Gena Akers of the San Luis Valley Regional Medical Center writes that requiring people to buy politician-approved health plan “works” because “free-riders are not allowed, therefore no cost-shifting.” This common justification for mandatory insurance (a.k.a., the individual mandate) is dubious at best and misleading at worst.
As I’ve written before:
In Colorado, the cost-shift from the uninsured is just $85 per insured person. This is according to research done for Colorado’s 208 Commission. …
Key findings include that “the uninsured pay for about half of their care out-of-pocket” while only “20 percent is uncompensated care from providers.” An Urban Institute study provides further evidence that uninsured cost-shifting is small — at most “only 1.7% of private insurance premiums.”
By outlawing affordable plans, mandatory insurance increases premiums by much more. Consider the federal health control bill, HR 3590. It requires that all plans include at least ten mandated benefits, such as maternity care and substance abuse treatment [HR 3590, sec. 1302], whether you want them or not. A typical mandated benefit increases premiums by about 0.75%, concludes a 2008 MIT study.
Oddly, many proponents of mandatory insurance support Medicaid and Medicare, even though they impose large cost shifts — even when not counting the taxes the insured pay to fund these programs. As I’ve written elsewhere:
A Milliman actuarial study concluded that the cost-shift from Medicaid and Medicare adds $1788 to the annual insurance premium for a family of four. The uninsured pay more of their medical bills than Medicaid does for its participants, reported Reuters in 2008. What’s more, a CDC study found that people “with Medicaid coverage were more likely to have had multiple visits to [emergency departments] … than those with private insurance and the uninsured.”
Also, if the uninsured are free-riding, to my knowledge they can most easily do this in emergency departments because EMTALA forces doctors to treat them. But emergency treatment is a small fraction of total medical spending. If supporters of mandatory health plans were sincerely concerned about this, they’d support only forcing everyone to buy a plan that covers only emergency room treatment, rather than bloated plans with mandated benefits that appeal to groups that lobby for them.