For every visit for any health care, there is an administrative component. People who self pay cost more (not your SIL in particular, just people in her situation in general) in terms of the paper work required. That increased administrative cost affects all of us, because it increases the administrative load for the health care provider, and those administrative costs tend to be spread out across the entire patient base.
People who pay for their own care, it seems to me, are more likely to delay that first visit longer than those with insurance. So they are worse off when they first enter the health care system, and thus more costly.
People who are insured may not necessarily change this habit, just because they have insurance. They still, it turns out, delay getting care in the first place. For example, people who get Medicaid still tend to enter the health system through an ER, which is the most expensive way to do it. Therefore, they need to be trained in the proper use of the system. That includes learning how to identify a primary care physician, and learning that it is much better to go to the pcp first instead of going to the ER first.
The lost productivity does cost me something, but it is invisible to most people because it is an opportunity cost, and most people think that doesn’t make sense. It is the same thing as if we invest in the military, we get much less back than if we invest in any other sector of the economy. Fewer people get jobs and less money is circulated.
There is always the possibility that, had your SIL had health insurance (this is purely hypothetical), she would not have been sick as long and she would have gotten an education and a job in some lab and gene sequenced an antidote that could fight off multiple flus. Again, I’m not talking about your SIL in particular, but of people in a similar situation in general.
What you are missing is the interconnectedness of people and what people do in their private lives does have an effect on others. Let me give you an example. Most people believe that property rights should be absolute, right? It’s your property, and you can do what you want with it. So you start making some product that pollutes the stream in your back yard that runs into my back yard and kills all my cattle who drink from the stream.
There are many more scenarios like that that are much less obvious; the impact of poor health and lack of access to health care is one of those cases. The poor health of anyone costs me money through what is called “cost-shifting.” Medicaid does not pay the full cost of health care, so hospitals charge insured patients more to make up for that. People who “self-pay” cost more because they are less likely to pay in full, so those costs get shifted onto all of us who are insured. Your SIL may pay up her bill, but that is rare. Most people without insurance are without insurance because they can’t afford it. And even with your SIL, you help her pay her bill (I think you said that). Where would she be without your help? It is better that no one should have to worry about paying for health care.
People get better care if they don’t have to worry about paying for it. Having insurance allows us to teach people how to take care of themselves better. It allows for more preventive care. Our current system, and the system we’re discussing both do not deal with this problem. There will still be all kinds of cost-shifting. It’s be even worse if we continue to allow people to not pay into the system while still receiving health care.
Your SIL may not be a free rider, but many others doing her job are. We all pay for that because the cost of unpaid for care is shifted onto those who do pay for care, especially onto those with “Cadillac” plans.
There are only two ways this can work and one is clearly more humane. We can force everyone to pay for health insurance and then provide insurance to everyone. On the other hand, we could drop the requirement for hospitals to serve everyone, thus allowing them to turn away those who can not pay, and then we can allow the free market to work. Insurance only works if you only have to pay for the people you insure. Right now, we are forced to pay for care for everyone, whether or not they are insured. Remove that mandate or insure everyone. Those are the only two ways we can eliminate the inefficiencies and cost-shifting that are endemic in our system. At least, the only two ways I know of.