Republicans fighting against national health

The Republicans on the Senate Finance Committee are bravely seeking to stop Sen. Baucus’s “moderate” version of Obamacare. They proposed an amendment this morning which would have removed from his bill the universal mandate that everyone must buy health insurance. It was voted down by the narrowest of margins, 12-11. Sen. Baucus complained that the amendment would gut the plan, since the plan is based on “shared responsibility.” “Shared responsibility” = socialism. And the Republicans are trying to stop it. Meanwhile a female Democratic senator said that the attempted amendment showed that the “rich” don’t want to pay their share. For heaven’s sake, a majority of the country opposes this thing, this thing that would force tens of millions of ordinary middle class people on pain of criminal penalties to purchase health insurance, yet she says that only the “rich” are against it. That’s the only way that liberals can conceive of any issue, that they are fighting against the oppression and greed of a small evil minority.

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A. Zarkov writes:

I have already discussed in a prior post why the universal mandate is unconstitutional. If the Democrats manage to pass a health insurance legislation with a mandate then, as day follows night, this will issue end up in the Supreme Court because there is likely to be different decisions among federal circuit courts. In this event, the court will either have to find the federal authority for the mandate somewhere other than the commerce clause, or come to grips with just how far they can push the commerce clause. If they should hold that mere existence constitutes engaging in interstate commerce, then they will openly have gutted the whole idea of our federal government being based on enumerated powers. In other words, we are no longer a constitutional republic.

MG writes:

I wish all my conservative compadres would either propose solution to a “free rider” problem or declare that it is perfectly OK to have free riders for the sake of ideological purity.

Consider. For a healthy young person, younger than 30-35, without many financial assets, it is perfectly rational not to buy health insurance. For a very occasional office visit, minor illness, tests, etc, he could pay out of his pocket. For a major expenses caused by an accident, gun wounds, or major disease (very unlikely) he will let society to pick up the tab.

Even if a hospital will try to recover (they rarely do), a young person could simple declare bankruptcy and/or move, etc. For a large county hospital I’m familiar with, total recovery rate, including patients with insurance(!,) is about 20 percent.

Now, there is probably 2 to 5 percent of population, assorted time-space travelers, aliens abductees, UFO watchers, Libertoads and Ron Paul groupies propose that we just drop sick people without insurance on the street and let charities to take care of them.

Unfortunately for the space cadets, the remaining 90 percent or more of people will not stand for that. The Supremes declared, presumably the found it in the Constitution, that any hospital, public or private, must take people who need emergency treatment. [LA asks: in what decision was this?]

There is also management problem, when ambulance picks up a person after heart attack or gangbanger lies bleeding on the street, they have neither time nor tools to verify if they have insurance. And time is often of the essence.

It means that there is no easy way to remove the “free rider” problem in our society. Unless there is a universal, tax-like mechanism. Rich individuals could post a bond that maybe refunded to them if they did not use public resources.

Or we could just learn to live with free riders, as we do today.

What are your alternatives, dear compadres?

LA replies:

I don’t have a full answer, but one thing that has become clear from the debate is that the cost to society of taking care of the free riders is vastly less than what the cost of the “cure” would be.

Paul Nachman writes:

You quote “MG”:

Unfortunately for the space cadets, the remaining 90 percent or more of people will not stand for that. The Supremes declared, presumably the found it in the Constitution, that any hospital, public or private, must take people who need emergency treatment. [LA asks: in what decision was this?]

It has, I think, nothing to do with the Supremes. It’s the EMTALA law. Opening paragraphs:

The Emergency Medical Treatment and Active Labor Act (42 U.S.C. § 1395dd, EMTALA) is a United States Act of Congress passed in 1986 as part of the Consolidated Omnibus Budget Reconciliation Act. It requires hospitals and ambulance services to provide care to anyone needing emergency healthcare treatment regardless of citizenship, legal status or ability to pay. There are no reimbursement provisions. As a result of the act, patients needing emergency treatment can be discharged only under their own informed consent or when their condition requires transfer to a hospital better equipped to administer the treatment.

EMTALA applies to “participating hospitals”, i.e., those that accept payment from the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) under the http://en.wikipedia.org/wiki/EMTALA—cite_note-1Medicare program. However, in practical terms, EMTALA applies to virtually all hospitals in the U.S., with the exception of the Shriners Hospitals for Children, Indian Health Service hospitals, and Veterans Affairs hospitals

[citation needed]. The combined payments of Medicare and Medicaid, $602 billion in 2004,[1] or roughly 44% of all medical expenditures in the U.S., make not participating in EMTALA impractical for nearly all hospitals. EMTALA’s provisions apply to all patients, and not just to Medicare patients.http://en.wikipedia.org/wiki/EMTALA—cite_note-1

I also think that EMTALA is terrible public policy, precisely because of the free-rider problem. Apparently the Supremes have dealt a little bit with EMTALA (see, e.g., here), but I haven’t really looked into it. But, anyway, it wasn’t a matter of the court inventing a “right”—it’s a statute.

During the current health care debate, I’ve learned that uncompensated care (e.g. for illegal aliens) isn’t the main financial hit hospitals take (although I suppose that it probably is the dominant hit in the most severely impacted places). The main hit is cost-shifting, meaning that medical providers get paid substantially less by Medicare and Medicaid than their actual costs, so that private patients and their insurers have to make up the difference (in order that the providers can continue in business at all). This is a significant driver of the list-price costs (i.e. actual costs for non-government-funded patients) in the U.S. medical industry.

A. Zarkov writes:

MG brings up the standard liberal argument for the mandate: we need to force people to buy medical insurance to avoid free loading. But let’s dissect the freeloading problem. If a young person can avoid paying for medical care by going bankrupt, then reform the bankruptcy law. If someone refused to insure then make his medical debts non-dischargeable in bankruptcy. We do this for student loans, taxes, alimony and many other kinds of debt. Most people without assets will choose insurance rather than risk carrying a huge debt for the rest of their lives. People with assets will also insure to avoid putting them at risk. We can deal with the problem of illegal aliens by deporting them after they receive (presumably) life saving emergency treatment. The truly indigent will need some form of public assistance as they do now.

If for some reason we really need to have government-run medical insurance with mandates, then let the states do it. As I pointed out, the US Constitution does not prevent the states from imposing a mandate. This way the states can experiment with different programs. If a particular state should adopt a ruinous medical care program then people will move out until the legislature comes to its senses. States with successful programs will get copied. The federal government can also audit the states to find fraud. On the other hand, if the federal government runs everything, who will check up on them? Obviously in many cases the press won’t do it—look at ACORN.

Jonathan W. writes:

I would like to correct one point made by MG. The Supreme Court never ruled that there was a constitutional right to emergency treatment. Rather, the legal imperative comes from the 1986 Emergency Medical Treatment and Active Labor Act. This law requires that hospitals that accept federal health care reimbursements (mainly Medicare and Medicaid) treat all emergency patients without regard to ability to pay. As far as I know, the only group constitutionally entitled to health care are prisoners.

Kristor writes:

Free riding wouldn’t be such a problem if creditors had more rights. You go to the ER uninsured, you owe the hospital $20K, you don’t get out of it, period—even by declaring bankruptcy. You strike an agreement with the hospital that they will garnish 10% of your earnings until they are repaid, with interest. If you are totally impoverished, of course, that won’t work. But that’s a different issue; the totally impoverished are presumably covered by some sort of welfare system.

The bankruptcy laws are set up in this country to encourage entrepreneurship, which is good, but they also encourage enormous personal debt, which is bad. The solution is simple: have two sets of bankruptcy laws, one for legal persons, one for natural persons. To keep barriers to entry low for entrepreneurs, simply let the bankruptcy code for businesses apply only to legal persons, such as corporations. If the entrepreneur wants to take advantage of those more lenient bankruptcy laws for legal persons, he must incorporate; otherwise his business debts are his personal debts, and are subject to the more stringent bankruptcy code for natural persons. That code provides that while natural persons may renegotiate debt, creditors cannot be stiffed.

If such a system were in place, young people would buy health insurance as a matter of routine (it is absurdly cheap for them—like, equal to the cost of 8 hamburgers a month).

BTW, re the Obamacare provision that would require us all to buy health insurance, California requires all drivers to have car insurance. Is this not the same sort of thing?

A. Zarkov writes:

Kristor writes, “BTW, re the Obamacare provision that would require us all to buy health insurance, California requires all drivers to have car insurance. Is this not the same sort of thing?” The answer is no. For one thing, mandatory insurance operates at the state level, not the federal level. As such there is no US Constitutional prohibition against this kind of law. Even more fundamentally, one needs to engage in an activity or transaction to trigger mandatory automobile insurance such as registering and driving an automobile. You also have the option of posting a bond in lieu of buying insurance. This is very different from the Obamacare mandate where all you have to do is simply exist.

Paul Nachman sent this yesterday in response to an earlier comment by Mr. Zarkov on the same subject:

This line by A. Zarkov is pretty wonderful:

“If this is so then my cats are engaged in interstate commerce along with my furniture.”

Posted by Lawrence Auster at October 01, 2009 11:51 AM | Send