A Yale study, and an accompanying profile in The New York Times, made waves this month for exposing what’s called “surprise billing.” This occurs when a patient receives a high, out-of-network bill for care received at an in-network hospital. Amazingly, the study found that almost a quarter of emergency room visits at in-network hospitals resulted in a bill for out-of-network services. This lack of transparency makes it impossible for patients to make educated choices in the health care market and stands to increase costs for consumers and taxpayers.
Many hospitals have been contracting out their emergency rooms to private companies in an effort to trim administrative costs. EmCare, the company highlighted in The New York Times piece, employs its own doctors who are not always part of the patient’s insurance networks, despite the hospital’s in-house doctors being in-network. This means that consumers who receive care at these in-network emergency rooms have no idea they may be treated by an out-of-network physician. They find out when they receive a surprise bill that it is many times more expensive than they expected.
Though news of these exorbitant billing practices shocked consumers and casual readers, this type of abuse comes as no surprise to those of who monitor health care policy. In most sectors of the economy, prices and services are transparent, and consumers shop around and choose the best price and level of service for them.
But health care isn’t a free market. Neither hospitals nor insurers provide adequate information on the prices they charge for services, and they routinely saddle consumers with crippling bills. Patients rarely know what they can expect to pay or what their options are when visiting hospitals and emergency rooms, and no one is held accountable.
This is no small problem. No patient — let alone a quarter of patients — should go through the traumatic experience of having to get emergency care only to be traumatized again by the bill. Patients should always have the option to be treated by an in-network doctor at in-network hospitals, and they deserve to know when they will be charged for out-of-network care. It can’t be too much to ask for hospitals to be transparent with the American people.
Hospitals aren’t transparent because they don’t have to be. They are generating immense profits, and unless consumers hold them accountable for providing clear information about their services, they’ll have no need to change their practices or become more transparent.
In fact, The New York Times highlighted just one example of hospitals abusing patients’ vulnerability for profit. A separate study from Johns Hopkins University found that hospitals charge patients with private insurance an average of 340 percent more than they bill Medicaid — the lowest cost hospitals can charge for treatments — for the same emergency care. By taking over large chunks of the health care system, the government has distorted the market so much that it’s virtually impossible to make sense of it.
Similar studies found even more outrageous examples of overcharging, again highlighting the lack of transparency that allows hospitals to gouge patients on price. Worse, hospitals refuse to change their billing practices even when they’re publicly shamed for overcharging.
Hospitals won’t change because their lack of transparency increases their profits, but it is also driving up the cost of health care for all U.S. taxpayers. When hospitals charge insurers more, insurers increase premiums or cut coverage to offset the losses. In short, we are paying higher prices for insurance because hospitals are overcharging patients, and patients don’t have the information they need to make smart decisions. Individuals who lose coverage may be picked up by a government-subsidized plan that affects all taxpayers. Talk about lose-lose.
It is time for our nation’s hospitals to start treating patients with respect. When provided with the right information, consumers are fully capable of weighing decisions and making the right choices for their care. Until there is transparency in hospital billing and treatment practices, patients won’t have the freedom to make informed health care decisions. It’s time we held hospitals accountable and made sure both consumers and taxpayers are treated with respect.
• David Williams is the president of the Taxpayers Protection Alliance.