Emergency rooms to blame for the cost of healthcare
The New York Times has published an opinion piece by Dr Glenn Melnick, Professor of Public Policy at the University of Southern California and a researcher at its Schaeffer Center for Health Policy and Economics, in which he says that emergency rooms are to blame for the ‘out of control cost of healthcare’.
The New York Times has published an opinion piece by Dr Glenn Melnick, Professor of Public Policy at the University of Southern California and a researcher at its Schaeffer Center for Health Policy and Economics, in which he says that emergency rooms are to blame for the ‘out of control cost of healthcare’.
Dr Melnick states that regulations concerning emergency room care are one of the most powerful forces behind cost increases. “These regulations have granted hospitals what is essentially a monopoly over emergency room patients, allowing them to charge basically whatever they want,” he claims.
He also said that to ensure readily available emergency treatment, most states require healthcare plans to tell all their members to go to the nearest hospital in an emergency and that insurance will cover the visit. He said that this is meant to assure timely access to needed care and tends to work well. However, Dr Melnick explains that the problem is that rules afford hospitals great pricing power when they’re negotiating with health insurance companies. “Increasingly, hospitals have learned that if they demand higher prices from health plans and do not get them, the hospitals can just cancel their contract. They will still get paid for treating emergency patients under those plans — and in fact will be paid more, because those patients will be out of network,” he says.
Dr Melnick highlights that data from California illustrates how hospitals have exploited this situation with total billed charges by hospitals having risen by US$263 billion to $386 billion from 2002 to 2016, despite the fact that the number of patients being admitted did not increase. Furthermore, billed charges to health plans increased from $6,900 per day to more than $19,500 per day. “This astronomical run-up in billed charges gave California hospitals leverage to demand and receive much higher prices for in-network patients, too. The average price paid by health plans to hospitals for all care grew almost 200 per cent — to $7,200 per day from $2,500,” says Dr Melnick. “In effect, they could threaten: Pay us $7,200 per day to sign a contract or $19,500 per day for emergency admissions without a contract.”
Dr Melnick says that it is important for patients to be aware of this fight between hospitals and insurers as whenever insurance companies have to pay more, so too do patients, in the form of premium increases. “An American family of four with an employer-sponsored preferred provider organisation health plan now pays on average more than $28,000 a year for healthcare. If nothing changes, health care prices and insurance premiums will continue to grow,” he concludes.