What do the Emir of Kuwait and the working poor of the United States have in common? Not much, except when it comes to paying for health care in the United States. They all pay the highest price: up to 500 percent more than the hospital receives for insured patients.
That’s because hospitals negotiate discounts with big institutions like insurance companies, HMOs or the government that require payment of only a fraction of the listed charges. Those institutions have substantial bargaining power and can guarantee hospitals a certain number of patients. Uninsured people, on the other hand, have no bargaining power and are left to fend for themselves once they get their bills.
Jennifer Kankiewicz was rushed to New York’s Beth Israel Hospital in July 2002 for an emergency appendectomy and was hospitalized for two days. “I waited through a day’s worth of not being able to get out of bed because I didn't have health insurance,” recalled Kankiewicz. “The next day, a friend drove me to the hospital in an emergency and we went to the closest hospital we knew of.”
“They provided great service,” she said. The hospital “reassured me that I could apply for Medicaid assistance. So I thought, maybe Medicaid would help me with the $24,000 that it cost me.”
Though Kankiewicz is poor, she was not poor enough. She was denied Medicaid assistance because she makes $19,000 a year. In order to qualify for Medicaid, Kankiewicz needed to be pregnant or disabled or earn less than $350 a week. Though she was able to convince her surgeon to reduce the charges slightly, she still faces more than $19,000 in hospital bills – more than her annual salary. She said she is being billed by six separate billing groups and, unlike the big insurance companies, Kankiewicz has no negotiating power with the hospital or its collection agencies.
“It’s like sending a guppy out to the sharks,” said Elisabeth Benjamin, the supervising attorney of the Health Law Unit at the Legal Aid Society in New York. “It’s just not fair.”
Several states operate a funding pool for hospitals to offset the money they spend on charity care as well as bad debt. In New York, these funds total almost $1 billion a year.
Benjamin is the author of a new Legal Aid report called “State Secret: How Government Fails To Ensure That Uninsured And Underinsured Patients Have Access To State Charity Funds.” The report alleges that none of the 22 hospitals surveyed in New York City have a process that would let poor or uninsured patients apply for the hundreds of millions of dollars in state government funds intended to help pay for hospital care for the needy, despite the fact that they are all receiving between $4 million and $60 million annually in charity care funds from the state. As a result, patients who are uninsured and have limited financial resources are forced to pay inflated prices for their care.
“An average consumer that might want to call a hospital and find out what the charity care policy is, forget it,” Benjamin said. “What we found was at all 22 [hospitals], no one had a way to actually get the state money applied to your case.”
According to Benjamin, Beth Israel receives $28 million a year for charity or bad debt cases. But rather than establishing a process to inform patients like Kankiewicz about applying for this money, Beth Israel made her go through the process of applying for Medicaid.
“I could have told Jennifer in 30 seconds, she wasn’t going to be eligible for Medicaid,” Benjamin said. “For her to have gone to a fair hearing [on Medicaid eligibility] on her own was a waste of time.”
Kankiewicz said that when she initially spoke to the collections department at Beth Israel, they asked her why she chose the most expensive hospital if she was uninsured. “Honestly, I didn’t understand that I was a consumer, that I had to shop,” Kankiewicz said. “I wasn’t making a decision at the time. I rushed to the hospital that I knew where it was.”
Like Kankiewicz, many uninsured patients end up with huge medical bills and no way of paying them. Hospitals then hound them for payment using collection agencies and lawyers, who employ such methods as filing lawsuits, slapping liens on homes, seizing bank accounts and garnishing wages to extract payments. Some hospitals now rank among America's most aggressive debt collectors.
“[Patients] don’t know they have been sued because the collection attorneys and the collection agent hired by the hospitals are voracious,” Benjamin said. “They claim to serve people, but in fact they have never served anybody with court papers. The next thing my clients know, their bank accounts have been taken.” But for some people, it can get worse than that.
A Return to Debtors’ Prisons
Hospitals in several states have actually had patients arrested and jailed if they are unable to pay their debts. This legal tactic is chillingly known as “body attachment.”
“Body attachment is basically a warrant for arrest,” said Claudia Lennhoff, executive director of Champaign County Health Care Consumers in Illinois. She said that if patients miss court dates, which they may not even know they have, the attorneys for the hospitals or collection agencies can ask the judge to issue warrants for the patients’ arrest.
“They can go out immediately and find that person or it can just kind of be out there and then if the person gets pulled over, for example, for having a taillight out or speeding or something, it pops up, and then shows a warrant for arrest and the person gets brought in, and then they get incarcerated,” Lennhoff said.
Take the case of Jim Bean, a musician in Urbana, Illinois. More than a decade ago, he received treatment at the Carle Foundation Hospital, the primary teaching hospital of the University of Illinois at Champaign-Urbana, for a gunshot wound after a failed suicide attempt. He attended 13 court dates relating to his $7,718 hospital bill. But then Bean missed a hearing, which he says he did not know was scheduled. It was jail for him.