How should we deal with the “uncompensated care” issue discussed in Tuesday’s Supreme Court oral argument on the Affordable Care Act? One potential answer is a 2,700 page health care bill that imposes an individual mandate to buy health insurance or face stiff penalties.
An alternative answer would be that these costs should be paid by the receiver of care or be the responsibility of individual hospitals and healthcare providers who treat those who show up to receive services but can’t or won’t pay. Leaving aside the former, one could argue that the latter should have to internalize those costs if they are willing to treat the uninsured and those unable/unwilling to pay. However, this really means that providers will charge higher costs for those who do pay and/or take a hit in the form of lower profits or reducing the costs of service (by lowering the quality of care and the pay/benefits of those who work at such institutions). The “internalization of cost” answer is clearly not a great one.
Yet those of us who would face a higher cost for going to providers who service uncompensated care patients could theoretically go to providers who do not and thus can offer less expensive care. This would put market pressure on providers to stop servicing patients who won’t/can’t pay. So now we’d have a lot less medical care for the “can’t/won’t pay” population (with some of these people making the trade-off to purchase insurance) – unless providers (such as non-profits) chose to provide care anyway and find a way to make it work in a market populated with both do-gooders and do-wellers. Some individuals might even choose to pay more for care knowing that they would be subsidizing the charitable works of their do-gooder provider. However, a lot of people would be far more price sensitive and abandon those providers – making it harder for those places to survive. So I’m not sure this is a live option even in theory.
More importantly, it isn’t an option in reality. Indeed, such discussion is moot because Congress has essentially forced hospitals to provide uncompensated care – so one government intervention begets the rationale for another (the ACA)!
This brings us to the receiver of care and how providers ought to deal with those who can’t/won’t pay. I would argue that part of the problem of uncompensated care could be handled by health care providers being more vigilant about collecting fees even if this means being a lot more stern (even “nasty”) with those who don’t/can’t pay. For example, the hospital could be more serious at the point of service about discussing the social costs and immorality of not paying for services rendered. Perhaps shame might push some people who probably could pay (but who don’t want to trade-off other goods in their lives) into the do pay category. And there are a lot of folks out there who could pay if they were willing to allocate more resources to health care and less to other goods they enjoy. Case in point: an acquaintance of mine in graduate school sought ER care and refused to pay. He was neither truly poor nor unable to pay but simply took advantage of the system so as to avoid trading off other things in his life. A pointed stare might have shamed him into taking his responsibilities more seriously. Or…
If moral suasion doesn’t work, it should be possible to garnish the future wages of uninsured patients or otherwise seek compensation for services rendered. There is no free lunch in the world and this would serve to make those who receive care pay….eventually (and incentivize health insurance purchase before the need to seek care). This won’t work for the homeless or those permanently out of work, but these people likely represent such a small part of the problem that it would be far less expensive to the rest of us to subsidize them through higher insurance premiums than to do so through the tax system as ObamaCare does. If there are some legal barriers to such efforts as wage garnishing, these should be eased.
Wouldn’t such moves and others like them incentivize people to purchase health insurance without coercion or at least make them face the need to pay the costs of their decision? And isn’t that what we ultimately want?
Of course, the healthcare system would work a heck of a lot better if we actually had a relatively free market in which hospitals and other health care providers could compete freely on the basis of price and quality of service, advertise this, compete across state lines, and so forth — thus also making insurance less expensive.
I’d rather try a freer market approach or the one we have with real teeth for failure to pay than successive attempts to rationalize a system with massive government intervention. And yes, I do realize that there will be people who truly cannot provide for themselves and who are not simply making bad decisions or externalizing the costs of their choices re: trade-offs. For these people, charity and even government assistance will probably be necessary. But there is way too much moral hazard and disincentivizing proper behavior in this realm.