We Will Never Have A Self-Reliant Healthcare System – Forbes

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As Ross Douthat says, the senate healthcare bill “officially reconciles the Republican Party to the idea that the government should provide support for working-class health insurance”. Unfortunately, I don’t think the whole country is reconciled to that fact. I’d like to address a position I don’t see argued by pundits, but I do hear out in the real world: getting the government out of healthcare, and moving to a system of self-reliance. It’s important to understand why this will never happen.

Critics of publicly providing healthcare often argue it doesn’t really make people healthier. You don’t have to believe this result for the purposes of this argument if you don’t already, but there is some evidence of this, including the famous Rand Health Insurance Experiment. What matters is that if you do believe this result, there is a flip side to it: that giving low-income people free healthcare doesn’t make people healthier implies that they are already getting treatment for a lot of conditions, and someone is already paying for that. In other words, for a lot of healthcare costs there is simply no escaping the fact that you and I and society at large will pay for them. It’s a question of how.

One place that the uninsured get treated at others’ expense is in hospitals, which are required by law to treat them for emergency medical conditions. Other factors push hospitals to provide treatment beyond direct federal and state laws requiring it, including non-profit hospitals who must provide community benefits to receive tax exemption status and the duties required my medical ethics. These costs are significant. In 2012, uncompensated care costs for hospitals were $46 billion, and Garthwaite, Gross, and Notowidigdo estimate that every newly uninsured person costs local hospitals on average $900.

The dream of “self-reliance” in healthcare is in part impossible because hospitals are going to treat lots of people for legal and ethical reasons that we are simply not going to get rid of. Even if you could muster the temporary voter support to abolish the state and federal laws that require hospitals to treat people who show up with emergency conditions, this would last until the first person died on the streets outside of a hospital who refused to treat them. This may be a fine outcome to you, with a radical committed principle to self-reliance, but you simply have to understand it will never be okay to most people.

To some libertarians and conservatives, the status quo may glow with the beauty of private voluntary charity, but as we have seen already this is not strictly voluntary for hospitals. What’s more, where uncompensated care costs are significant for hospitals these costs can end up being borne by raising prices for everyone else. When you go to the hospital for treatment, you will be paying for the cost of those without insurance who show up to that hospital.What’s more the federal government compensates hospitals that have high uncompensated care costs, to the tune of $17.1 billion in 2012. All of this means the status quo is hardly voluntary charity.

The costs of treating the uninsured are borne by hospitals, healthcare consumers who live near the uninsured, and taxpayers. Not to mention that a first step to getting free treatment can involve spending all of your savings, potentially declaring bankruptcy, and then proving to the hospital you can’t pay.

What we do to help people get treatment is an open debate, but what is not a possible solution is mere self-reliance and a free market in healthcare. We live in a society that, thankfully, pays for a lot of healthcare for people who can’t afford it. Libertarians and conservatives dreaming of some utopian state of self-reliance need to accept that this is not an option. We are going to pay healthcare costs for the sick, it is a matter of how, to what extent, and what we make the sick sacrifice first. The status quo is hardly a voluntary charity utopia, and it never will be.

Some readers, in particular those who surround themselves with the professional class, will take this post to be arguing with a strawman. Surely, nobody thinks we should all just pay our own health costs and be fully self-reliant. But this is something real people believe, even if it’s not a position defended by pundits or discussed by the Washington D.C. professional class.

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