Les Jones: Unpaid Medical Bills Only Responsible for 3% of Healthcare Costs

October 11, 2007

Health Care > Unpaid Medical Bills Only Responsible for 3% of Healthcare Costs

But how big is the free-rider problem, really? According to an Urban Institute study released in 2003, uncompen- sated care for the uninsured constitutes less than 3% of all health expenditures. Even if the individual mandate works exactly as planned, that's the effective upper boundary on the mandate's impact.

So even a 100% solution to that problem wouldn't make much of a dent in healthcare costs.

Posted by lesjones | TrackBack

Comments

My wife and I both work at hospitals. We have close personal friends that are doctors.

The average recovery rate from doctors runs around 30% of what they bill. Same for hospitals. One doc friend manages to collect almost 40% of what he bills, but he is very much the exception.

Now, the thing is that this is certainly not all due to uninsured folks not paying. Here are some of the causes:

1. Medicare/MedicAid do not pay nearly as much as the doctor bills.

2. Procedures get expensive and even insured people can have a hard time paying their share.

3. Someone gets treated and dies anyway and their estate doesn't have enough to cover the medical bills, especially for prolonged treatments or lengthy inpatient stays.

4. Insurance companies cut deals with providers to only pay a portion of the standard rate. My hospital is the premier one in the area and we don't make nearly the same kind of reduced price deals as my wife's hospital has to.

From what I've seen, most doctors don't deal with uninsured patients unless they pay at least a chunk up front. Most uninsured folks just go to the ER where they can get treated without insurance and then just not pay the bill.

Medical charges are priced such that they factor in the collection rate. They have to charge three or more times what it costs to provide the service, or they'd all go out of business. If most of us were suddenly forced to have health insurance, medical costs would plummet since the collection rate would go up so much. That would enable uninsureds to be able to pay for more of their bills.

Of course, if we just held people accountable for paying their bills it would do the same thing. Since most people side with the sick person, it's hard for medical providers to get the sympathy they need to be able to collect a lot. That's also why a hospital or doctor will usually let you make payments of $5 a month for a $5000 bill. They know you'll never get it paid off, but it's better than nothing and don't expect to get more than $1500 out of you anyway.

Posted by: GunGeek at October 15, 2007