Are the uninsured free-riding?
August 19th, 2008 | by Brian Schwartz |A common rationale for compulsory, mandatory insurance is that the uninsured are free-riders, so it’s OK to force them to buy insurance. In a previous post I addressed how even if there are free-riders, mandatory insurance does not follow.
Michael Cannon at Cato suggests that they are not free-riders anyway. Some excerpts:
Many uninsured people show up at the hospital, get treated, and then don’t pay their bills. Doctors and hospitals scream an awful lot about having to deliver “uncompensated” care. But two recent studies … show that the uninsured who do pay their bills more than make up for the uninsured who don’t. Why? The uninsured pay the highest prices. … [one study found] that in 2005, “uninsured patients as a group still paid a higher percentage of charges, on average, than Medicare and Medicaid.”…
Federal and state governments offer large tax breaks for employer-sponsored health insurance. The uninsured, by definition, do not obtain employer-sponsored health insurance. Because they forgo those tax breaks, they pay higher taxes. Those additional tax payments help fund things like subsidies to hospitals…
So it’s not at all clear that when people don’t buy health insurance, they are imposing costs on the rest of us. The uninsured mostly just hurt themselves.
