The free rider problem is prevalent in the public healthcare industry. This, is especially, because there are people who do not want to pay for services and medication rendered. The costs of healthcare deliver and innovation lean heavily and strain those that pay for them. Medication, for instance, is considered as a non-excludable public good, meaning that it is impossible for one payer to exclude others from accessing it. The free-rider syndrome then leads to under-funding in health innovation and under-provision of medication.
The free rider syndrome is a hindrance in the implementation of Health Information Technology (HIT). The US government has invested heavily towards the adoption of Electronic Health Records (EHR) by healthcare providers. While EHR could reduce the cost of healthcare, its adoption is drawn back by the problem of free riders. Marlow (2017) questions whether the government is wise in subsidizing the implementation of EHR. In the scenario that everyone would pay for healthcare, without free-riding, the government would not need to rush innovation in EHR implementation. Marlow (2017) observes that government subsidies have led to immature technology development in healthcare. The article proposes that the free riders problem be suppressed so that innovation is not under-funded, neither is it rushed (Marlow, 2017).
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Additionally, the free rider problem is prominent in health insurance. The syndrome is cultivated by the disaggregated nature of the US health insurance system in which patients have multiple health plans to shift across. Free riders reduce the value of health insurance by raising costs and as such, there are meagre incentives to encourage investment in the industry (Basu, 2015). Basu (2015) proposes that in order to minimize the problem of free riders, a new health currency be created.
References
Basu, A. (2015). Financing cures in the United States. Expert Review of Pharmacoeconomics & Outcomes Research, 15 , (1) 1-4. https://doi.org/10.1586/14737167.2015.990887
Marlow, M. L. (2017). Should government subsidize Electronic Health Records?. Mercatus Working Paper.
