POV: Have Gun, Will Nudge
by Ayn Rand | March 1962
It's Not the Unions — It's the Labor Laws
by Doug Altner | March 19, 2014
Regulatory Strangulation
by Steve Simpson | March 13, 2014
Obamacare creates a new class of free riders
by Rituparna Basu | January 23, 2014
Obamacare Is Suffocating An Already Sick Health Insurance Patient
by Rituparna Basu | January 22, 2014
The Broken State of American Health Insurance Prior to the Affordable Care Act: A Market Rife with Government Distortion
by Rituparna Basu | January 21, 2014
Obamacare is Really, Really Bad for You, Especially If You're Young
by Rituparna Basu | August 21, 2013
Justice Department should let US Airways & American Airlines merger proceed
by Tom Bowden | August 16, 2013
Why Is Apple Inc. On Trial? For Good Behavior, It Turns Out
by Tom Bowden | June 20, 2013
The Forgotten Man of the Minimum-Wage Debate
by Doug Altner | June 19, 2013
Why Delivering Beer Isn’t Easy
by Doug Altner | June 11, 2013
What Explains GM’s Problems With The UAW?
by Doug Altner | May 20, 2013
What Are The Search Results When You Google ‘Antitrust’?
by Tom Bowden | April 18, 2013
To Protect the Defenseless, We Must Abolish the Minimum Wage
by Don Watkins | March 27, 2013
I’ll Buy My Own Contraception, Thanks
by Rituparna Basu | November 13, 2012
Why The Glass-Steagall Myth Persists
by Yaron Brook | November 12, 2012
Why Ayn Rand’s Absence From Last Thursday’s Debate Benefits Big Government
by Yaron Brook | October 15, 2012
Changing the Debate: How to Move from an Entitlement State to a Free Market
by Don Watkins | July 02, 2012
3 Things Everyone Needs to Know About the Apple Antitrust Case
by Don Watkins | April 10, 2012
What's Really Wrong with Entitlements
by Don Watkins | February 21, 2012
The Entitlement State Is Morally Bankrupt
by Don Watkins | September 13, 2011
How Important Is the Obamacare Litigation?
by Tom Bowden | August 12, 2011
Atlas Shrugged: With America on the Brink, Should You “Go Galt” and Strike?
by Onkar Ghate | April 29, 2011
The Road to Socialized Medicine Is Paved With Pre-existing Conditions (Part 3)
by Yaron Brook | April 06, 2011
The Road to Socialized Medicine Is Paved with Pre-existing Conditions (Part 2)
by Yaron Brook | March 10, 2011
In Defense of Finance
by Yaron Brook | February 15, 2011
The Road to Socialized Medicine Is Paved with Pre-existing Conditions
by Yaron Brook | February 10, 2011
The Avastin Travesty
by Tom Bowden | December 12, 2010
Apple Now Targeted for Success Like Microsoft Was in the 1990s
by Tom Bowden | October 04, 2010
The Un-American Dream
by Don Watkins | August 27, 2010
What About Private Health Emergencies?
by Tom Bowden | April 08, 2010
What’s Really Driving the Toyota Controversy?
by Don Watkins | March 26, 2010
Anti-Smoking Paternalism: A Cancer on American Liberty
by Don Watkins | March 06, 2010
Apple vs. GM: Ayn Rand Knew the Difference. Do You?
by Don Watkins | March 02, 2010
Smash the Labor Monopolies!
by Tom Bowden | September 15, 2009
America’s Unfree Market
by Yaron Brook | May 2009
Atlas Shrugged and the Housing Crisis that Government Built
by Yaron Brook | March 2009
The Green Energy Fantasy
by Keith Lockitch | February 25, 2009
Stop Blaming Capitalism for Government Failures
by Yaron Brook | November 13, 2008
The Resurgence of Big Government
by Yaron Brook | Fall 2008
The Government Did It
by Yaron Brook | July 18, 2008
From Flat World To Free World
by Yaron Brook | June 26, 2008
How Government Makes Disasters More Disastrous
by Tom Bowden | April 29, 2008
Life And Taxes
by Yaron Brook | April 17, 2008
War On Free Political Speech
by Yaron Brook | March 21, 2008
To Stimulate The Economy, Liberate It
by Yaron Brook | February 14, 2008
Exploiters vs. Victims in the Grocery Strike
by Elan Journo | January 30, 2004
Prescription Drug Benefits Violate the Rights of Drug Companies
by Onkar Ghate | July 24, 2002
Drop the Antitrust Case Against Microsoft
by Onkar Ghate | March 17, 2002


Government And Business in Voice for Reason
Government & BusinessRegulations

Obamacare creates a new class of free riders

by Rituparna Basu and Yaron Brook | January 23, 2014 | The Daily Caller

Welcome to Obamacare, land of skyrocketing premiums, cancelled insurance policies, and a website that is exhibit A of government incompetence. If Republicans are serious about stopping this destructive law, they must criticize more than its rollout troubles, which are fixable. They must expose the law’s fundamental problems, which its supporters are determined to hide.

For example, Obamacare creates a new class of free riders in America. This is the purpose of the individual mandate, the law’s central provision, which requires most Americans, starting this year, to carry health insurance coverage or else pay a fine to the government.

Obamacare creates a new class of free riders

Supporters portray the mandate’s function as the opposite. “We’re not going to have other people carrying your burdens for you,” said the president in 2009. “If you don’t have insurance and you need to go to the emergency room or unexpectedly get diagnosed with cancer, you are free-riding on others,” said Ezekiel Emanuel, a former Obama administration adviser, last year; “Insured Americans will have to pay more to hospitals and doctors to make up for your nonpayment.”

Now, not everyone without coverage has the intention to free ride — government distortion of insurance has priced people out of the market for decades. But even so, who are Obamacare supporters kidding with their feigned aversion to pawning off one’s medical expenses onto others? Free riding is the name of the game in American health care.

Why, for example, can someone walk into an ER expecting to free ride on the insured? Because federal law requires these facilities to treat him even if he has no intention of paying. Medicare (its mythical “trust fund” notwithstanding) and Medicaid similarly entitle more than 100 million seniors and lower-income Americans to free ride on younger generations and those of higher income. Employer-based coverage has also long been rigged by government so that older, less healthy workers free ride on younger, healthier employees, who are charged higher premiums to lower the costs of the former.

If Obamacare supporters were really offended by free riding, they’d call not for a law forcing people to buy coverage, but for the phasing out and eventual repeal of the government programs that allow it in the first place.

In reality, Obamacare’s proponents have no problem making one person’s medical bills the responsibility of another. Their real objection is that some people are not shouldering enough of others’ burdens, which is what the individual mandate actually enforces. Here’s how.

Recall a core goal of Obamacare: to make care cheaper for people with preexisting conditions. To achieve this, the law requires insurers to accept them and charge them the same premium they charge healthy people. But it’s a fact that someone who has diabetes, for example, has, on average, more than double the medical expenses of someone who doesn’t. Since insurers can’t charge higher-risk customers for their higher costs (the way auto insurers charge higher premiums to less safe drivers), insurers must pass on those costs to younger, healthier policyholders. Accordingly, 30-year-old nonsmoking men have, on average, seen their premiums more than double to pay for the various redistribution ploys in Obamacare.

How do you get people to buy a policy whose costs have been artificially raised? Enter the individual mandate. Its actual function is to coerce younger, healthier Americans into paying for other people’s health care. (This transfer is not, as Obamacare supporters say, inherent in insurance. If it were, we wouldn’t need Obamacare.)

If there were any doubt that this is the mandate’s purpose, the government’s recent actions have put that to rest. The penalty for not buying coverage in 2014 is the higher of $95 or 1 percent of your income, and for many the fine is negligible, compared to spending thousands of dollars on an Obamacare policy (the penalty increases in future years). Amid rising concerns that younger people won’t buy coverage this year, the government launched last summer a propaganda campaign to convince them to sign up. This media blitz, which enlisted sports teams and celebrities and even the mothers of these young people, was initiated because, if too few younger and healthier Americans choose to buy Obamacare’s overpriced policies, the law’s fundamental scheme will fail.

Obamacare’s individual mandate, far from ending free riding in America’s health care system, institutionalizes it on a national scale by force: the old and sick free ride on the young and healthy.

What does this say about Obamacare’s proponents, who continue to claim the opposite? That they think the American people can and must be fooled into accepting their policies. This fact alone should raise serious suspicion about Obamacare.

About The Authors

Rituparna Basu

Rituparna Basu was a researcher and analyst at the Ayn Rand Institute between 2011 and 2016.

Yaron Brook

Chairman of the Board, Ayn Rand Institute