Uninsured Americans being Routinely Charged more for Medical Treatment

One of the reasons the health care industry in the United States is in such dire straits is because of the upside-down medical billing practices.

About fifteen years ago, I had a hysterectomy. My hospital bill was on the order of $9,000. I had a major medical policy: I had to pay for doctor’s visits, prescriptions, and diagnostic tests and x-rays (unless they resulted in a hospitalization within a certain number of days), but a percentage of my hospital stay was covered.

Being in insurance, I actually read my hospital bill and what I discovered absolutely floored me. Nearly half the total charge was written off because I was insured. That lowered the bill to about $4,700.

Because I chose a hospital in my network, my insurance coverage paid 90% of the bill and I was responsible for 10% plus my $100 deductible. But I only owed about $450 to the hospital and that included my deductible. I called the insurance company to see what was going on because I thought surely I would have to pay at least $480 (10% of $4,700 or $470 plus my $100 deductible). Here’s another interesting wrinkle: had I gone to the hospital outside the network, my insurance would have covered 80% of the charges. However, 80% of the charges at that hospital was equal to a dollar amount in excess of 90% of the charges at the hospital I went to, so the insurance company paid the same dollar amount as they would have had I gone to the out-of-network hospital.

Bottom line: since I had insurance, the hospital got $4,700 towards a $9,000 bill, of which I paid $450. But if I didn’t have insurance, I would have been responsible for the entire $9,000!

Does that make any sense at all? We have insurance companies collecting hundreds of millions of dollars in premiums and the medical providers routinely write-off large amounts of bills the insurance companies pay, but the uninsured are responsible for the entire amount.

I have heard that the medical industry, just like the retail industry, food industry and most industries adds to their prices to cover bad debts or theft. That’s a reasonable practice. But if a hospital can accept 50% of a bill from an insurance company, why not just bill that amount in the first place?

If it’s imperative that the medical industry have two pricing structures, then give the larger amount to the insurance companies and bill individual the write-off price. Hospitals and other providers might well find that their bills are more often paid. By the way, Medicare is similar: it will only pay a given amount for any procedure, and many medical providers just accept the amount Medicare pays or they bill the patient for the remainder.

If you have insurance, check the next bill you get from your doctor or clinic, or read the payment notice you get from your insurance company. You’ll see the difference between what was billed and what was paid.

This entire set-up is totally backwards. Until uninsured people are expected to pay the same amount as insured people pay (or less), fewer and fewer people will get the health care they need until it becomes an emergency and then we all have to pay the price.