Hospitals Charge Higher Rates To Uninsured Patients

A Wall Street Journal report revealed that many US hospitals routinely charge top prices to uninsured patients and cash payers. In contrast, patients with health insurance received discounted rates. It turns out that hospitals charge different prices for the exact same service.

As of 2019, there are around 11% of Americans under the age of 65 do not have any form of health insurance. This translates to about 29 million people.

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Uninsured Patients Are Paying More

Previously, hospitals kept their prices confidential, especially pricing differences between different patient types. However, a new federal rule that took effect last January 1 required them to make their prices public.  This allowed patients to compare rates between those with insurance and those without. Over time, cash-paying uninsured patients received the highest charges most often.

In defense of hospitals, many usually offer financial aid. However, policies vary greatly. In addition, patients usually go through hoops to avail any discount. Meanwhile, other hospitals say that they offer patients a chance to sign up for insurance.

Analysis Covered Medical Emergencies

The Journal’s analysis covered a number of emergency services.  It focused on the required procedures that patients need to undergo. This includes procedures like emergency room visits and imaging scans. It also covers emergency procedures like angioplasty or stenting. Heart attacks are one of the most common emergencies among uninsured patients.

The WSJ’s analysis used data from Turquoise Health Co., a pricing-transparency startup. Many outlets have yet to submit data on pricing as required by the government. Instead, the research covered 1,550 hospitals in the Turquoise data. These include hospitals that disclosed information on both insurance and cash-payment rates.

Hospital Findings

Apparently, hospitals bill uninsured patients at their highest rates. About 21% of hospitals billed the highest rates for those without insurance. In 171 of those hospitals, the cash rate was equal to or higher than any rate billed to insurers.

The study reported that uninsured patients' bills are 3.6 times higher compared to others. Specifically, they are higher compared to patients with Medicare Advantage plans. Government usually sets Medicare to cover hospital costs. This makes Medicare rates the de facto baseline. This is the reason why Medicare Advantage plans are often near-standard costs.

Restrictive Financial Aid Policies

Some large regional nonprofits also tend to bill uninsured patients the highest. They also offer the most restrictive financial aid policies. The WSJ report took data from 270 counties with at least two hospitals with published rates. The average difference between the lowest and highest rates for an ER visit is $1,852.

Even when hospitals offered discounts, these won’t appear automatically in the bill. Instead, hospitals will require patients to initiate negotiations, often with lawyers. Only then can prices start to go down. In some cases, uninsured patients can receive up to 85% off their hospital bills only if they applied for it. On average, however, uninsured patients can apply for discounts between 20 to 30%.

Why Are Hospitals Expensive Anyway?

Experts remain baffled by the high cash prices posted by US hospitals. They usually post what they call a sticker price, which often represents the starting point for negotiations with insurance companies. A bigger discount usually goes to big insurance companies that provide a large volume of patients.

Meanwhile, insurance plans offered under government programs like Medicare and Medicaid get even lower rates, Government health insurance rates remain tied to federal and state agencies mandated prices. However, cash payers or those with insurance that doesn’t cover the particular condition often get handed the sticker price.

Watch Peter Centenello explain What's Wrong With US Health Care?

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Do you agree with the healthcare system in the United States that offers different prices for the same procedure? Do you agree that uninsured patients should pay the highest rates?

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