In the health-care market, the only recourse that free-riders leave providers is to withhold their services in what are typically emergency circumstances – the very instances in which we all agree services should not be denied. It is often impossible, in any case, to determine whether individuals who are in severe pain or delirious can pay or not. Current law, in fact, does not permit providers to deny medical services in these circumstances. And beyond these logistical and legal obstacles, most providers are also reluctant to deny care for humanitarian reasons.
Free-riding, in turn, shoves the free-riders’ costs onto others through higher prices. This problem is so substantial that in 2009, Newt Gingrich castigated individuals who didn’t purchase health insurance yet could afford it, calling them free-riders and saying that they ought to be required by law at least to post a bond.
An insurance mandate aimed at stopping free-riders is in complete harmony with a free market. Indeed, the mandate is essential for a free market to be able to operate properly, which is why the Heritage Foundation, a fierce advocate of the free market, was among the first to propose mandating the purchase of health insurance as a solution to both the free-rider problem and rising health-care costs.
Other markets – like the ones for broccoli or spinach, or the vast majority of markets for other products and services – don’t normally face free-ridership issues at the point of service. Nor does free-ridership result from “inactivity” in these other markets the way it does in the health-care market. These distinctions provide clear grounds for differentiating the mandated purchase of health insurance from the myriad other purchase options individuals have within other markets.
Thus critics need not worry that the health-care mandate represents a “potentially unbounded assertion of congressional authority” as articulated by the 11th Circuit Federal Court, which ruled the mandate unconstitutional in August 2011.