My friend Chelsea Ross, 34, 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.
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 like more than 50 percent of Americans with private insurance today, her Aetna plan was a high-deductible plan, meaning that her coverage didn’t start until she’d used up her $5,000 deductible and coinsurance amounts. As a result, 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 were $5,605.49.
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 they may never use, plus the deductibles and copayments, seems like 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 could 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 copayment limit, regardless of the “discount” Aetna negotiated with Methodist.
Of course, I’m not encouraging people to be uninsured. Medical costs can be catastrophically high. But having insurance doesn’t mean you can avoid medical debt. In fact, 61% of people with medical debt are uninsured, according to a report from the Kaiser Family Foundation and the New York Times. And this has real consequences. The same report revealed that 75% of insured patients who struggle to pay medical bills end up cutting back on spending on food, clothing, or necessities. 62% of people facing medical bill issues, whether insured or uninsured, also struggle to make other payments, 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 try to begin to address the financial devastation Americans have suffered from accessing health care. But these would not have helped Ross. For example, the federal Price Transparency Act required hospitals to post pricing information online starting in January 2021, but emergency patients like Ross don’t have time to shop around for information to decide where to get care. The same goes for the Insurance Coverage Transparency Act, which went into effect on January 23, which requires health insurers to post pricing information for covered services. And the No Surprises Act, which went into effect in January 2022 to prevent people from receiving unexpected emergency bills, would not have applied to Ross’s case because the hospital had a contract with Ross’s insurance company.
If it’s not an emergency and you want to pay cash, you can choose not to disclose that you have insurance. Hospitals may say differently because they often prefer to bill insurance companies to get more reimbursement, but you have the right, protected by the Health Insurance Portability and Accountability Act, to tell them that you don’t want them to contact you. But it’s nearly impossible to get enough information to make that decision before you get medical services, because in most cases you won’t know exactly what service 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 have access to the services they need and are protected from the economic ruin and impoverishment that comes from having to pay for them.” Yet that is exactly the problem we face in the United States, one of the richest countries in the world. There are ways to reform the system, from large-scale 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.