My general interest in the debate surrounding the health insurance mandate led me to a post written by David Dranove of the blog Code Red the other day. While David is generally supportive of the mandate, he posed a few good questions to conservatives and liberals who object to it. As a non-lawyer, he tacitly set aside the constitutional issues, which I’ve addressed earlier and which I still think rule out further discussion of the idea. That said, I agree that the impulse behind the mandate (prevent free-riding in the health care system) is a fair-minded one. Rather than ask everyone to visit David’s blog (although I still recommend it) to read my comment, I thought I’d re-post my thoughts here.
The question David put to conservatives opposed to the mandate was this:
Are you going to mandate that providers stop treating the uninsured? Or are you going to mandate charity? If neither, then the uninsured are going to receive care and free ride on the rest of us. Government has every right to act on the behalf of the majority and limit the free riding. Look at it this way. Conservatives endorse the right of the government to raise taxes to pay for the national defense, lest those who do not want to pay their share free ride on the rest of us. Just as the national defense protects all of us, so do our medical providers. The parallel to health care is close to exact.
This is a fair question. No one believes that doctors will stop caring for the sick, even if they are uninsured. We wouldn’t want them to do that, anyway — there’s some minimal moral expectation that those who are in need should be able to expect help from our medical system. So, since the care will be provided, who will pay? And if it’s not the government — essentially, a collective responsibility assumed by the public — who else could it be? The solution, to my mind, is through a series of changes rather than a single one (or a single payer).
First, in the case of non-emergency care, we empower medical providers to require proof of ability to pay prior to receiving care. That can come in any number of forms: cash up front, traditional insurance, enrollment in government health programs (VA, Medicaid, Medicare), or the posting of a bond. That’s a lot of options for anyone, and any truly indigent person would be taken care of by Medicaid. Those not eligible for government programs but without traditional insurance would be able to pay on a fee-for-service basis, or to post a bond. The bond option isn’t really available today, but that’s mostly because anyone can get medical care without showing any ability to pay at your average hospital. If a bonding option was necessary for some uninsured Americans to get treated, and it was affirmatively supported by government policy, it would flourish. Since that bond would only be intended to cover the specific treatment sought, the required payment would be at a considerable discount to traditional insurance, but not so low to encourage routine use of the option.
If the individual is receiving emergency care, obviously there won’t be an opportunity to address payment before care is received. In this case, for uninsured indigents, hospitals should be allowed to administratively enroll them in Medicaid. You might argue that this is the same as an insurance mandate, but this is different in two ways. First, it is the hospital, not the government, that is taking the action as a condition of providing care. Second, the states could implement this requirement, and the general police power of the states includes the ability to require such things — not the Commerce Clause of the U.S. Constitution. This simple rule would protect the hospital from a large fraction of uncompensated emergency treatment cases.
For the uninsured that are not indigent but can’t pay their emergency bills (college students, the unemployed without COBRA, etc.), I’d recommend that the government establish a “one-strike-and-you’re-out” risk pool. This risk pool would serve to pay for the emergency care costs only (not follow-on expenses when the individual is capable of making his/her own health decisions). The risk pool would pay on two conditions: 1) the individual agrees to pay over time a means-tested proportion of his care expenses at a subsidized interest rate and 2) the individual obtains basic health care insurance (high-deductible, no bells and whistles) and maintains it for a period, maybe five years. This system protects the medical provider from the risk of nonpayment, it creates a constitutional means for requiring the uninsured-by-choice to pay their bills, and it limits the government’s liability to a smaller set of health transactions.
If an uninsured individual doesn’t want to avail himself of the risk pool, he must pay his bills out of his pocket. For those who don’t, Congress should create a much more streamlined and powerful means of collections for health care providers. Such a system, which could operate out of the same Magistrate Court system that hears most Social Security appeals today, would empower health providers to recover their own money, rather than take the financial hit and pass the cost onto paying customers. It’s not as if hospitals WANT to raise costs on paying customers — it’s just that the transaction costs of recovering the funds through current channels are far too high to make it worthwhile. Reduce the transaction costs and those incentives would change, benefiting the rest of us that don’t try to free-ride the system.
This system only works if guaranteed issue is also mandated, since an individual exiting the emergency room may not be able to obtain coverage under the current system. But since guaranteed issue is a given in every health reform bill I’ve seen, I don’t consider it too controversial.
Note that none of these changes restrict one’s liberty to choose how to pay for health care — so long as one doesn’t put others on the hook for health care. Once the uninsured individual does that, his liberty is constrained, but in a manageable and humane way. Why take an unconstitutional, coercive route when you can reach the same result without dramatically increasing costs for the insured population and still get the doctors paid?
What other ideas do folks have to avoid free-riding in our system without a mandate?