Healthcare – Market Reform

A core problem with the American health care system is that its market is fundamentally flawed. Part of this is due to laws created to provide humanitarian treatment during medical emergencies. In 1986, congress passed the Emergency Medical Treatment and Active Labor Act. Before EMTALA, if you showed up at an emergency room without proof of insurance, you could be turned away. Under this new law, hospitals would be required to provide services no matter the financial status of the patient.

Under EMTALA, there became less of an incentive for people to get insurance since emergency care would always be provided. And since the uninsured will be will be far less likely to pay their bill, someone has to cover these costs which are estimated at 55% of all emergency services. This results in hospitals raising their prices for services, which typically falls on the insured, raising premiums. Thus, you have a perverse incentive for the purchase of health insurance.

A large percentage of the uninsured are young healthy Americans. These individuals would contribute more to insurance revenues rather than costs. Therefore, a possible solution is to require obligatory coverage. By doing so, we expand the risk pool of Americans to lower per capita insurance costs. Since most Americans are now insured, the cost of EMTALA is reduced, which lowers costs across the board. This is a market based approach to the concept of socialized medicine.

There is another positive side effect. Since insurance is mandatory, anyone showing up for treatment without insurance would most like be an undocumented alien. These individuals could be treated and turned over to immigration officials thus easing the loads on ICE. However, it is also likely that illegals would purchase insurance to prevent easy discovery. Either outcome is a net positive for health care.

As a libertarian, the thought of mandated insurance is in exact opposite to my core principles. But the other solution is to turn away people at the hospital that are not insured or don’t have an insurance bond. I’m not sure any libertarian could support that ideal.