Wednesday, March 28, 2012

The Conservative Critique of the Individual Health Insurance Mandate

The straightforward case for the individual mandate is that uninsured individuals will eventually impose costs on others when they're treated in the emergency room (and elsewhere), and their unpaid bills are recovered via higher health insurance rates.  Lawyers criticizing this argument before the Supreme Court, as well as a few sympathetic SC Justices, claimed that this goes on all the time in markets, e.g., if some people stop buying a particular good or service, its cost and price may rise because economies of scale are lost.

This is certainly true, but the conservatives' stress on externalities, cross-subsidies, and free riding in many markets other than health care, while it may be a good argument against the uniqueness of the health care/insurance market, it could also be read as an acknowledgement of the widespread inefficiency/ineffectiveness of real-world markets in general.  Insofar as many real-world markets fall far short of the competitive ideal, one could conclude, not that the health care/insurance market shouldn't be regulated, but that many other markets should be regulated in order to reduce cost-shifting, free riding, and the other unwanted outcomes.

1 comment:

  1. That is a regrettable truth you point out. Despite some advances being made, a lot of things in society, including the healthcare system is still far from being as efficient as possible. It will be interesting to see what steps authorities will take to try and solve that problem.