Freeloading on the healthcare system

Massachusetts, where I live, has a Republican governor who has been attempting to make progress on the healthcare debacle. The other day an article appeared in the paper with the latest chapter in this ongoing attempt. The word “freeloading” appeared in the article; to suggest that the current refinement’s goal is to remove options for freeloading on the system.

Freeloading is a problem in all collective action systems. It’s one of the reasons that classical minded economists run screaming from the analysis of public goods – you know, like public schools, public roads, public health, environmental regulation, etc. etc. More mature economists get a gleam in their eye and roll up their sleeves, of course.

One way to pull the rug out from under any collective activity is to highlight how some people are, or might, be getting
a better deal than others. For example you announce that families with more children are freeloading on the public schools, or that my acquaintance who got encephalitis is freeloading on the health care system. Of course that was probably caused by cut backs on the public health expense of keeping the mosquito population under control.

My first thought when people mention freeloading as a problem around healthcare is Wal*Mart. World’s largest corporation which manages to avoid much of the responsibility for healthcare that comes with being an employer. Employer responsibility for health care was one of the bargains struck by American society during the 20th century; it arose out of union negotiations. Over the last 30 years corporations have discovered that as unions weaken and their political power has increased they can opt-out of that bargain. The society has yet to reach a new consensus about how to bear this responsibility.

Of course there are lots of other candidates for the the role of healthcare freeloader; or to use more exaggerated speech – parasites. A lot of money has been spent to cast malpractice lawyers into this role, though the data would seem to suggest it’s the malpractice insurance providers who benefit from that subplot.

My impression is that since we have a total breakdown in the consensus about where the responsibility for healthcare resides we have fallen into a messy trap where all the players spend vast amounts of resources attempting to shift responsibility to somebody else. The business community created that mess. All now compete to see if they can shift costs someplace else.

The governor’s plan is to force individuals to buy health insurance, much as we force everybody to buy car insurance in this state. So today’s casting for the role of freeloader is individuals. That’s a very popular move on the right, shift risk onto the weakest player in the social game.

But looking more closely it’s interesting to note that the governor is, at the same time, trying to force employers to provide health insurance. To make them pick up the responsibility they dropped over the last few decades. Of course the details of that make all the difference.

One last detail, states are not allowed to work on problems like this without the permission of the Bush administration. To institute any change in the regulatory framework the state has to be granted a waver. Only one state has managed to get a waver that allowed them force firms to bear some of the responsibility, i.e. Hawaii.

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