Medical Tuesday Blog
In Government Medicine, There Is A Perverse Incentive To Be Uninsured “Free Riders.”
As we move into the 21st century, it is clear that we are living with a number of institutions that were not designed for the Information Age. One of these institutions is our health care system.
Characteristics of an Ideal Health Care System
By John C. Goodman, President
National Center for Policy Analysis
NCPA Policy Report No. 242
Web site: www.ncpa.org/studies/s242/s242.html
Why should government be involved at all in our health care system? Aside from providing care for low-income families, the most persuasive argument is that in the absence of coercion people will have an incentive to be uninsured “free riders.” In our society, people who choose not to pay for insurance know that they are likely to get health care anyway — even if they can’t pay for it. The reason is that there is a tacit, widely shared agreement that no one will be allowed to go without care. As a result, the willfully uninsured impose external costs on others — through the higher taxes or higher prices which subsidize the cost of their care.
What evidence is there that free riders are a problem? One piece of evidence is the number of uninsured:
Although it is common to think of the uninsured as having low incomes, many families who lack insurance are solidly middle class. And the largest increase in the number of uninsured in recent years has occurred among higher-income families:
In deciding to be uninsured by choice, many healthy individuals are undoubtedly responding to perverse incentives created by government policies.
Far from solving the free rider problem, most government interventions these days are making the problem worse. Indeed, we might be better off under a policy of laissez faire.
If we accept the free rider argument, however, what policy implications logically follow from it? One commonly proposed solution is to have government require people to purchase insurance. However, this is neither necessary nor sufficient. Instead, a complete solution would have 10 characteristics. Adhering to each of them would lead to a system that provides a reasonable form of universal coverage for everyone without adding to national health care spending and without intrusive and unenforceable government mandates. . .
“People who fail to insure are likely to get health care anyway — even if they can’t pay for it.”
Government is not the solution to our problems, government is the problem.
– Ronald Reagan