2 women walk into a hospital with acute stomach pain. One is a highly paid lawyer at a top law firm who is covered by her company’s health insurance plan and the other is a working class American without health insurance. Both women get the exact same diagnostic tests and medical care, and both stay in the hospital for the exact same number of nights. Do the two women pay the same amount for the health care they consume (in total, including payments made by the insurance company on behalf of the lawyer who has health insurance)? Likely not, if the above happens in the USA.
Does this make any sense? I believe the answer is clearly no….and yet this unfair practice has been allowed to go on for decades….and is still going on today. The reason for this is that insurance companies in America directly negotiate “bulk pricing” directly with hospitals and other healthcare providers. This pricing is usually significantly lower than the “list price” of a product or service. However, when an individual (e.g., uninsured worker, foreign national, etc.) who is paying for their health care expenses out of pocket walks into a health care provider, they pay the “list price”. It’s ironic that this leads to price discrimination against the same (generally poorer) individuals who couldn’t afford health insurance in the first place.
So here’s a simple solution for ending health care price discrimination in America: Mandate that every hospital or health service provider can only charge uninsured individuals the average of the pricing they have negotiated with their health insurance companies. This would eliminate much pain and suffering….and right a basic wrong in our health care system today.
November 1, 2008 Update:
Today, I received an “Explanation of Benefits” Statement from my health insurance provider which I think proves my point above:
Service Date: October 16, 2008
Type of Service: Outpatient Services (a generic term to say this is for a minor outpatient procedure performed about 2 weeks ago)
Total Billed (to health insurance company): $5,665
Patient Savings: $4,767
Coinsurance Copayment Amount: $89.80
Claims Payment: $808.20
In other words, the total cost to the insured party (in this case me) and the insurance company was $898…or 16% of the amount billed. So we saved $4,767 for only one reason: we had the insurance company negotiating with the provider, auditing the bill etc.
