Sometimes one can only marvel at America’s system of health care. It’s almost as if a bunch of people got together and decided to make a system that defies logic – a system that costs more than that of any other nation, one that produces mediocre life spans, and is so complex that the public simply cannot fathom how to navigate it.
The inefficiencies and illogic of this system manifest themselves in bizarre ways. For example, hospitals are supposed to treat the sick and injured, no matter whether they have insurance coverage or not. Obviously, as medical costs increase and coverage weakens, hospitals are forced to try to figure out ways to cover their costs. It’s difficult to pass the costs of the uninsured – or underinsured – onto the bills of those with more robust coverage, because those prices are usually negotiated between the health care institutions and insurance companies.
As a result, hospitals look to do what they can to directly squeeze patients to pay for the charges for their hospital stays. One tool used by hospitals is to go after patients with outstanding bills through a debt collection process. There have been reports of hospitals getting the courts to place liens on the homes of patients, or getting wages garnished, as a way to collect outstanding medical debts.
This is the way that businesses attempt to collect outstanding debts on cars, credit cards, or homes, in cases where the owner is claimed to have not paid their bills. But what makes the health care arena different is that patients are not choosing to buy the care – they have to go due to illness or injury.
The American system does not provide universal coverage for those hospital patients, unless they are 65 years old or older (and that system is also complex, but the coverage is there).
So, patients who must get hospital care to recover from their illness can find themselves up against a forceful debt collection machinery when they have outstanding bills. This adds mental anguish to the physical ones that they experienced.
Who are these patients? Typically, they are the working poor – those with just enough income to make health coverage unaffordable – or those with inadequate coverage. Exactly the people who face other forms of financial stress.
New York’s system of health care – much like the rest of the nation’s – allows for hundreds of thousands to go without health coverage and hundreds of thousands more with inadequate coverage. This reliance on a hodgepodge health coverage system can put the finances of millions of Americans at risk.
The consequences of inadequate coverage impacts the nation. According to Forbes, “Fully half of Americans now carry medical debt, up from 46% in 2020” and that “More than half (57%) of Americans with medical debt owe at least $1,000.” Those debts can often leave needy patients facing legal actions by hospitals and other providers, with judgments often enforced through liens on property or wage garnishments. And the not surprising result is that medical expenses are the leading cause of bankruptcy in America.
The most obvious solution is for the nation to offer coverage to everyone, similar to what seniors have now. But that’s not in the political cards.
Another is for states to step into the breach and place financial band-aids to eliminate the worst practices.
Buried among the 1,000 bills that passed the Legislature this past session are two that attempt to provide such protection.
One bill simply outlaws the practice of hospitals dunning patients with debts. This legislation would prohibit a lien being placed on a person’s primary residence for medical debt judgments as well as prohibit wage garnishment for medical debt judgments.
Another bill outlaws a sneaky fee that hospitals add to patients’ bills. This legislation requires that patients be notified that a hospital will be charging a “facility fee” and whether such fee is covered by the patient’s health insurance.
Facility fees are expenses charged by hospitals to cover their overhead. People who receive outpatient care at hospital-owned buildings can be charged a facility fee, in addition to treatment costs. Since hospitals do not have to disclose the costs of facility fees beforehand, patients are often shocked when they receive a bill that is much higher than they expected. The two main ways patients face facility fees are through outpatient treatment at an emergency room and at a hospital-owned doctor’s office.
Patients needing urgent treatment, requiring greater use of the facility, results in the patient being billed a bigger facility fee. That’s the rationale hospitals use to justify facility fees; but unfortunately those fees can too often be excessive.
A case could be made to ban such fees, but this legislation does not do so. It merely requires providers to inform patients of such fees and whether the patient’s insurance covers such fees prior to providing the medical care. Surely a very reasonable approach and one that will help consumers to avoid those charges.
Of course, approval of these two bills by the Legislature does not make them law. Those bills must be approved by Governor Hochul. But given the financial woes facing New Yorkers, easing those pressures when a patient must go to the hospital would seem like a no-brainer. The governor must act.