Chelsea Ross had insurance when she had to go to the emergency room with chest pains. But “we negotiated it out,” she said. … [+]
My 34-year-old friend, Chelsea Ross, went to the emergency department at Methodist Hospital in Richardson, Texas, four years ago with sudden chest pain and shortness of breath. Thankfully, nothing serious was diagnosed and her symptoms subsided. During her four-hour visit to the emergency department, she received blood tests, x-rays, an EKG, and a CT scan for a total of $11,300.75. Ironically, she had health insurance, but the costs were higher than they would have been if she hadn’t had insurance.
Emergency department bills from Methodist Hospital totaled $11,300.75.
We’ve all heard about the skyrocketing costs of health care, but today I want to focus on how our health care system is irrationally structured and can be shockingly detrimental to those who have insurance.
but, 50% Like 10% of Americans who currently have private insurance, her Aetna plan was a high-deductible plan, meaning it didn’t cover her until she’d used up her $5,000 deductible and coinsurance amounts, so she was essentially a self-pay, or cash-paying, patient.
Hospitals that have contracts with insurance companies have an “allowance” or “negotiated rate” that they will accept. That means that hospitals offer discounts to insurance companies rather than asking them to pay a “list price.” So in this case, the “list price” of $11,300.75 was not what Aetna or Ross would have paid. Because Methodist Hospital gave Aetna a “discount” of $3,503.23 for Ross’s services, the “allowance” the hospital expected from Ross or her insurance company was still about $8,000. Aetna paid the hospital $2,192.03, but Ross’s out-of-pocket expenses came to $5,605.49.
The flowchart compares what Ross paid as an uninsured patient with what he paid as an insured patient. … [+]
Methodist Hospital offers a 45% “cash” discount off the list price listed on their website. For example, the hospital charge for a chest CT scan is $6,229, but $3,426 if paid cash. This means that if she had not provided her insurance information and requested to pay cash, her total bill would have been $6,215. Considering that the average annual health insurance premium for an individual is $8,345, not having insurance for this incident would have saved her over $7,700.
But wait, isn’t there a penalty for not having insurance? The answer is no. Congress eliminated the tax penalty for not having insurance in 2019. But wait again, Ross would only have saved money if he had no other medical expenses that year, right? That’s right. If Ross had needed major surgery or had another expensive emergency room visit that year, his insurance would have kicked in after he met his deductible and co-pays.
But the fact that the average American has to pay at least $8,000 a year or more for insurance that may never be used, plus the deductibles and copayments, seems to me to be an example of how our current health care system is screwing us. Insurance screwes us because it supposedly allows us to negotiate a lower price than we would without insurance. After all, isn’t one of the benefits of insurance that it gives insurance companies more negotiating power and allows them to negotiate better prices? To make matters worse, the “discount” Aetna received didn’t actually help Ross. Ross would have had to pay the same amount after he hit his deductible limit, regardless of the “discount” Aetna negotiated with Methodist.
I’m certainly not encouraging people to be uninsured. Medical costs can be catastrophically expensive. But having insurance doesn’t mean you’re safe from medical debt. In fact, 61% of people with medical debt have insurance. According to reports from the Kaiser Family Foundation and the New York TimesAnd this has real consequences: According to the same report, 75% of insured patients who have trouble paying medical bills end up cutting back on spending on food, clothing, and basic necessities. 62% of people who face medical bill issues, whether insured or uninsured, also have trouble paying other bills, which can create an avalanche of financial instability for them and their families.
Numerous policies have been proposed or adopted at the state and federal levels in recent years to address the economic devastation Americans have suffered from health care. But these would not have helped Ross. For example, the federal Price Transparency Act Hospitals were required to post pricing information online starting in January 2021, but patients in urgent situations like Ross’ don’t have time to hunt around for information to decide where to get care. Insurance Transparency ActThe “No Surprises” law, which took effect on January 23 and requires health insurers to post pricing information for covered services, and which takes effect in January 2022 to protect people from unexpected emergency bills, would not have applied to Ross’s case because the hospital had a contract with his insurance company.
If it’s not an emergency and you want to pay cash, you can also choose not to disclose that you have insurance. Hospitals may tell you differently because they prefer to bill insurance companies and get more reimbursement, but telling your insurance company that you don’t want them to contact you is a right protected by your insurance policy. Health Insurance Portability and Accountability ActBut it’s nearly impossible to get enough information to make that decision before receiving medical services, because in most cases, you won’t know what specific services you need, how much the hospital will charge, or how much your health insurance company will pay until after the fact.
We wrote to the hospital three times in 2021 asking if we could get a cash discount given her situation. We never heard back. Methodist also reached out for comment but never heard back. But someone called Ross that month asking, “How much can you pay?” And then another call a few weeks ago asking if we wanted to “pay” our bill, dangling a 25% discount if we could pay that day. These calls are more reminiscent of a flea market negotiation than a functioning health care system.
The World Health Organization, known for its work in low-income countries, defines one of the components of a basic health system as “[s] “People can get the services they need and be protected from the economic ruin and impoverishment that comes from having to pay for them.” Yet that is exactly the problem we face here in the United States, one of the richest countries in the world. There are ways to reform the system, from big ones like a single-payer system that would cut down on the inefficiencies of thousands of different health plans, whether at the federal or state level, to less dramatic ones like a “public option,” a government-established health plan that Americans can join if they want to. But it requires not just acknowledging that there is a problem, but also a willingness to have these conversations.
Meanwhile, like many other Americans, Ross still pays for the medical care he received while he was insured through a monthly payment plan.
