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Hospitals Taking Advantage of the Poor

Half of the personal bankruptcies filed last year were due to large medical expenses. Paul Pilzer, a prominent economist, shared with me that he suspects hundreds of thousands of these Americans could have paid their medical bills if they were not (literally) three times the price that the same hospitals charge their insured patients. Effectively, the uninsured (mostly poor and minorities) are charged two to three times the price for the same service.

His interest in the rich-poor pricing scheme of medical providers started when his pregnant wife picked up a prescription in April 2000 at Rite-Aid and they charged her $151. When he phoned to complain, the pharmacist refunded $100 over the phone and told that they only charged the "full price" to Hispanics, and that next time I sent my maid (i.e. "his wife looked Hispanic") over to pick up a prescription I should call or make sure they knew it was for the Pilzer family.

Hospitals' billing and collection practices have emerged as a controversial issue over the last 18 months as many hospitals have come under sharp criticism for charging people without insurance significantly more than they charge those insured. This is just not right. If I were to charge two different rates for the patients I see, one for those with insurance and another for those without, I would be prosecuted by the insurance companies for fraud and be required to give them back the "discount" that non-insurance patients pay. But, if the situation were reversed and the non-insurance patients were charged more, it is perfectly legal (although morally questionable).

New York Times June 17, 2004

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