This story is creating a bit of an uproar, and while I understand why, I think it outlines an important question in American culture: If you have an accident, a fire, or other emergency requiring the assistance of first responders, should you get a bill? In Passaic, NJ, they’re answering that question in the affirmative, but with a twist: Rather than going to the people who use the service directly, they’re going to “go after insurance companies” for payment. They say from the outset that they’re not going to go after people who don’t have insurance, leading me to wonder what kind of free-riding they are now encouraging. Mayor Alex Blanco seems to think this shouldn’t affect insurance policy rates, but I wonder if that’s very honest. Asked about the effect on rates, and whether the measure would drive them up, Blanco said “I feel that it would be unethical on their part.” There are certainly ethical questions involved, but the worst of them are not with the insurance companies.
Blanco’s claim is that coverage for such fees is built into most insurances, and whether that’s true, I don’t think it’s unreasonable to expect people to pay when their activities result in a call to emergency services. The bothersome part from my point of view is that it will not be uniformly applied. Leaving an exception for those without insurance seems to me to be an inducement to forgo coverage, but of course, how much is involved? In this case, fees from $600 to $1000 are involved, and that’s a large expense to anybody who’s just suffered a loss of some sort. The idea of exempting some people on the basis of a lack of coverage is the problem.
The fact that one person insures his or her assets, while another refuses to do so shouldn’t be a determining factor in whether to charge. This puts the city in the position of acting as another re-distributor of wealth. If the city determines that a charge of $600 to $1000 is appropriate, there should not be differentiation in this manner. What the city is doing in this case is to go after the easy targets, and I think that’s fundamentally unfair. They’re going after insurance companies of those who are insured, because the insurance company is stuck, and the invoices will be paid, but it would not be so easy to collect from those without insurance, so they’re essentially saying they won’t even bother to attempt collection.
I understand that we can feel compassion in various situations for people who have had a run of bad luck, or had bad things happen to them, but the problem here is that the compassion is too selective, and looks like discrimination. If they went after everybody, irrespective of insurance status, perhaps the amount they charged per incident could be lower, meaning they would be hitting insurance companies for less, and therefore reducing the impact on policy owners via their rates.
Instead, what the city of Passaic has done is cause a cost-shifting to occur, and I believe that’s fundamentally wrong. It happens in two ways: First, they will likely bill insurance companies more than an incident actually costs in many cases, and this means the insured are paying for the uninsured. Second, even if the fees here are representative of the actual costs, and there’s no padding in them to cover the uninsured calls for service, then the residents who pay taxes are basically gifting the amount to the uninsured. Either way, and it’s probably a little of both, what is happening is to shift the burden in what becomes a redistributive scheme.
I don’t mind the idea of charging, because in point of fact, to do otherwise is to impose the whole cost of every instance on tax-payers. Some will argue they pay for that already through their taxes, but that’s not always the case. Very often, what revenues come in through the taxes is enough to cover the expense of maintaining a fire department’s existence, but not nearly enough to cover the costs of all the calls to which they respond. As more cities around the country find themselves in budgetary difficulties, I expect this to spread, and I’m not opposed to it, but I would argue that there should be no free-riders, and that those who have insurance or pay taxes shouldn’t be forced to eat the costs for the uninsured.
I think we do far too much of that sort of redistribution as it is. Let’s not add another layer to this problem. One would think we’d learn something from our health-care funding problems, but it appears we have not. Redistribution of costs from the irresponsible to the responsible doesn’t improve the situation because it merely encourages more irresponsibility. Isn’t it high time were learned that lesson?