Uninsured patients are billed on average 2.5 times more than insured patients and 3 times more than Medicare patients for hospital care, according to a new study published in Health Affairs. Professor Gerard F. Anderson of the Johns Hopkins Bloomberg School of Public Health writes: “Fifty years ago the poor and uninsured were often charged the lowest prices for medical services.” Today this pricing policy is reversed, and the gaps are widening from what they were in the mid-1980s.
The five states with the highest markups were New Jersey, Pennsylvania, California, Alabama, and Nevada. Gov. Arnold Schwarzenegger’s office issued a statement from California’s director of health and human services Kim Belshé in response to the study yesterday:
The trend is clear. What we have seen in the last twenty years is extraordinary growth in hospital costs for treating the uninsured. And all insured Californians have been bearing the costs of unpaid hospital bills. The Governor is focused on health care reform that guarantees coverage for all to put an end to the hidden tax associated with unpaid medical bills.
Hospital groups have been quick to criticize the study as dated. Survey data are from 2004. USA Today quotes an American Hospital Association representative:
‘Unfortunately, the study is really out of date. Hospitals have really made changes,’ says Carmela Coyle, senior vice president for policy at the AHA. ‘The serious problem is that we have more people who can’t pay for the care they need.’
The LA Times quotes the California Hospital Association:
Since 2004, hospitals have provided billions of dollars in free and discounted care for the uninsured and have changed their billing practices to lighten the burden on the uninsured, said Jan Emerson, a spokeswoman for the California Hospital Assn., a trade group. In California, a law that went into effect this year requires hospitals to offer discounts to uninsured patients who earn as much as 350% of the federal poverty income level, about $70,000 for a family of four.
The study in Health Affairs also noted that despite their efforts, few hospitals actually recoup the full charge amount from patients. In 2004, for every $100 hospitals charged, they collected $39.
Updated comments from the blogosphere: Wall Street Journal’s Health Blog asks: Are hospitals charities, cheapskates, or both? They spoke with study author Jerry Anderson.
“Anderson tells the Health Blog that from the point of view that matters most to patients, hospitals’ “ratio of charges to costs has just gone up and up and up.” Crunching Medicare data from 2004, Anderson found that hospitals have been raising their list prices an average of 10.7% a year since the mid-1980s; Medicare rates – a proxy for actual costs – have gone up more slowly, at about 6.3%.”
Kevin, MD Weblog says hospitals are “caught between a rock and a hard place” on pricing.