Argument: Uninsured free-riders are no big problem; mandates unnecessary
Glen Whitman. "Hazards of the Individual Health Care Mandate." CATO. September/October 2007: "how big is the free-rider problem, really? First, we should note that not all free riders are uninsured. In fact, people with insurance consume almost a third of uncompensated care. Second, not all care received by the uninsured is paid for by others. Analysts at the Urban Institute found that the uninsured pay more than 25 percent of their health expenditures out of pocket. [...] So how much uncompensated care is received by the uninsured? The same study puts the number at about $35 billion a year in 2001, or only 2.8 percent of total health care expenditures for that year. In other words, even if the individual mandate works exactly as planned, it will affect at best a mere 3 percent of health care expenditures.
With auto insurance, at least there is a reasonable argument that a well-enforced mandate could reduce insurance premiums. When many motorists are uninsured, those who do buy insurance need, and are sometimes required, to buy coverage for damage done to their vehicles by the uninsured. So when the uninsured become insured, others' premiums could fall. But this argument simply doesn't fly in the case of health insurance, because (as already noted) uncompensated care is such a small fraction of overall health spending. Furthermore, more than 85 percent of uncompensated care is paid for by governments, not by private insurance. That means less than 15 percent of uncompensated care — less than half a percent of all health care spending — contributes to higher private insurance premiums.
None of this means that the uninsured are not a problem. But the problem is not that they cost the rest of us too much. One reason uncompensated care is such a small fraction of health care spending is that uninsured people simply get less health care than others. (Though they do get some; health care and health insurance are not synonymous.) So if the real concern is making health insurance and health care available to those in need, we should focus on health care prices and insurance premiums.