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Pinning down cost shifting in health care

By Jason Sagall
web posted October 17, 2011

On August 18, the Atlanta-based Eleventh Circuit Court of Appeals found the Affordable Care Act's mandatory insurance provision unconstitutional by a vote of 2-1. The dissenting judge, Stanley Marcus, while maintaining that the mandate for Americans to buy health insurance or pay a penalty is constitutional, went further to commend Congress for addressing the "substantial economic problem" of "cost shifting."

"Cost shifting" in the legitimate sense refers to the causal effect on the market when health care service providers or insurers find ways to compensate for losses when consumers do not pay their bills. But "cost shifting" in the pejorative sense that Obamacare supporters use the term has the purpose of conjuring blame on anyone who--from the outset--does not put his funds into a health insurance policy and thus does not make them available in an insurance pool to serve others' immediate economic needs.

These same critics do not confer any credit to consumers for positive economic "cost shifting" as they spend their earnings in other markets. But that is incidental in the hypocrisy.

The Emergency Medical Treatment and Active Labor Act requires hospitals to provide emergency services regardless of citizenship, legal status or whether patients have insurance or the ability to pay. Yet the same political mentality behind that 1986 law screams bloody murder today over the reported (according to 2009 figures) 1.8 percent shift in costs attributed to individuals who obtained health care services but did not pay for them.

What portion of that 1.8 percent was sanctioned and enabled by the existing law?

What is any entitlement program if not the shifting "from each according to his ability, to each according to his need?"

From its "shared responsibility payment" to its "guaranteed issue" provision, Obamacare is cost shifting by design. It is the destruction of individual accountability--not its achievement, as President Barack Obama would have us believe.

When push comes to shove, as it did in the way Obamacare was passed, those who push for socialized medicine do not argue for it on the grounds of economic necessity or political right or self-sufficiency. Ultimately, they try to shove it down the throats of Americans based on an untenable moral ideal of self- sacrifice of the individual to the collective--an ideal antithetical to the wisdom and forethought of America's founders and the limits they built into the U.S. Constitution.

A person exercises his freedom of choice to refrain, wisely or not, from buying health insurance. He has an intrinsic and constitutional right to be left alone, and an obligation to pay for the goods and services he consumes, if and when he does so, with or without insurance. The only "shifting" caused by a person who lives under that premise exists in the minds of entitlement seekers or their political representatives. It takes a detachment from causality and a perverse sense of poetic injustice to construe those who refrain from "economic activity" in a particular market as depriving others of their needs and rights.

Americans should pin the blame for cost shifting on government for institutionalizing it, and then work on real reform. ESR

Jason Sagall is an analyst with Americans for Free Choice in Medicine. Copyright © 2011 Americans for Free Choice in Medicine. All rights reserved.


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