How do hospitals collect money from the uninsured?

I’m spending this month down among Boston’s largest cluster of hospitals. One thing that I’ve noticed is that the people who do the work are completely disconnected from the people who collect the money.

I sat with a group of medical students looking at some insurance data. There were 12,000 claims for one patient. I said “What a disaster for the insurance company.” The students were bewildered. They had been thinking only about the hardship for the family and patient, i.e., bringing someone in for 12,000 procedures, medications, tests, etc.

A suburban friend’s cleaning woman came into one of these hospitals, told them she had no job, and they delivered her baby for free. One of the beauties of the U.S. system is that nobody can say what the value of this service was or what it would have cost if she had tried to pay. (For example, see “The Real Cost Of Giving Birth In The U.S.” (HuffPost) in which you won’t actually learn either what it costs or what the hospitals charge!)

A friend of a friend is married to a Honduran. Every time one of her extended family members is 8 months pregnant she will come to Boston. After labor begins, “they drop her off and drive away; that way nobody can ask for her address or insurance information.”

[Aside from the free hospital services, what’s the value in this system? The US Govt offers permanent residence to anyone whose child is a citizen at least 21 years old (see this helpful federal web page on the subject). In most states permanent residents are eligible for nearly all welfare benefits. Thus the “anchor baby” eliminates the need to save for retirement and the parent can spend 100 percent of his or her income prior to retirement.]

Given that doctors don’t make too much use of past test results, and therefore there is no medical value in supplying a real name, I’m surprised at the horror stories that we sometimes read in the media about hospitals chasing down former patients for non-payment of bills. At least in urban environments, how was it that any hospital ever gets the full name, address, and Social Security number of an uninsured patient? Why aren’t Americans simply saying “I’m undocumented” when asked invasive personal questions by a hospital administrative staffer?

14 Comments

  1. presidentpicker

    February 10, 2018 @ 2:24 pm

    1

    I wonder if healthcare costs are high for this reason. hospitals cannot refuse treatment just because a patient has no money or insurance, and must absorb costs. They still have to practice “defensive medicine” i.e. over prescribe expensive diagnostics etc.

  2. Mark

    February 10, 2018 @ 3:58 pm

    2

    Non-profit hospitals must take all comers. Not so with private, for profit hospitals. Read about uninsured patients in Southern California being taken from hospital to hospital before finally finding one to treat them.

  3. Mark

    February 10, 2018 @ 4:00 pm

    3

    @Phil,
    An American citizen claiming to be undocumented would in many jurisdictions be telling a criminal fib.

  4. philg

    February 10, 2018 @ 4:14 pm

    4

    Mark: Fortunately, Boston hospitals are more enlightened than their Southern California counterparts. But, when it is time to have a baby, why is it tough to choose a non-profit hospital as the destination?

    [It looks as though if those hospitals you mention want to stay on the Medicare gravy train, in fact they do have to deliver babies at no cost. See https://en.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act ]

    What’s the crime in saying “I don’t have any documents” (if you are not carrying a passport or driver’s license) and “I don’t know if I was born in the U.S.”? Who among us has personal knowledge, as in a specific memory, of being born in a particular place? Is there a law covering “documented” Americans requiring them to identify themselves as such?

  5. Mark

    February 10, 2018 @ 4:30 pm

    5

    Phil,
    You’ll be asked for your name. That’s a tough one to wiggle out of…although I suppose one could refuse to give their name.

  6. philg

    February 10, 2018 @ 5:11 pm

    6

    Mark: I agree that if your name is “Sayfullo Habibullaevic Saipov,” for example (see https://en.wikipedia.org/wiki/2017_New_York_City_truck_attack ) then a hospital could perhaps hunt you down and try to collect money, assuming that you hadn’t decided, shortly before arriving at the ER, that really it would be simpler when dealing with native-born Americans to go by “Sammy Sawyer”.

    (See also https://everydayfeminism.com/2015/02/respecting-someones-name-change/ for why people should never ask “But What Is Your Real Name?” (“this question undermines any work an individual has done to assert themselves”).)

  7. lion

    February 10, 2018 @ 5:58 pm

    7

    Back before our extended family wasn’t the government, there were consequences in our immediate network for stealing stuff. The consequences were not having any friends or a ball of fire in the sky sending us to hell. Nowadays, you get divorced either way & our extended government family doesn’t do anything.

  8. Paul

    February 10, 2018 @ 6:33 pm

    8

    Sorry Phil, what you are saying just doesn’t happen. Undocumented immigrants are paying taxes and paying their way, the nightly news tells me as much. this just can’t be going on.

  9. Ron Wayne

    February 11, 2018 @ 9:42 am

  10. Brian Gulino

    February 11, 2018 @ 11:52 am

    10

    Sorry Paul, this from USA Today:

    “At least 500 companies offered “birth tourism” services in China last year, the Shanghai newspaper National Business Daily reported. While there are no official statistics, the number of Chinese citizens heading to the USA to give birth likely is in the tens of thousands each year. The cost of a trip, including medical expenses, runs from $20,000 to $80,000.”

  11. philg

    February 11, 2018 @ 1:26 pm

    11

    Ron: I’m sure that a lot of folks in poor countries would be delighted to give birth there if they could get paid what a U.S. hospital would have charged!

    Brian: Thanks for that excerpt. But it does bring us back to the question in the original posting… given that hospitals advertise a simple way to get free care, and do actually provide free care to a lot of patients, why do these Chinese visitors pay?

  12. M

    February 11, 2018 @ 2:07 pm

    12

    Sorry, but there is no such a thing as a non-profit hospital (please don’t tell the IRS). As an account manager once told me, verbatim: Our goal is to put you on food stamps, and once you are on food stamps we will help you get the free healthcare.

    They had to justify a 3000% mark-up on a cancer drug produced by Teva Pharmaceutical, the only US=certified manufacturer (btw, the drug was developed in Italy in the late 70s early 80s.)

  13. Ron Wayne

    February 12, 2018 @ 6:40 am

    13

    philg: ” I’m sure that a lot of folks in poor countries would be delighted to give birth there if they could get paid what a U.S. hospital would have charged!”

    As the nyt article points out, that may not be as bad as you seem to believe:

    “GiveDirectly’s work is an attempt to test one of the simplest ideas in economics — that people know what they need, and if they have money, they can buy it. Taken to its logical conclusion, this suggests that giving away money may often be more helpful to people than giving them cows, or medicine, or training or whatever.”

  14. Dingus

    February 12, 2018 @ 4:29 pm

    14

    This seems like a situation that could be resolved via barter economy. In the absence of fiat money the patient and hospital should engage in a quid pro quo arrangement. The hospital should take a liver section or a kidney and the patient gets treated to an all you take buffet of medical treatment. Everyone wins!

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