The free-rider lie

v  The lie:  Free-riders, people who don’t pay their health care bills, are the main driver pushing Health Care insurance costs higher. Obama Care proponents, including Justice Ginsberg in her Supreme Court opinion, cite a statistic claiming free-riders extracted from health care providers $43 billion worth of uncompensated care in 2008. 

1.       The truth is that “$43 billion” is a lie.

v  Three-fourths of skipped bills are compensated.

“We traced its estimates of the magnitude of… $43 billion per year, … to two sources: the aforementioned Health Affairs study, and a non-peer-reviewed study commissioned by FamiliesUSA, a Washington, D.C., group long known for its advocacy of greater government involvement in health care. Yet Congress simply ignored the evidence in the Health Affairs study and failed to recognize the serious flaws in the FamiliesUSA analysis.

Specifically, Congress ignored the $40 billion to $50 billion that is spent annually by charitable organizations and federal, state, and local governments to reimburse doctors and hospitals for the cost of caring for the uninsured. These payments, which amount to approximately three-fourths of the cost of such care, mitigate the extent of cost shifting and reduce the magnitude of the hidden tax on private insurance.” http://www.hoover.org/publications/hoover-digest/article/84061

v  “Analysts at the Urban Institute concluded that uncompensated care accounts for 2.8% of all health care spending, and that cost shifting due to the uninsured raised private insurance premiums is 1.7% “at most.” The non-partisan Congressional Budget Office agrees: “Overall, the impact of cost shifting on payment rates and premiums for private insurance seems likely to be relatively small.” http://www.cato.org/publications/commentary/cost-shifting-does-not-justify-obamacare

2.      The truth is that the Federal Government is the biggest free-rider and therefore the biggest driver of higher insurance prices.

v  If you accept the lie that Justice Ginsberg cites, “43 billion of uncompensated care in 2008,” then the federal government is still six and a half times the free-loader as the scapegoated free–riders.

Medicare spending … reached $466 billion in 2008. Spending on Medicaid was $352 billion in 2008. http://www.healthaffairs.org/press/janfeb0907.htm pulled from the Center for Medicare and Medicade Services.  Kaiser Foundation estimates a national reimbursement rate of 0.72 in 2008 for Medicare and Medicaid. (The Government uses monopoly-like purchasing status and the force of law to short-pay bills) $352billion + $466billion= $818 billion. $818 billion is under 3/4th payment on actual invoices. Extrapolating from $818 billion, the total invoices for Medicare and Medicaid were $1,136 billion ($1.1 trillion). This leaves $318 billion that politicians refused to pay hospitals and doctors. That is over 6.5 times what the scapegoated “free-riding” uninsured left to the HealthCare system, and is $318 billion that providers must offset by raising prices to private insurance. The real free-rider is the Federal government.

v  If you don’t accept the “43 billion dollar” lie, and only count the quarter of skipped bills that providers are stuck with, then Federal Government was 29 times the free-loader than the free-riders were in 2008.

v  Furthermore, the Heritage Foundation cites the fact that Medicare/aid compensation is now closer to 56%. 

3.      The truth is that the Patient Protection Act betrays the lie.

v  They justify tyranny with duplicity by attempting to have it both ways: The uninsured are free riders who burden us by using health care they don't pay, but that hospitals are forced by state good-Samaritan laws to provide and then must make up the cost by increasing prices on those who have insurance. And, the uninsured are primarily healthy young adults who are an actuarial gold-mine for insurance companies because they "incur relatively low healthcare costs." In other words the mandate betrays their lie, if the uninsured burdened the system significantly then they couldn’t be used buoy the new system.

“It is precisely because these indi­viduals, as an actuarial class, incur relatively low healthcare costs that the mandate helps counter the effect of forcing insurance companies to cover others who impose greater costs than their premiums are allowed to reflect.” Chief Justice John Roberts

v  Claiming that the Affordable Care prevents free riders from passing their cost on to you is a lie. Those who cannot pay hospitals back now, are precisely the ones exempted from the individual mandate penalty.

The lawyers defending the bill before the Supreme Court admitted that “[t]he amount of the penalty will be calculated as a percentage of household income for federal income tax purposes, subject to a floor and [a] ca[p],” and that individuals who earn so little money that they “are not required to file income tax returns for the taxable year are not subject to the penalty” §5000A(e)(1); who earn too little income to require filing a tax return   

Conclusion:

Justifying the Affordable Care Act as a solution to prevent free riders from passing cost on to you is a lie. Those who cannot pay hospitals back now, are precisely the ones exempted from the penalty. The real free-rider grabs an ever growing market share and wields the force of law to impose its will. The real-free rider is the Federal Government.