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Monday, December 17th 2007

Making Money Off The Uninsured

The Healthcare Economist links to a recent paper which makes a nifty point.

How much uncompensated care do doctors provide?” comes to the conclusion that private physicians make more money per uninsured patient than per insured patient.

45-59% of physicians actually provide negative uncompensated care


Compared to all insured, physicians deliver [as little as] -$2.10 in uncompensated care per visit by the uninsured.

How is this possible? Physicians have fees they charge patients for every office visit, every procedure. When third party payers come into the picture they set their own fee schedules. The insurer basically says, we’ll pay you 40% of what you would “normally” charge for an office visit and in return we’ll allow patients on our insurance to visit you. It’s quantity.

But when someone without insurance comes in for a visit or a procedure, they typically get billed the “full” amount (or at least more than what is billed to the insurance company). So even though some large percentage of visits by the uninsured go unpaid (result in no or little compensation), the physicians are charging more than they would get with an insured patient and so physicians actually make more money per patient when you compare the whole of the two populations.

Healthcare Is A Business?

Also of note, most private physician “charity” care doesn’t arise from physicians offering it…but instead by the bills they level onto their uninsured patients not being paid.

[M]ost uncompensated care arises from the uninsured not paying their bills…Only 13% of the uninsured were billed less than the insured; only 7% were billed nothing…on the other hand 87% of the uninsured were billed more than the insured

To be fair, private physicians represent a tiny fraction of the total charity care provided in this country. For instance my county hospital and clinics, staffed largely by salaried physicians (both employees of the county and through contractual arrangement with the medical school), obviously provide the vast, vast, vast majority of charity care in this area. The same is likely true the country over.

Although an interesting study, I think the policy implications for such are limited. Healthcare is a business but there are a lot of physicians out there doing really incredible work for the public good. Don’t draw too many conclusions from this paper.