Posted by Bill Sandweg on 01 November 2021.
The way in which hospitals bill their patients is a sin. It ought to be against the law, but it is not. Hospitals can charge whatever they want for a medical procedure and often do. Some studies have found that even the hospitals themselves don’t know how much it costs them to perform a procedure; they just pull numbers out of the air. That is not a sound way to run a business but is not far off from normal in the convoluted world of American health care.
Until recently, hospitals kept their prices a secret. Obviously, if prices were secret, there could not be any price competition between hospitals. Hospitals wanted their prices secret so they could continue to charge patients whatever they wanted. After years of lobbying by patient rights groups, the Trump Administration issued an order requiring all hospitals to list their prices on line. The price list had to be easy for the public to find. While some hospitals have complied and listed their prices, others have either ignored the order completely or have hidden their prices on line in ways that make it almost impossible for the public to find them.
Not only do hospitals get to make up whatever price they choose, they don’t charge everyone the same price, even for the exact same procedure. What you pay depends not only on whether you have health insurance but on what prices your health insurance negotiated with the hospital. Some health insurers get a better price discount than others. Some health insurers agree to pay more for Procedure X in return for the hospital giving them a lower price on Procedure Y. This can be a real problem, if you are one of that company’s insureds and are in the hospital for Procedure X. On top of all that, in some crazy cases, you may pay more if you have health insurance than if you had no insurance and were paying the hospital bill out of your own pocket.
For many years now, reporters at the Wall Street Journal have been investigating health care pricing and reporting on its effects on the American public. They have been doing a great job shining light on an important topic that the big hospital chains would prefer remain shrouded in mystery. Last week they ran a story about a couple who were financially ruined by hospital billings, despite the fact that they had health insurance.
There are two parts to the tragedy that befell this hard-working, older couple. The first is the arbitrary manner in which hospitals choose to bill their patients. The second is that this couple had to pay these bills in the first place. We remain the only industrialized nation in the world that does not provide universal health coverage to its citizens. We pay the most of anyone for health care and get less for our money than almost anyone else. Why should hard-working Americans run the risk that a health issue will ruin them financially? Even people who do everything right can be and are being financially ruined. We can afford billions for questionable government programs but not afford to take care of our own people?
Our lack of universal health coverage is the result of the enormous amounts of money that flow through our health care system. Hospital chains get some of those billions. Health insurers get some of those billions. Big Pharma gets some of those billions. Physicians get some of those billions. Not surprisingly, none of those who are raking in billions from the status quo in the health care industry want to see any meaningful reform. They contribute to politicians and have armies of lobbyists to remind the politicians about the source of their campaign contributions. So here we sit, year after year, watching good Americans get ruined financially because the big businesses that benefit from the status quo want to keep feeding at the trough.
The couple who were the subject of the Wall Street Journal story ran up large bills when the wife was diagnosed with cervical cancer and had to undergo expensive, if ultimately futile, treatment. If they had been with a different health insurer, what they had to pay out of pocket would have been less. Had their health insurer done a better job of negotiating, the amount they had to pay would have been less. Had they gone to a different hospital, the amount they had to pay would probably have been less. Sometimes there are huge differences in pricing between hospitals only a few miles apart but, without knowing how much different hospitals charge, patients cannot choose to go to the lower price hospital, even though in some instances the lower price hospital may provide a higher quality of care.
One example of the random and irrational effects of the insurance and hospital billing procedures involving this couple came when the wife needed a PET scan. Her health insurer had negotiated a rate for those customers it covered for PET scans of $1,497.00. However, because it was exempt from the provisions of the Affordable Care Act, the insurer refused to cover the wife’s PET scan and the couple were left to pay for it on their own. The hospital charged them its full price, which was $8,451, a charge which was one of the highest the Journal found for PET scans in the United States.
Not only are we at the mercy of fate in terms of what diseases we get and when, we are at the mercy of fate in what our local hospital decides to charge for the medical procedures we need. This insanity needs to end.
