Patients in Cook County without health insurance are expected to pay more than double what those with coverage pay for hospital medical care, according to a study set for release this week in Chicago by the nation’s largest union of health-care workers.
The new data underscores the plight of the uninsured. It shows that people who are least able to pay for medical care are at an even greater disadvantage than those with coverage, say the study’s sponsors, the Service Employees International Union, which recently launched the Chicago-based Hospital Accountability Project.
Because the uninsured do not have the leverage of a large health insurer negotiating their rates, they are left to pay full charges, something akin to a sticker price on a new car.
For example, patients without health insurance were charged $12,240 per hospital inpatient discharge on average in 2001, compared with $4,930 for patients who were covered by health plans that had negotiated discounts, according to the study of 49 hospitals in Cook County.
The union compared charges of self-paying uninsured patients to rates of local private insurers. The union would not disclose the names of the insurers used in its study.
This large disparity in pricing is a typical hospital industry business practice. But the practice is gaining more attention from consumer advocates and health policymakers as the number of Americans without health insurance climbs again amid poor economic conditions and rising unemployment.
Although the study focuses on financial data from Cook County hospitals, the union says the practice is a national problem affecting potentially millions of Americans.
The number of uninsured Americans is estimated at 41.2 million, or 14.6 percent of the U.S. population. In Illinois, about 1.7 million residents, or 13.7 percent, have no insurance, according to the most recent U.S. Census Bureau figures.
“The study demonstrates a fundamental contradiction in the health-care system, and it is basically price gouging of the working poor,” said Joseph Geevarghese, director of the union’s hospital accountability project. “It is morally upside down because those that are least able to pay are required to pay the most.”
Hospitals, however, say most medical bills of the uninsured are written off as bad debt. The industry points to the dramatic increase in the amount of bad debt hospitals write off every year in large part due to the rising number of uninsured.
“Hospitals have to make an effort to collect what is owed them and some hospitals use collection agencies, but at some point they just write it off,” said Rick Wade, senior vice president of the Chicago-based American Hospital Association.
“You put up a set of charges for a bill that represents the cost of delivering the care. The self-pay patient gets a bill that reflects the actual cost of delivering the care, but what the hospital and the individual often agree for the patient to pay is often far less than the actual amount of the bill,” he said.
But the study’s sponsors say there are an increasing number of examples in which hospitals demand that self-paying patients pay full charges.
Take Maria Martinez of Chicago, who said she is fighting a court battle with Advocate Illinois Masonic Medical Center over $14,611 in charges for her three-day hospital stay at the North Side hospital in May of last year.
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Had her medical care been covered by an insurance company, she would have been expected to pay only $4,340, according to the union’s analysis.
Demanding payment
But Martinez and her husband, Luis, claim the hospital is demanding payment of the full charges.
“They sent collection letters and everything,” said Luis Martinez. “They wanted their money, the whole money. I would say it’s an abuse of the system and I think it is also an abusive way of charging,” he said.
Advocate would not comment on the case involving Martinez, but said it makes efforts to work with patients to pay their bills.
“When there are individuals who have unpaid bills, we have financial counselors who work with the individuals to attempt to work a reasonable way for those bills to be paid,” said Dan Parker, spokesman for Advocate Health Care, parent of Illinois Masonic.
Advocate said its commitment to the uninsured is growing and denies it is singling out certain patients who cannot pay.
Advocate projects that it will spend $50.8 million on charity care this year, an increase of 16 percent from $43.8 million. In addition, last year Advocate had $139.8 million in bad debt expenses and that number is likely to grow.
Cuts in reimbursement to hospitals from managed-care plans and government health insurance programs have caused the uninsured to pay larger medical bills, hospitals say.
“Without question there is a growing problem with the nation’s health-care delivery system that forces self-pay patients to pick up a greater percentage of the cost of their care,” Parker said.
Still, industry analysts say hospitals are not making their pricing transparent enough for consumers to understand.
Hospitals, however, point out that federal rules prevent them from at least one option: a multitiered charge structure.
“We can not charge different rates for different people,” Parker said. “Federal law prohibits us from saying to someone without insurance, we are going to charge you a different rate.”
Cash discounts
But industry analysts say some hospitals are testing various ways to discount their services to the uninsured.
“Some hospitals do offer cash discounts, but it appears to be case-by-case and you don’t see ads for this stuff,” said Sandy Lutz, national health-care research director for PricewaterhouseCoopers in Dallas. “To most consumers, hospital pricing is a very gray area because they don’t know what prices they are paying.”
If hospitals do not begin voluntarily offering price discounts to the uninsured, the union may push for state and federal legislation requiring health-care facilities to disclose their pricing practices.
Further, the union said Illinois could consider limiting charges paid by the uninsured, as have some other states such as Connecticut.
“If hospitals aren’t willing to change their ways, that speaks to the consumer community, which may want to seek legislative changes,” said Geevarghese. “This is a systemic problem.”