As I listen to the discussion this week concerning the Supreme Court arguments on the constitutionality of the health insurance mandate, a couple of confusions seem apparent in the arguments some are making.

Supporters of the mandate are arguing that the product of health care is unique because everybody has to buy it.  This argument obscures an important point: the Affordable Care Act (ACA) mandate is not that you must buy health care but rather that you must buy health INSURANCE.  Insurance is a different product than health care.  Insurance is a way of pooling risk across a group of individuals who have some probability of experiencing a loss from some event.  It is just that in this case the insurance is for adverse health outcomes.

Without government intervention, an individual could choose to self-insure …. meaning he or she would choose simply to pay for health care costs from their own pocket rather than relying on a health insurance plan.  Thus, even if you accept that everyone may use health care at some point in one’s life, it is not valid to say that everyone needs to buy health insurance at some point in one’s life.

Actually, I would even argue that it is not true that a person must or will buy health care during his life.  One can certainly choose, and some religions do choose (there is a religious exception to the mandate allowed), not to avail oneself of modern medicine.  If one does choose so, that decision may reduce the overall quality of life and may result in earlier death, but it is not impossible to live in such a manner, perhaps for a very long time.  Indeed, through most of human existence, humans have lived without effective medical care, which has only developed in the past few millenniums.  Health care, though important for a higher quality of life, is not as necessary as food and water.  Thus, if any product satisfies the condition that all must buy it, food and water surely rank higher.

But, some have said, what if a person does self-insure and then ends up in the emergency room with serious injuries.  What would happen if he didn’t have insurance and if the required medical expenses were much larger than the individual could afford.  There are several possible outcomes.  In a free market, the person with no insurance would have to spend only up to one’s affordability; perhaps an operation would not be an option and he would only be able to afford pain relievers.   This kind of outcome is the risk one takes for not having health insurance and sharing risks with others.

The other outcome is what would really happen in America though.  That’s because hospitals are required by law to cover an uninsured patient in an emergency situation.  Thus, if to avoid death in an emergency an operation is medically advised, then by law the hospital will have to provide it to the uninsured person.  This supports the argument that by not buying insurance you are affecting others in the health care market, since the cost of your operation will be shifted to others.  However, it was pointed out in court yesterday that this problem arises entirely because of the government law that emergency room care must be provided to the uninsured.

Justice Sotomayor responded to this issue by saying, “what percentage of the American people who took their son or daughter to an emergency room and that child was turned away because the parent didn’t have insurance — do you think there’s a large percentage of the American population who would stand for the death of that child – ….  (when) they had an allergic reaction and a simple shot would have saved the child?”

Her point is that US citizens demand the emergency room care law because the alternative is unconscionable.  There is a problem with her argument though, because she is assuming that the alternative to a government mandated emergency care law is that children will die due to lack of a simple injection.  This seems to me to be the wrong counterfactual.  Instead, citizens in a community, state, or country that see uninsured children dying for lack of a simple shot would, of course, find it unconscionable, and would set up charities to pay the expenses of uninsured children in this situation.  Charitable hospitals would likely arise to offer free services for basic emergency care, funded by donations from compassionate community members.   In other words, taking emergency room care out of the hands of the government does not automatically imply that compassionate outcomes disappear.  Instead other private institutions will arise to take up the slack.

What private charities might not provide is unlimited coverage for the uninsured in all circumstances.  For example, if an alcoholic could be saved with a kidney transplant, private charities might not be willing to cover his uninsured expenses, instead opting for pain medications to keep him comfortable for the remainder of his life.  In contrast, a government program to cover everyone’s medical expenses might finance the kidney transplant because the expenses are spread over a larger group of present and future taxpayers and they will never even know how and why their taxes are being affected.

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