I Looked at My Bill and Realized the Uninsured Can Be Charged 37 Times as Much as the Insured

Healthcare Policy Prescription Number One: Make it illegal for healthcare providers to charge the uninsured more than they charge the insured.

I was uninsured and diagnosed with cancer last year. The experience got me thinking about our healthcare “system” (if it can be called that).

Even before my diagnosis I was in favor of truly universal healthcare, and I think we’ll get there eventually, but that seems politically impossible at the moment. So I’ve been exploring whether smaller changes in the laws, made one-at-time, can cumulatively bring about more affordable (and understandable) healthcare.

I want to present a dozen or more of these healthcare policy prescriptions for consideration, starting with…

A Law to Protect the Uninsured From Price Gouging

More than 12% of adults in the US are uninsured, and the trend is getting worse. Obamacare is being destroyed (fortunately it survived long enough to save me from bankruptcy).

It is also a deeply flawed law. For example, it was entirely foreseeable that some states would not expand Medicaid, yet lawmakers operated on the assumption that all would do so. As a result, millions of people are in the “coverage gap,” meaning they’re too poor to qualify for a Marketplace subsidy but make too much to qualify for Medicaid. That’s a disgrace.

In addition to those in the coverage gap, many choose not to buy insurance because it’s too expensive even with their income-based subsidy. Financial situations are not determined by income level alone, after all.

That was the case for my wife and I for years. Fortunately our income dropped enough to make a Marketplace policy affordable just prior to my diagnosis in late 2017. Unfortunately it would not go into effect until 2018, so I had some tough decisions to make about things like, oh, how long to delay treatment to save a ton of money.

My experiences, before and after I had insurance, gave me some insight into our healthcare system, and the difference in how the insured and tens of millions of uninsured are treated. For example, did you know…

The Uninsured Can Be Charged 37 Times as Much as the Insured

That sounds like something I’m inventing, so I have my insurance “statement of benefits” in front of me to be sure I document this correctly. Here’s one item, part of my chemotherapy treatment on January 23, 2018:

  1. Service Details : Cisplatin 10 Mg Injection
  2. Amount Billed: $752.00
  3. Amount Allowed: $20.06
  4. Paid by Plan: $20.06

Notice that my insurance company negotiated a 97.3% discount.

Now, imagine you’re uninsured and going through cancer treatments. Could you negotiate a 97.3% discount? Would you even think to try? More likely you would simply get billed at a rate 37 times as high as the rate paid by uninsured patients.

Of course I chose an extreme example, but of eleven items paid for by my insurance company for that date, every single one was discounted by at least 50%. The $4,069.00 in total charges for the day were paid in full for $994.91.

The cancer center where I received treatment is a for-profit company, as evidenced by the $808,000 house recently bought by one of the owners (almost everything’s online, you know). As such, I doubt they lose money at the rates paid by insurance companies.

I also doubt that they ever offer 97% discounts to the uninsured. Looking at the insurance company prices on that first benefit statement, I realized that the best prices I negotiated in 2017 (before I had insurance) were probably 50% higher than what my healthcare providers would have received from an insurance company.

And some poor readers probably didn’t even know you should negotiate healthcare charges.

In 1984, at age 20, I spent three days in the hospital and got a large bill. I was working at a fast food place making $3.40 per hour, and I took out a loan on my car so I could get a “huge” 25% discount for paying cash. For 33 years I thought of that as an example of what a good negotiator I was. Now it’s an example of what a sucker I was.

In 2017 my biopsy provider snuck in an extra charge of $1,050 after telling me I had paid in full (which was required at the time of service). I negotiated that bill down to $700, again thinking i was doing good. Had I been insured at the time, I’m guessing my insurance company would have paid $500 or maybe only $300. I was a sucker again.

But enough of the stories. The problem is clear:

Doctors, hospitals, clinics, and other healthcare providers routinely screw the uninsured, charging them the highest rates of all patients.

So what can be done about it?

Make Healthcare Providers Charge the Uninsured the Same Rates as the Insured

It would be a simple law (if there is such a thing). Just make it illegal for a healthcare provider to charge an uninsured patient more than the lowest-reimbursement rate they get from any insurance policy they accept.

Since most healthcare providers make a good profit from the reimbursements paid, and the uninsured are a minority of patients (13%), providers can’t claim they’ll lose too much money if not allowed to gouge the uninsured, who will, after all, pay the same rates.

Nor are many providers likely to stop accepting insurance in order to avoid price limits. Since most people have insurance, providers would give up too much revenue if they refused all insured patients.

Some providers might stop accepting patients whose policies have the lowest reimbursement rates, just as some refuse Medicare and Medicaid patients now. As a result, some insurance companies may have to raise reimbursement rates or try to sell policies with fewer provider options for their customers.

But if this becomes law, and a provider accepts any insurance payments at all, each insurance company will not only be negotiating the rates they pay, but also effectively negotiating on behalf of all uninsured patients, since these patients cannot be charged a higher rate.

The uninsured paying the same as those with health insurance — does that sound in any way unfair to doctors, hospitals, and other healthcare providers?

The Politics of Passing This Law

I generally don’t have a good grasp of “on the ground” politics, but it seems like this law might get some bipartisan support. After all, on the face of it the idea of healthcare providers routinely charging the uninsured 100% to 3,000% more than those who can afford insurance seems not only unfair, but also unnecessary for running a profitable business.

There are undoubtedly some problems I’m overlooking, but below is an example of what the congressional act might look like…

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Summary of the Protect the Uninsured Act

This bill establishes a limit to what healthcare providers who accept insurance can charge patients who pay their own bills (those who do not have health insurance coverage).

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An Act to Stop Price Gouging of Uninsured Persons Seeking Healthcare

Sponsored by ______________________________

Whereas healthcare providers often charge the uninsured much higher rates than those with insurance, which is unnecessary and can be unjust, especially to those who cannot afford to buy health insurance in the first place;

Be It Hereby Enacted by the House of Representatives and Senate in Congress Assembled:

Section 1: SHORT TITLE

This Act may be cited as the “Protect the Uninsured Act.”

Section 2. DEFINITIONS

  1. For the purpose of this bill “insurance” is defined as any payment system in which the health care recipient is not the primary payer.
  2. For the purpose of this bill “healthcare provider” is defined as any person or organization that provides services related to medical conditions and health matters in general.

Section 3. THE MAXIMUM PRICE ALLOWED

  1. This act sets the maximum price a healthcare provider can charge an uninsured patient at the lowest reimbursement rate paid by any insurance policy accepted by that healthcare provider.
  2. If a service is billed at a rate which exceeds this maximum, and the amount billed is not corrected within 14 days, the penalty for each violation of this law shall be $2,000.
  3. If violations of this maximum are intentional, a criminal penalty of one year in prison applies to each person who participated in the decision to charge too much.
  4. This bill will take effect 180 days after passage.

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