American citizens pay a higher cost for health care than those of any other country, largely due to obscure regulations that essentially grant hospitals the power to arbitrarily charge emergency room patients.
In the case of an emergency, patients are told by health care providers that their insurance will cover visits to any hospital, regardless of whether or not patients visit hospitals that are in their insurance networks. Though patients may face long wait times or hefty additional costs, this system ensures that patients have access to care when necessary.
However, regulations allow hospitals to have the most say in the cost of care when creating contracts with health insurance companies; if a hospital does not receive the steep prices that they demand from health plans, that hospital has the power to invalidate contracts with those health plans.
Without contracts, hospitals can demand a “billed charge” directly from emergency room patients who are out of network. These patients would pay a charge far higher than the charge that would be paid under a contract, leaving health plans little room to lower prices.
Hospitals have consistently used this power to their advantage. According to America’s Health Insurance Plans’ Center for Policy and Research, hospitals’ billed charges have risen by roughly $100 billion in the past decade alone, while the number of patients admitted to hospitals has remained consistent.
Average billed charges have risen to as high as tens of thousands of dollars, allowing hospitals to demand ever higher prices for in-network patient care from insurance companies.
This trend of exponential increase in the cost of care affects patients significantly. Patients often must pay higher prices for their health insurance plans, and are sometimes charged for the difference between the cost that is covered by the insurer and the cost of care demanded by the hospital, a practice called “balance billing.”
As hospitals continue to expand, they continue to exploit their power to demand exorbitant prices for their emergency room services. However, efforts have been made to limit hospitals’ power to determine the price of out of network care.
According to the Center on Health Insurance Reforms, states like Maryland and New York have “specific requirements for payment levels that must be met by health plans for different types of health services and different types of physicians,” meaning that hospitals in these states have less power to arbitrarily demand inflated prices from health plans and patients. Additionally, several states have prohibited hospitals from “balance billing” patients for emergency services.
Changes like these across the nation would have a momentous impact on the cost to health plans, and thus patients as well. If we do not act, the cost of healthcare will continue to increase, harming both health insurance companies and patients alike.