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Health Insurance Marketplace: Is there a ‘Free Rider’ Problem?

Posted on October 29, 2012 by admin

Eight million people enrolled in the health insurance marketplace its first year. This was a figure commonly tossed around in early 2013. On August 15, Administrator for the Centers of Medicare and Medicaid Services Marilyn Tavenner revised that statement, revealing that the real number of enrollees in the Marketplace was 7.3 million.

Many believed the discrepancy to be the result of citizens applying for health insurance twice, as a mistake. Oversight Committee Chairman Darrell Issa, R-California, had a different idea. He said he believed that the 700,000 Americans who were no longer insured through the Health Insurance Marketplace had more sinister motivations.

“They basically got a free ride. 700,000 people got a free ride,” Issa stated.

He is referring to the three-month free insurance policy that was offered by Healthcare.gov when you enrolled. Without any investigation whatsoever, he accused this impressive sum of enrollees with dishonesty.

Everyone is entitled to their opinion, including the Oversight Committee Chairman. No matter how Issa’s statement is perceived, it does pose an interesting question as the Affordable Care Act approaches the beginning of its second enrollment cycle: Is this free, three-month coverage promotion actually a problem?

There is no downside to a complimentary three months of health insurance if you are the recipient, especially if a patient uses it to see one or multiple doctors during this time. So there is reason to believe that Issa’s hypothesis has weight to it. While that is not to say the occurrence of this situation is a certainty, the government should consider taking action that would do away with this problem.

Given that health insurance is required in the United States under the Affordable Care Act, there is no reason to provide this loophole. If anything, some might perceive its existence as encouraging citizens to exploit the system.

Whether it involves revoking free insurance altogether and simply offering discounted rates, or asking for a credit card number upfront and eliminating any option to remove payment information after enrolling, this could prove to be a problem for years to come if the federal government does not address the issue sooner than later.