Here are three good reads on health care reform, all written or co-written by John Goodman of the National Center for Policy Analysis.
In this first piece, from Goodman?s blog, he questions the need for a government insurance mandate to address the supposed ?free rider? problem of uninsured Americans consuming medical services. Those who make the argument don?t seem to understand the basic math of the situation:
Imagine a community in which everyone dutifully pays health insurance premiums every month, except Joe ? who spends his money instead on other consumption. Then one day Joe gets sick and finds that he cannot pay the full costs of his medical care. So the rest of us ? being compassionate sorts ? chip in and pay for the remainder of Joe?s care. Upshot: When he was healthy, Joe got to consume all his income instead of paying premiums and after he got sick he managed to ?free ride? on everyone else?s generosity. You can think of this as both an ethical problem and as an economic problem. Ethically, Joe is getting an undeserved benefit paid for by others bearing an undeserved cost. Economically, Joe is imposing an external cost on others. If we let Joe get away with not paying his own way, others might emulate his example, and the cost could grow through time.
Turning to the ?mandate solution,? let?s add a bit of realism here. On the average, people without health insurance consume only about half as much health care as everyone else ? after adjusting for other characteristics; and of the amount of care they consume, they pay for about half from their own resources. So, roughly speaking, the ?free ride? for the average uninsured person is equal to about one-fourth of what everyone else spends on health care.
With these facts in mind, it should be clear that forcing Joe to buy insurance that pays for the same amount of care everyone else gets is not fair or equitable. That would be overkill. It would be overkill four times over. To get Joe to pay his own way, we need to take from him an amount of money equal to one-fourth the average health care spending of insured people and either distribute it to everyone else or put it in a fund to pay for uncompensated care required by Joe and others like him.
There is a solution, but ObamaCare don?t contain it. In fact, ObamaCare worsens the problem.
In another article, Goodman argues that consumer-driven health care remains the best approach for deterring wasteful consumption of medical services. And in a third piece, he discusses the deleterious fiscal impact of ObamaCare?s Medicaid expansion on state budgets.
JLF’s own Joe Coletti has commented on these issues, too. Check out this and this.