“Rationally” Choosing to Be Uninsured

hospital.jpgNYM has a good piece on low-paid, young New Yorkers who are increasingly taking chances with their health by choosing to be uninsured. Here’s one painter’s off-the-cuff calculations:

“Now I find myself making all these stupid calculations. Like, it would cost me around $3,000 a year to have insurance, right? Okay, isn’t that about what it would cost out of pocket if I broke my wrist? Chances are I’m not going to break my wrist once a year, so why not save the money for that onetime emergency?” Like many I spoke with, [the painter] said he’d happily pay for insurance, if only the cost-benefit analysis tilted more in its favor. “What’s ironic is that I would never live without my cell phone, but I won’t consider buying health insurance. It sounds ridiculous to say that out loud, but the fact is insurance is just too expensive. If it was the same price as my phone”—$150 a month sounded reasonable to him—“I’d buy it in a second.”

This internal struggle reminded me of a recent debate among Republicans on RomneyCare in Massachusetts–namely, the wisdom of an individual mandate to force everyone to have medical insurance, just as everyone who drives has to have car insurance. To the Heritage Foundation, the individual mandate makes free-riders pay for the care they are almost inevitably going to demand (and probably not be able to pay for) at an ER sometime. The libertarians at Cato think that it’s the thin end of a wedge designed to speed us to socialized medicine.

My own take: it’s pretty hard to see the rationality of the painter’s decision. Perhaps, ala a really generous view of heuristics, that hypothesized wrist injury is really a cognitive shortcut that averages out the range of illnesses the painter could have in a given year, and weighs the costs and benefits of insuring against them. But I doubt there’s any data available to back up that characterization. And he doesn’t appear to take into account the range of chronic illnesses that can greatly reduce life expectancy before they ever become emergent.

The only thing that makes the “calculation” at all reasonable is the idea that, as a backstop, the Emergency Medical Treatment and Active Labor Act (EMTALA) forces (many) hospitals to treat critical illnesses. A widespread culture of counting on it may well make individual mandates as porous in health insurance as they are in car insurance (where about 14% of drivers persistently fail to get insurance). In which case, how much should people who fail to sign up for health insurance, and need expensive ER care, be punished? Should they be denied care? Saddled with never-dischargeable debt (i.e., become hospital serfs)? How about their children?

The saddest thing about “forcing the poor to pay something” (via, say, an individual mandate) is the number of children who are still uninsured because of it. Oftentimes the programs demand really trivial premiums or copays…which nevertheless seem too steep (or are too bureaucratically demanding) for parents to make. It’s too bad they can’t just be automatically enrolled.

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