Free Tires For All!

I drive a big, hybrid SUV. With two car seats, it’s nice having that third row. I like the hybrid since gas is so expensive here in the Bay Area. But I didn’t realize how heavy the car was. I guess those hybrid batteries add a lot of weight. And being that I’m not a car guy (I probably know less about cars than most Americans know about brain surgery), I didn’t notice how quickly my tires would go bald.

That’s dangerous. Driving on bald tires increases the chance of getting in an accident, and with it, the likelihood of a major insurance payout. Yet my auto insurance doesn’t cover new tires. Clearly that doesn’t make financial sense for them.

Meanwhile, in healthcare, we mandate coverage of “preventive care,” the people version of getting new tires to prevent an accident. Under the Affordable Care Act, insurance plans, whether government-run, employer-sponsored, or purchased on the ACA marketplace, must cover a list of “essential health benefits” with no cost-sharing. These include things like primary care visits, contraception, and cancer screenings.

So what happens when we mandate insurance coverage of preventive care at no cost to the patient?

The first consequence is predictable: overuse. If auto insurance covered free new tires, people would get the best tires available as often as possible. Why not? It’s free. The people who really needed new tires would be stuck in line behind those who just wanted a fresh upgrade. That’s the misallocation you get when you remove price signals.

The same happens in healthcare. Large randomized trials like the RAND Health Insurance Experiment and the Oregon Medicaid study show that when out-of-pocket costs go down, utilization goes up. Healthcare, like tires, is an elastic good. Many people applaud this and say, “Good! More people going to the doctor is a win, right?”

Not necessarily. Neither study found significant improvements in health outcomes. More care doesn’t equal better health. Just like handing out free tires wouldn’t measurably reduce car accidents. This is because there are too many other factors at play. Preventive care without any out-of-pocket cost to the patient doesn’t guarantee population health improvements.

Once a product becomes “free,” someone still has to ration it. Just not the consumer. That job gets outsourced to bureaucracy.

If tires were covered by insurance, you can bet insurers would demand documentation, pre-approvals, and justification for new tire requests. They’d hire claims adjusters to deny excess use. Auto shops would start over-documenting. Sound familiar? That’s healthcare today. With third-party coverage and no pricing mechanism, demand skyrockets. Bureaucracy follows, trying to rein it in through paperwork, prior auths, and formularies. Administrative waste balloons.

Making something free also doesn’t change behavior. I didn’t skip tire replacement because it was expensive. I skipped it because I didn’t realize I needed it. Coverage wouldn’t have helped. Similarly, preventive care has a small, often overstated, effect on health outcomes. Again, it’s not bad, but it’s not the magic bullet it’s made out to be. Diet, exercise, and lifestyle have far greater impacts on individual health than routine office visits.

So who decides what is covered for “free”? Mandating coverage politicizes the system. Once the government decides what qualifies as “essential,” interest groups line up to ensure their services make the cut.

Take colonoscopies. Yes, they can catch cancer early. But there’s legitimate debate about when to start, how frequently to repeat, and which types are appropriate. But specialty societies that benefit from doing colonoscopies publish papers and lobby for expanded coverage. Yes, some of this is science, but a lot is rent-seeking. Policymakers have difficulty telling the difference. Like tire companies arguing for more frequent replacements, providers push for more generous coverage of their services. Central planning invites manipulation.

So how do we promote access without distorting the market or inflating bureaucracy?

Give patients the money and let them decide.

If someone needs financial assistance, offer a cash-equivalent subsidy. That allows individuals and their doctors to choose the preventive services that fit their own risk profiles, values, and preferences. That’s a decentralized, Hayekian model: millions of people making decisions with localized information will have better aggregate outcomes over a one-size-fits-all coverage policy determined by bureaucrats.

Instead of fighting over what’s “essential,” we let price signals and individual choice guide resource allocation. That reduces bureaucracy, empowers patients, and avoids the lobbying arms race. Paradoxically, this could increase access to preventive care because prices would fall, quality would rise, and the services people actually value would flourish in a real market.

Mandating preventive coverage balloons costs. Imagine how much car insurance would cost if it covered new tires. Buyers wouldn’t care about price. Sellers wouldn’t either. Bureaucracy would bloat. Transparency would vanish. Premiums would spike, driving calls for subsidies. After all, car insurance is “essential.”

It’s the same spiral in healthcare. “Free” services become more expensive, just hidden behind pooled premiums, higher deductibles, and government transfers. We have increased the costs, we just socialized them and obscured the true price.

Ultimately, critics of the approach to empower patients instead of bureaucracies fall back on paternalism. They don’t trust patients to make good choices. They assume the only way to ensure proper preventive care is to make it free at the point of use. They treat the American people like children.

Central planners don’t know more about individual risk than a patient and their physician. Government bureaucrats don’t care more about that patient’s health than the patient does. Car insurance that covered tires wouldn’t have prompted me to replace mine any sooner. It wouldn’t have prevented an accident. It only would’ve made the process slower, more frustrating, and more expensive when I actually decided to get new tires.

Let’s stop pretending healthcare is any different.