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May 10, 2007:
An analysis of the hospitals bills for the
insured patients and the uninsured patients who
pay with their own funds in the United States has
brought to light some sickeningly startling facts.
Hospitals, on an average, charged uninsured
patients 2.5 times more than they charged health
insurers and three times more than the allowable
amount paid by Medicare for medical services,
according to a study published in the journal
Health Affairs on May 8, 2007.
The study was conducted by Gerard F Anderson, a
health economist and director of the Center for
Hospital Finance and Management at Johns Hopkins
Bloomberg School of Public Health.
Anderson examined hospital bills between 1984 and
2004 for his study. Anderson’s analysis of the
2004 hospital data for the United States also
concluded that the gap between the rates charged
to patients who ‘self-pay’ and those with health
insurance coverage has grown substantially since
the mid-1980s.
Patients who self-pay for hospital care, such as
the uninsured and foreign visitors, do not benefit
from discounted rates negotiated on the patient’s
behalf by insurance companies and Medicare.
Instead, they are charged the full, undiscounted
rate for services in the hospital.
This practice has led to numerous lawsuits by
consumers and some government efforts to level
prices charged by hospitals.
In the 1950s, says Anderson, the uninsured and
poor were charged the lowest prices for medical
service. Today, they pay the highest prices, often
two to three times more than what a person with
health insurance would pay for hospital care.
Anderson’s analysis determined the ratio between
the prices hospitals charged self-pay patients and
Medicare-allowable costs, which are the costs that
Medicare has determined to be what it costs to
provide care to all patients. In 2004, the ratio
was 3.07, which means that, for every $100 in
Medicare-allowable costs, the average hospital
charged a self-pay patient $307.
The charge-to-cost ratio was greatest at
for-profit hospitals – 4.10 compared to a 2.49
ratio at public hospitals.
The study also shows that the gap between the
amount self-pay patients are charged and what
Medicare pays for hospital services more than
doubled over the past 20 years.
Anderson argues that the widening gap in prices
makes it increasingly difficult for the uninsured
to pay their medical bills. The ratio between the
amount hospitals charged self-pay patients (gross
revenue) and the amount the hospitals actually
collected (net revenue) was 2.57 in 2004. Which
means that hospitals collected only $0.39 for
every dollar charged.
He estimated that if hospitals had actually
collected the full amount charged to every
patient, the profit margin per hospital would
average over 200%.
The study was supported by Harry J Kaiser Family
Foundation. Gerard F Anderson has participated in
numerous lawsuits on behalf of the uninsured and
other self-pay patients.
BY OUR PHARMA CORRESPONDENT
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