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Friday, October 18th 2013

What You’re Charged Versus What You Pay

Not to make light of the anecdote Timothy Murphy just posted over on Mother Jones but it doesn’t 100% reflect how health care costs work for those paying out of pocket for ER care. Those being namely the uninsured. In the story he gets stitches in the emergency room and then gets a shocker of a bill.

[I]f I didn’t have insurance, like 47 million working-age adults nationally and approximately 23 percent of 18-to-25 year-olds, it would have increased the bill by a factor of more than a hundred.


I don’t have $5,000 of disposable income just lying around. My unfortunate encounter with typically wayward millennials could have left me broke.

I’m not sure it changes greatly the point of his story but what you’re charged and what you pay as an uninsured individual are two greatly different things. In fact, the charges and bills people tout as examples of the exorbitant costs of health care are absolutely meaningless in terms of what people actually pay. Those paying for hospital care out of pocket can probably more reliably expect to actually pay somewhere between zero to a half of those charges.

The reasons hospitals actually present a bill with such a big sticker price is complex to say the least but the initial bill is a starting point and one far removed from what the hospital is actually going to try to collect.

If Mr. Murphy didn’t have insurance he’d be unlikely to be expected to have $5,000 in disposable income by George Washington University hospital. The final payment would probably be something much less and would’ve almost certainly been financed into monthly payments over a length of time. No $5000 or even $1500 lump sum.

Here’s a good New York Times profile of someone with a similar experience.

Still, those costs can create a significant burden. Maybe not so dramatic.

Where health care costs really hamper the uninsured is probably not emergency care but in chronic illnesses and in long term acute care. You’ll get treated in an ER no matter your ability to pay and the hospital is probably gonna work with you on your bill. You’re much less likely to get that chemotherapy without a funding source.

No doubt medical bills are a major contributor to financial ruin and costs for the uninsured are a major obstacle to access. But ER visits probably isn’t where the big problem is.

Nitpicking maybe.