One of the proofs that Obamacare is really about helping insurers and Big Pharma rather than ordinary Americans is its failure to do much about the seamy practice known as balance billing.
Say you have a scheduled procedure, like getting a stent. Like most Americans who have health insurance, you are in an HMO or a PPO. Your doctor, who is in your network, schedules you for the operation at a hospital in your network. You assume the only thing you need to worry about is a fairly minor co-pay and recovery.
But weeks later, you find that the anesthesiologist wasn’t in your network, and you are hit with a $12,000 bill for his services. And this sort of scamming (hospitals knowingly putting people on a surgical team that they can bill at huge premiums to negotiated rates) is routine. And of course, if the ambulance takes you to an emergency room that is not in your network, the outcome can be catastrophic. Some examples of typical bad outcomes, the first from Families USAm (hat tip Dromius):
A 2010 report by America’s Health Insurance Plans said out-of-network providers often charge exorbitant rates, as high as 70 times the Medicare reimbursement for a similar service. A report issued by New York State in March cited the case of a patient who went to an in-network hospital emergency room after severing his finger in a table saw accident. The finger was reattached by a nonparticipating plastic surgeon, and the bill was $83,000. The insurer estimated the going rate for the procedure was only about $21,000.
A story in the New York Times from October shows how vulnerable patients are in emergency situations, even in in-network hospitals:
Once the cardiologist figured out why Raquel and Michael D’Andrea’s 9-week-old daughter was so frail and unable to eat, he immediately sent her to the hospital for heart surgery…
Ms. D’Andrea knew she had already selected a comprehensive plan a few years earlier. She gave her insurance card to the hospital staff, but her daughter, Sienna, was ultimately treated by several doctors who were not in their plan’s network.
“We assumed that because we showed them our insurance card and nobody had any objections, we were covered,” said Ms. D’Andrea, 35, of Farmingdale, N.Y.
The bills were so numerous and complex that the New York Times story didn’t provide a total. Ms. Andrea’s mother, Ms. Cooper, who ran a boutique with her daughter, had to shutter it to help with the baby’s care and decypher the bills and fight the hospital (the daughter had to go back for 17 days in the hospital):
Ms. Cooper spent countless hours poring over the bills, trying to make sense of it all. “It was so overwhelming,” said Ms. Cooper.. “We received department bills and there could be 60 invoices on one printout. You would have a bill for $8,100 from one department or $6,500 from another department. It was hard to figure out what was covered, what wasn’t covered and what was balance-billed.”
Very persistent effort enabled them to get the out-of-pocket payments down to $10,000.
When we’ve described some of the problems with Obamacare, some readers have piped up and insisted, “Oh, but you forget, those costly plans are still really valuable! The most you can pay in 2014 is $6,350 if you are an individual and $12,700 for a family of two or larger.”
That is just not true. Those limits apply ONLY to in-network services. All Obamacare does is nibble around the edges of the balance billing abuse. Families USA summarizes the relevant parts of the ACA Patient’s Bill of Rights:
Although the new law does not completely solve this problem (balance billing), it does make some changes that are designed to minimize your bills for emergency care: It sets some standards for what health plans must pay out-of-network emergency providers, and when providers are paid adequately, they are less likely to balance bill.
Your plan must pay the emergency providers the greatest of these three amounts:
1. The amount it pays in-network providers;
2. A payment based on the same methods the plan uses to pay for other out-of-network services (for example, a percentage of usual and customary fees charged by other providers in your area); or
3. The amount Medicare would pay for that service.
Say get in an accident out of state. You will be hit with a large emergency room bill, and your insurance will pay only a comparatively small portion.
Buried in the New York Times article was a terse assessment:
Still, there’s nothing in the law that stops health care providers from billing consumers for the balance, which is what often happens — and exactly what the D’Andrea family experienced. “This is not an issue that the Affordable Care Act fixes,” said Timothy S. Jost, a professor at the Washington and Lee University School of Law and expert on health care laws. “It is conceivable that the problem gets worse for some people if the Affordable Care Act encourages narrower networks, which some people think it might do.”
Remember, Romneycare has had only a marginal impact on medical bankruptcies in Massachusetts. And there are reasons to think you could easily have nasty outcomes financial outcomes with Obamacare. I’m getting reports now from parents who are lucky enough to have kids that are under 26 and employed find that their inclusion under their parents’ coverage is not terribly useful if the child’s job isn’t where the parent resides. Similarly, people with existing conditions (particularly if they might need emergency care or surgeries) may simply assume, as some readers have, that they aren’t exposed to costs above their policy maximum and thus won’t be aggressive about making sure that professionals that attend to them are really covered under their policy. As the inevitable horror stories get publicized, that problem will become less prevalent. But the initial billing victims will, using Geithner’s HAMP metaphor, foam the runway for hospitals rather nicely.