How many Americans don't have health insurance, and who are they?
About 46 million Americans don't have health insurance, according to the latest figures from the U.S. Census Bureau. The number has grown steadily since 2000. According to the Kaiser Foundation, four out of five (81 percent) of the uninsured are in working families with at least one full-time wage-earner.
Don't hospitals expect the uninsured not to pay and just write off their bills, anyhow?
Hospitals get certain accounting and public-relations benefits even when they don't collect from the uninsured. For-profit hospitals get a tax write-off on uncollected debts. Non-profit hospitals (85 percent of U.S. hospitals are non-profit) cite their uncollected debts in fund-raising efforts and to the government in arguing for higher Medicare and Medicaid reimbursement payments.
What can happen to an uninsured patient if he or she can't, or won't, pay the bill?
Hospitals are required by federal regulations to make a good-faith effort to collect bills sent to all patients. At least until recently, many hospitals went to great lengths to do that. Hospitals, or collection agencies they retained, sued patients for uncollected bills, put liens on their houses or, in a few instances, had them thrown in jail. Collection agency actions can result in a ruined credit rating.
The American Hospitals Association contends that the most heavy-handed tactics are now the exception, rather than the rule. Some hospitals do, however, continue to refer cases to collection agencies.
One important study, published in March, 2005, has documented the financial impact medical bills have on Americans. Harvard professors Elizabeth Warren, David Himmelstein and Steffie Woolhandler, found that "medical problems contribute to about half of all (personal) bankruptcies" in this country.
What patients are charged a hospital's full list-price?
Only the uninsured are billed the full sticker price, and the uninsured comprise only about 5 percent of a hospital's patient-load. Most patients (95 percent) are covered by insurance, Medicare (for those over 65) or Medicaid (for the poor). The hospital price-lists, called "charge masters," are irrelevant to these so-called third-party payers: Medicare pays a fixed rate for every procedure, based on Medicare's cost estimates plus a small percentage. Medicaid pays slightly less. Insurance companies also negotiate fixed-price discounts.
Won't hospitals go broke if they give discounts to the uninsured?
That's highly unlikely, according to our research. The hospital industry made near-record $26.3 billion in profits in 2004 (the last year for which figures are available), according to the American Hospitals Association. As many as 25 percent of hospitals – particularly municipal hospitals which handle mostly the poor – lose money, the AHA claims. But other hospitals – both non-profit and for-profit hospitals – make handsome profits. According to the AHA, the average hospital's profit margin is 5.2 percent, the highest in six years.
One state – Maryland – actually imposes price controls on hospitals, setting maximum prices they can charge above cost. As far as we can tell, these price controls have not forced any hospital in Maryland out of business.
By Michael Rosenbaum