In American if you are not an employee, you will not have health insurance but must seek it out in the private market if you want it. If you don’t have insurance, you will be billed directly for the costs of any health care you end up using. Without the (much maligned) Affordable Care Act (aka Obamacare), getting health insurance is optional, so people who are not covered under an employer plan can choose to go without. But when things go badly, those who choose to forego insurance and bear the costs of whatever health care they actually use, do not in fact always bear these costs. Instead, they can externalize these costs by filing for bankruptcy, throwing the unpaid cost onto health care providers, who in turn pass it on to insurance companies, and from there onto people who do pay for health care coverage. Allowing people to both under-insure themselves and then discharge health care costs in bankruptcy thus creates a tremendous potential for free riding and externalizing costs onto others in society.
It seems the face of anti-ACA litigation has done just exactly that:
“As someone who chose not to purchase health insurance —and felt strongly that the federal government had no business telling her that she had to buy it whether she liked it or not—Mary had become an active and outspoken critic of the law. As a result, she was the perfect candidate to be a human face on the challenge to Obamacare.
Last fall, Mary Brown and her husband filed a petition of bankruptcy seeking relief for some $55,000 in debts the couple had run up . . . [including] $4500 worth of medical bills…
Almost half of the medical debt run up by the Browns is owed to Bay Medical Center in Panama City, Florida. A spokesperson for the hospital had this say about their experience with the Browns and the many others who cannot pay their medical bills because they have chosen to remain uninsured. “This is a very common problem. We cover $30 million in charity and uncompensated care every year,” “If it’s a bad debt, we have to absorb it.”
And related to that is this:
In America, when employment contracts, so does health care coverage: “From 2007 to 2010, the share of children and working-age adults with employer-sponsored coverage fell to 53.5 percent from 63.6 percent”.
From Planet Money’s Adam Davidson,
Over the centuries, proposed answers have varied greatly. Smith declared that the difference between wealth and poverty resulted from the relative freedom of the markets; Thomas Malthus said poverty comes from overpopulation; and John Maynard Keynes claimed it was a byproduct of a lack of technocrats. (Of course, everyone knows that politicians love listening to wonky bureaucrats!) Jeffrey Sachs, one of the world’s most famous economists, asserts that poor soil, lack of navigable rivers and tropical diseases are, in part, to blame. Others point to culture, geography, climate, colonization and military might. The list goes on.
He doesn’t mention what continues to be one of my favorite books on the subject, Guns Germs & Steel. But the column is on the more recent work (linked to last week), which I have ordered but haven’t read yet, by Darren Acemoglu and James Robinson. Davidson says this book argues
“that the wealth of a country is most closely correlated with the degree to which the average person shares in the overall growth of its economy…when a nation’s institutions prevent the poor from profiting from their work, no amount of disease eradication, good economic advice or foreign aid seems to help.”
This seems in tune with the Spirit Level.