Hospitals in America are charging uninsured patients about 2.5 times more than rates paid by health insurance companies, reports a study in the May-June issue of the Health Affairs journal . The study found that for every $100 in Medicare-allowed costs, the uninsured patient was charged an average of $307.
“Over time, the uninsured have been paying higher and higher prices for hospital care compared to what the insured population pays,” says Gerald Anderson, the study’s author. Anderson calls the price markup “unjustifiable.”
Hospital mark-up rates varied state-by-state. California, New Jersey, and Pennsylvania had the highest rate of mark-up (about four times the Medicare-allowed costs). Idaho, Maryland, Montana, Vermont, and Wyoming had the lowest rates (about twice what Medicare allows). Predictably, for-profit hospitals had a higher mark-up rate than their non-profit counterparts.
The problem, according to the study, is the inability of uninsured patients to negotiate the prices of their care. Hospitals set rates for patient care on a list called a “Chargemaster.” Insurance companies are able to negotiate the prices down when contracting with hospitals, but individuals who do not have health insurance are unable to do so. Many believe that the hospitals inflate prices on the Chargemaster in anticipation of the fact they will come down during negotiations.
According to the American College of Emergency Physicians, about 46 million Americans are uninsured. Of those, about 80% are both unable to afford health insurance and ineligible for public programs.
There are currently about 60 class action lawsuits pending on behalf of uninsured patients for this overcharging. The American Hospital Association (AHA) has enacted a voluntary policy for poor and uninsured patients, but it is unclear how many of the 5,000 hospitals that AHA represents have adopted the policy.
To read the article’s abstract, click here .