The Red Herring of Health Care Freeloaders


In 1986, a law was passed that mandated Medicare-accepting hospitals treat all patients who arrive on their doorsteps, regardless of the ability to pay. Since then, the so-called “freeloader” problem has plagued the American health system. The individual mandate then gained traction as a way to encourage personal responsibility – forcing so-called freeloaders to pay into the health care system they utilize, especially emergency room care.

First popularized by the GOP and The Heritage Foundation two decades ago, the individual mandate became a major part of Obamacare. It is critical to Obamacare remaining intact. But how much do “free-loading” emergency room visits actually drive up the cost of care in America?

According to editor Nick Gillespie, not very much. On CNN’s Crossfire, Gillespie argued only “2 percent of all health care spending” is done in emergency rooms. While this is a lot in pure numbers – nearly $48 billion in 2008, according to a study likely used by Gillespie and cited by Politifact – it’s small change compared to the simple size of America’s health care system.

Furthermore, emergency room costs may be more of a red herring than Gillespie indicated. Via PolitiFact:

…[R]ecent academic have suggested that the economics of emergency rooms and the larger health care system are more nuanced than previously thought.

For instance, one study by the Rand Corp. suggested that it may be overburdened primary-care doctors — not patients — who are driving traffic toward the ER. According to Arthur Kellermann, one of the authors of the RAND paper, doctors described the ER to researchers as their “overflow valve” where they “send complicated patients” for diagnosis.

Even Lee, who co-wrote the paper suggesting that ERs could account for as much as 10 percent of health care spending, has said that heavy use of emergency rooms is not necessarily a problem. “Diverting non-emergency care may simply shift costs onto primary care offices and clinics which may not have the infrastructure to accommodate a large volume of unscheduled care,” Lee told Science Daily.

The argument by Republicans in the 1990s and Democrats now is that the individual mandate targets those who would otherwise pass their health care costs on to the rest of us. Clearly, as proven Gillespie and Politifact, this is not the reality of health care spending.  The individual mandate argument is being used more for the exact reasons former Vermont Governor Howard Dean described in 2009:

“This is a bigger bailout for the insurance industry than AIG,” former Democratic National Committee chairman and medical doctor Howard Dean told “Good Morning America’s” George Stephanopoulos today. “A very small number of people are going to get any insurance at all, until 2014, if the bill works.

“This is an insurance company’s dream, this bill,” Dean continued. “This is the Washington scramble, and I think it’s ill-advised.”

No wonder the insurance industry has been behind this law. A government mandate for customers is preferable to having to actually fight in the free market for a profit.