatives arguing against punishing people for being irresponsible. Why the intense defense of people who choose to let others shoulder the burden for their health insurance? Why such extreme opposition to fining people who try to get a free ride on health care? Choosing not to buy health insurance they can afford is often a good deal, financially, for a healthy individual. But it is socially destructive and carries a huge risk to society. It is in everyone’s best interests to remove that financial incentive to let others pay for their risk.

Is the mandate the best solution to this problem? Absolutely not. But conservatives hate the alternatives even more than the mandate. More importantly, we have spent the last 20 years trying to improve this system, and have thus far failed. We can’t afford another 20 years of failure. We can’t afford another 5. There are legitimate flaws in this law, but it is a positive step, and we desperately need to start moving in that direction.


One response to “The problem with health insurance

  1. this is so spot on. the argument against the tax would only make sense it living without health insurance was financially possible. we are not going to turn sick people away who cannot afford it yet we are also not going to put people in debtor’s prison. the money has to come from somewhere

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