Hospital Markups on Care Toughest on Poor: Study

Tuesday, May 8, 2007; 12:00 AM

TUESDAY, May 8 (HealthDay News) -- In 2004, U.S. hospitals charged patients without health insurance and those who paid for care out of their own pockets an average of 2.5 times more for services than fees paid by health insurers, and 3 times more than Medicare-allowable costs, a new study finds.

The study found that for every $100 in Medicare-allowable costs, the average hospital charge for uninsured and other self-pay patients was $307. The charge-to-cost (markup) ratio at for-profit hospitals was 4.10, compared to 2.49 for public hospitals. The markup was 3.25 at small urban hospitals and 2.42 at rural hospitals.

The findings, published in the May-June issue ofHealth Affairs, show that the difference between what self-paying patients are charged for hospital services and what Medicare pays has more than doubled in the past 20 years -- from 1.35 in 1984 to 3.07 in 2004.

In 1984, hospital charges averaged about 35 percent above costs, and gross charges were 25 percent above net revenues, the study said.

"Over time, the uninsured have been paying higher and higher prices for hospital care compared to what the insured population pays. The markup on hospital care for these individuals, especially for those who can afford it least, are unjustifiable," study author Gerard F. Anderson, director of the Center for Hospital Finance and Management at the Johns Hopkins Bloomberg School of Public Health in Baltimore, said in a prepared statement.

Markup rates varied state-by-state, with the highest markups for self-pay patients in California, New Jersey and Pennsylvania (four times above Medicare-allowable costs). The lowest markup rates were in Idaho, Maryland, Montana Vermont, and Wyoming (less than two times Medicare-allowable costs).

"Hospitals should do the right thing and lower the prices they charge the uninsured. Fifty years ago, the poor and uninsured were often charged the lowest prices for medical services. The markups on care for those who can least afford it have got to end," Anderson said.

More information

The American College of Emergency Physicians has more about uninsured patients' access to medical care.

SOURCE:Health Affairs, news release, May 8, 2007

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