Study Claims Hospitals Charge 2.5X for the Uninsured

[Pew pew pew]

From this article...

U.S. hospitals are charging uninsured patients about two-and-a-half times more than those with health insurance, a mark-up that has been steadily rising despite pressure to level prices, a study released on Tuesday found.

In 2004, the most recent year for which data was available, hospital patients without health insurance and others who pay for medical care out of their own pockets were charged an average 2.57 times more than those with health insurance, according to the study published in the May-June issue of the journal Health Affairs.

...

The American Hospital Association (AHA), which represents most of the nation's 5,000 or so hospitals, said the report was out-of-date and methodologically flawed.

...

Hospitals set rates based on a list called the chargemaster, which is generally believed to inflate prices substantially, in the belief that prices will come down during a negotiation process.

For-profit hospitals had the highest discrepancy between costs estimated by Medicare and prices charged, the study found.

[SomeKid]

The report is flawed.

I had a test done, saw the bill they sent the insurance company. When insurance refused to pay anything, the hospital charged me substantially LESS.

Also, in clinicals I have seen how they bill other people. I never saw anything resembling what you posted PP.

[The Rabbi]

The report is flawed.

I had a test done, saw the bill they sent the insurance company. When insurance refused to pay anything, the hospital charged me substantially LESS.

Also, in clinicals I have seen how they bill other people. I never saw anything resembling what you posted PP.

This may shock you, but just because you have anecdotal evidence that appears to contradict the study doesnt mean the study is flawed.

I could easily believe it.  They charge so much because their chances of collecting anything become infinitessimal once there is no 3rd party payer.

[grampster]

After being in the insurance business for 37 years, I can assure you that insurance companies pay more than people who pay cash.

In Michigan, if you are injured in an auto accident the insurance company pays about 175% of the actual cost.  This is because uninsured people who go to emergency rooms rarely pay and must, by law, be treated. 

In a lawsuit several years ago, AAA Michigan challenged this inequity.  The basis of the argument was that Michigan's unlimited medical coverage provided through the No-Fault law was being used as a social institution to pay the costs the medical community incurs because of unreimburesed costs from uninsured e room walk ins.

The court held for the medical community.  The following year there was a ballot question asking the voting public to amend the No Fault law to provide for a "schedule of benefits", to stabilize and equalize costs/billings.  That failed as well.

If there is indeed a study as related in the OP, then I would submit it has been skewed, perhaps because there are many who would like to see socialized medicine, and these stats have been altered to support that ax that is being ground.

[allmons]

Hospitals charge 2.5 times their cost to OFFSET the losses incurred by caring for the uninsured. Every hospital in this country will give you a discount if you pay your bill. Originally it was 3%, per Medicare / Medicaid guidelines, but most hospitals charge 2.5 now. At least $10 of every $100 you are billed goes to pay for those who can't - or won't - pay. The cost of illegals alone is in the hundreds of millions of dollars for US hospitals.

I firmly believe that the US should sue Mexico for reimbursement of health care costs.

[Paddy]

What hospitals charge has no relevance to what they expect to be paid.  They typically charge 2.5-4x what they actually collect, and they know in advance they won't collect anywhere near what they charge.  It's a huge game between providers and insurance companies. 

[SomeKid]

The report is flawed.

I had a test done, saw the bill they sent the insurance company. When insurance refused to pay anything, the hospital charged me substantially LESS.

Also, in clinicals I have seen how they bill other people. I never saw anything resembling what you posted PP.

This may shock you, but just because you have anecdotal evidence that appears to contradict the study doesnt mean the study is flawed.

I could easily believe it.  They charge so much because their chances of collecting anything become infinitessimal once there is no 3rd party payer.

I was not just noting my experience as a customer, I noted what I saw when I looked at what the case managers had. But go ahead and right me off, and the insurance guy who posted after you. He is probably just worthless anecdotal evidence as well; ignore us all, we contradict your study which you agree with and must therefore be right.

[De Selby]

I'm amazed at how easily the public has bought the insurance companies' line on this issue.

It's an industry that's highly regulated with very little competition.  It's almost routine to find out that a medical insurance company is actually a giant scam-for medicare or some other government program, or that the officers are just plain raiding the corporate chest.

I can buy a plane ticket to Singapore, a month's hotel stay and food, and a surgery for about 20 percent of what I'd pay for just the surgery in America, more or less. 

You don't have to want an incompetently run socialist system to recognize that the health insurance/health care provision industry in this country is deeply flawed.  We get higher prices and longer wait times than many socialist medicine system states-tell me how you can reconcile that with the view that this is all the fault of the masses of uninsureds.

[The Rabbi]

The report is flawed.

I had a test done, saw the bill they sent the insurance company. When insurance refused to pay anything, the hospital charged me substantially LESS.

Also, in clinicals I have seen how they bill other people. I never saw anything resembling what you posted PP.

This may shock you, but just because you have anecdotal evidence that appears to contradict the study doesnt mean the study is flawed.

I could easily believe it.  They charge so much because their chances of collecting anything become infinitessimal once there is no 3rd party payer.

I was not just noting my experience as a customer, I noted what I saw when I looked at what the case managers had. But go ahead and right me off, and the insurance guy who posted after you. He is probably just worthless anecdotal evidence as well; ignore us all, we contradict your study which you agree with and must therefore be right.

Go back and read the OP carefully.  What Grampster wrote doesnt contradict the report.  If you insist your personal experience is more relevant than a report then I'll "right" (sic) you off.
There is an obvious difference between what is billed and what is actually collected.

[onions!]

There is an obvious difference between what is billed and what is actually collected.

Isn't that the truth.When I looked over the insurance summation of my knee surgery last year I saw that my insurance payed about 80ish% of what they were billed.I did notice that they paid $28 for a pair of Tylenol though.

[ilbob]

It is somewhat like the "rack" rate that hotels posts in rooms. It is rare that anyone pays anywhere near that rate to rent a room.

[The Rabbi]

Yup.When my son was born last year insurance didnt cover it.  We got a bill from the hospital for iirc $12000.  By the time they were done discounting it (uninsured, so much, pay it all at one time, so much etc) it was about $5,000.
I would love to see the charge-off rate between what is originally billed and what they actually collect.  I'll bet it's enormous.

[K Frame]

The report is flawed.

I had a test done, saw the bill they sent the insurance company. When insurance refused to pay anything, the hospital charged me substantially LESS.

Also, in clinicals I have seen how they bill other people. I never saw anything resembling what you posted PP.

I'm not sure how your situation is applicable to what is being described.

You HAVE insurance; your insurance just wouldn't pay for the procedure.

The study is referencing people who have no form of health insurance at all.

[SomeKid]

Some people think my situation did not apply, let me quote the OP:

In 2004, the most recent year for which data was available, hospital patients without health insurance and others who pay for medical care out of their own pockets were charged an average 2.57 times more than those with health insurance, according to the study published in the May-June issue of the journal Health Affairs.

...and you people tell me I am not paying attention to the OP (looking square at the Jewish spelling Nazi)...

Mike,

I was pointing out that hospitals do not charge more for those who are paying out of pocket. Being uninsured or having your insurance refuse to pay is essentially the same thing.

If the report had stated that hospitals charge more to insurance companies than uninsured/out of pocket payers, it would be accurate.

My clinical experience was even more relevant, I saw the charts they have. It is a fact they charge insurance companies more because insurance companies don't pay 100%.



Re-reading this thread reminds me of the gun threads on DU. The leftists who have their minds made up have no problem chiming in about how bad the current situation is, and how big medicine/big insurance are screwing the common man, even when nobody is getting screwed.

[K Frame]

My point is that you submitted it THROUGH your insurance first.

You did NOT pay for the procedure out of your own pocket by bypassing your insurance entirely. That's what this phrase means (at least what I interpret it to mean): "others who pay for medical care out of their own pockets..."

Once again, the study as it is laid out does not apply to your situation since you ran the bill through your insurance company first. That triggers an entirely different kind of record keeping at the hospital level as you noted.

However, I was NOT commenting on that aspect, nor am I commenting on the claim that billing practices are different depending on the patient's insurance status. What I AM commenting on, once again, is the fact that by giving your insurance information to the health care provider as the "first bill" instead of you assuming full cost & liability yourself, you triggered a set of events that was not addressed by this study.

Once again, your situation is not applicable to the study.

You're right, this is like gun threads on DU, where people attempt to read FAR more into a comment than is actually intended. Mirror time, kid.

[SomeKid]

Mike,

Paying out of pocket and being uninsured are *not* the same thing.

Think of it this way, an uninsured person will always pay out of pocket, but paying out of pocket does not mean you are uninsured. When my insurance company declined to pay, I paid out of pocket.


Ok, I re-evaluated what I said Mike. (Never say I cannot look in the mirror.) Maybe, just maybe I am explaining it poorly. Let me try again.

The hospital charges an insurance company MORE than they charge a person. When I received my bill, (and I cannot find it, so I may not be exact) it had a discount labeled "Self-Pay deduction". It was roughly half the insurance charge. If I had no insurance, I would have received that bill, the same as even though I was insured. Hospitals do not try to screw people w/o insurance, as this study claims.

I saw the billing charts for everyone on the unit. They all had the same design, insurance gets charged more. On patients w/o insurance, they always charged less.

The study is flat wrong. Period.

[auschip]

Interestingly enough, the study reflects my and my wives experience as well.  Wife has major back surgery, we have insurance, but because of a technical foulup the computer billed us first.  I called and explained we shouldn't have received bill, and gave them insurance info.  The insurance company sends me a copy of everything they pay.  In this case, the insurance company had pre negotiated a maximum they would pay for a procedure, which based on the itemized bill they originally had sent me, was much lower (in my situation it was around half). 

Admitedly, this is anecdotal information only, but to say they were "Flat wrong.  Period." Would be incorrect, as it was the case in my situation.

[The Rabbi]

Admitedly, this is anecdotal information only, but to say they were "Flat wrong.  Period." Would be incorrect, as it was the case in my situation.

It is anecdotal, but it squares with what everyone else, save one, has reported here, including me.
When I get medical treatment I get a benefit statement ("BS") from Blue Cross.  The BS lays out what the provider charged and what the actual rate negotiated by Blue Cross is.  The Blue Cross rate is always lower, even though I end up paying it myself out of pocket.
And fwiw, the word "right" was spelled correctly.  It just wasnt the correct word, which would have been "write."  So when I see that inattention to detail, right off I'll write off.

[K Frame]

Once again, you're still not grasping what I'm saying.

By attempting to have your insurance pay the bill first, you are entered into the hospital's billing system as an INSURED patient.

At that point you now no longer have have any conceptual clue how you would have been billed had you walked up to the hospital and said either "I don't have insurance" or "I'll be paying this out of my own pocket."

For the fourth time, YOUR EXPERIENCE IS NOT APPLICABLE TO THE BASIS OF THE STUDY.



Your experience occurred at ONE hospital. There are, IIRC, roughly 6,000 individual hospitals in the United States.

Your experience with ONE hospital's billing practices do not make you an expert in what happens at hospitals across the United States.

You cannot, with any degree of surety or truthfulness, say that your experience with the billing practices at, for example, Holy Spirit Hospital in Central Pennsylvania would, could, or should be directly related to the billing practices at Baptist Medical Center in San Antonio, Texas.

[SomeKid]

Mike,

You still aren't grasping what I am saying.

Regardless, short of showing you the chart (which I cannot do), having a hospital case manager sit down and explain it all to you like she did with me (again, something I cannot do and which took more than a few minutes); I see no further way to explain it to you or the rest of the posters here.

Let the bashing continue. Hospitals, insurance companies, and all of us healthcare (or soon to be in my case) workers are obviously simply out to scam everyone as hard as we can! (All the while, having bad grammar for the Rabbi to play with.)

[The Rabbi]

I think you've utterly failed to address Mike's points, or even comprehend what he writes.

[Paddy]

somekid, you said:

I had a test done, saw the bill they sent the insurance company. When insurance refused to pay anything, the hospital charged me substantially LESS.

which is exactly what everyone else is saying, and is consistent with the report.

The bill sent to the insurance company was more than you ultimately paid.  It was also more than the insurance company would have paid, had the tests been covered.  You were not "uninsured".  Had you been uninsured, you would have paid more than you did.  Being uninsured is different than your insurance not covering this or that or the other thing. Insurance doesn't automatically pay everything.  Providers (doctors, hospitals, labs) have agreements with various insurers to accept specific amounts for specific services.  The amount you paid is probably the same amount the insurer would have paid had the tests been covered, per the agreement.

[thebaldguy]

Health insurance companies pay less. They buy health care in bulk. If you walked into a hospital and paid out of your own pocket, you would pay more than an insurance company.

[nico]

I can't speak about medicine, but I know of a lot of dental practices where the normal fee schedule (list of fees for any given procedure) is higher than the fee schedule for insurance companies.  As someone mentioned, the way a lot of insurance companies work (specifically HMOs and PPOs) is as follows: in participating with a given company, you (the doctor) agree to accept their fees, and agree not to offer procedures to their patients that aren't on the fee schedule (ie: if a patient needs a root canal, but the insurance doesn't cover root canals, you can't alert the patient to that fact).  You then get what's called a capitation fee for every person who lists you as their primary provider (usually ~$2-3/month), and a co-pay from the patient whenever they come in (~$5-20).  The capitation fee is supposed to cover "routine" procedures (cleanings every 6 months, etc.). 

This system is supposed to discourage over-treatment.  In reality, a lot of fee schedules are so ridiculously low (some fee schedules dictate lower prices than the doctor's materials costs or lab fees) that every time a patient who participates in that plan comes in, you lose money, thereby encouraging under-treatment and other (often unethical) cost-cutting methods.  A lot of doctors deal with this by some combination of under-treating those patients and/or using cheaper, lower quality materials or cheaper labs that do poorer work (which is all unethical).  Most doctors compensate for this by setting their standard fee schedule (ie: the fees that people without insurance pay) at higher prices. 

This is all based on my dad's (who is a dentist) experience working for other people and in opening his own practice.  Practices he's seen/worked in that accept a lot of HMOs have substantially higher fee schedules and tend to have cheaper, lower quality equipment than practices that don't.  In his practice, he accepts a handful of insurance plans, a few PPOs, and no HMOs.  His fee schedule is lower than a lot of others and he can do work to his own standards without worrying about losing money in the process. 

[MillCreek]

Another comment on the methodology of this study: http://www.healthcarebs.com/2007/05/09/hospitals-overcharging-the-uninsured-it%e2%80%99s-bs/