Abstract
It is a commonly held belief that full billed charges for hospital services, when submitted to uninsured patients, constitute such an extraordinary payment burden that hospitals’ attempts to collect full payment are irrational. We examine that proposition with data on the joint distribution of hospital charges and uninsured incomes, guided by prevailing standards on the concept of ability-to-pay. We find that there is in fact a substantial intersection of charges and incomes in which full payment from the uninsured, or at least substantial partial payment, is a reasonable commercial expectation. When we quantify the estimated extent of charge collectability, we conclude that there is empirical support for current hospital collection practices.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
American Hospital Association. (2005). AHA Hospital Statistics.
Anderson G.F. (2007). From “soak the rich” to “soak the poor” Recent trends in hospital pricing. Health Affairs 26(3): 780–789
Becker, C. (August 14, 2006). Charitable obligations: Both sides declare victory in uninsured billing settlements. Modern Healthcare 36(32), 6–16.
Cunningham P., Kirby J. (2004). Children’s health coverage: A quarter-century of change. Health Affairs 23(5): 27–38
Elixhauser, A., & Russo, C. A. (May 2006). Uninsured hospitalizations, 2003. AHRQ HCUP Statistical Brief No. 7.
Fedor F.P. (2004). Changing views about “usual charges” Healthcare Financial Management 58(1): 32–36
Fronstin, P. (January 2000). Sources of health insurance and characteristics of the uninsured: Analysis of the March 1999 current population survey. EBRI Issue Brief No. 217, Employee Benefit Research Institute.
Fronstin, P. (December 2000). Sources of health insurance and characteristics of the uninsured: Analysis of the March 2000 current population survey. EBRI Issue Brief No. 228, Employee Benefit Research Institute.
Fronstin, P. (2001). Sources of health insurance and characteristics of the uninsured: Analysis of the March 2001 current population survey. EBRI Issue Brief No. 240, Employee Benefit Research Institute.
Fronstin, P. (2002). Sources of health insurance and characteristics of the uninsured: Analysis of the March 2002 current population survey. EBRI Issue Brief No. 252, Employee Benefit Research Institute.
Fronstin, P. (2003). Sources of health insurance and characteristics of the uninsured: Analysis of the March 2003 current population survey. EBRI Issue Brief No. 264, Employee Benefit Research Institute.
Fronstin, P. (2004). Sources of health insurance and characteristics of the uninsured: Analysis of the March 2004 current population survey. EBRI Issue Brief No. 276, Employee Benefit Research Institute.
Fronstin, P. (2005). Sources of health insurance and characteristics of the uninsured: Analysis of the March 2005 current population survey. EBRI Issue Brief No. 287, Employee Benefit Research Institute.
Jacoby M.B., Sullivan T.A., Warren E. (2001). Rethinking the debates over health care financing: Evidence from the bankruptcy courts. New York University Law Review 76(2): 375–418
Hospital Group Backs Guidelines for Billing Uninsured. Managed Care Law Weekly (March 7, 2004).
Kenney G., Chang D.I. (2004). The state children’s health insurance program: Successes, shortcomings, and challenges. Health Affairs 23(5): 51–62
More Financial Relief Provided to Uninsured Patients by Healthcare Company. Health & Medicine Week (April 7, 2003).
National Center for Public Policy and Higher Education. (2005). Measuring up 2004, The State Report Card on Higher Education: Texas (http://www.highereducation.org). Accessed 31 Oct 2006.
Owens B. (2005). The plight of the not-for-profit. Journal of Healthcare Management 50, 237–250
Pauly M.V. (1987). Nonprofit firms in medical markets. American Economic Review 77(2): 257–262
Reinhardt U.E. (2006). The pricing of U.S. hospital services: Chaos behind a veil of secrecy. Health Affairs 25(1): 57–68
Rhoades, J. A. (June 2004). The uninsured in America, 2003: Estimates for the U.S. Population under Age 65. AHRQ Statistical Brief No. 41.
Symposium. (2006). Pricing and payment issues for hospitals. Health Affairs 25(1): 44–93
Taylor, M. (October 17, 2005). Focus stays on charity care. Modern Healthcare 35(42), 8–9
Unland J.J. (2005). Two years into the storm over pricing to and collecting from the uninsured. Journal of Health Care Finance 32(1): 54–66
Weissman J.D., Dryfoos P., London K. (1999). Income levels of bad-debt and free-care patients in Massachusetts hospitals. Health Affairs 18(4): 156–166
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Lynk, W.J., Alcain, R.F. The level of hospital charges and the income of the uninsured patient. Int J Health Care Finance Econ 8, 53–72 (2008). https://doi.org/10.1007/s10754-007-9028-5
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10754-007-9028-5