The Amish get hosed

I’m fuming over this story in the Wall Street Journal, from June 28, 2008. It’s a tale of Old Order Mennonite and Amish communities in the American northeast, and how their dependence on their own community rather than outside help may lead to bankruptcy. The story explains a lot about what’s wrong with American Medicine—and how well-intentioned policies can have vast and unjust consequences.

Many of these groups shun modern conveniences like electricity and cars. They believe their community should be self-sufficient. Every member of the community supports each other in times of health and sickness. They reject government aid, social security, government-subsidized healthcare, and health insurance. They do not reject modern health-care—in fact, it is a religious imperative to seek health care when someone is ill, and (contrary to propaganda from anti-vaccine sites) they do immunize their children and seek modern medical care when appropriate. And as with other goods and services, they expect to pay for it.

The Amish and other uninsured Americans are being forced to pay “list price,” an entirely made-up figure that has no bearing on the cost of providing care. The list price of medical services is a preposterous invention that developed as a way for medical providers to get paid a fair amount in a bizarre system where the payer gets to set the price.

In any other business transaction, the traditional roles of buyer and seller set the price. Jim wants to buy a car. It lists for $20,000. He haggles a bit, and eventually pays the dealer $18,000—though he still has to pony up for the imaginary undercarriage rust protection. Still, the system works: Jim knows the price, and he can either agree to pay it or take his business elsewhere. Prices are revealed in advance, and both sides have to agree before the car changes hands.

Compare that to what happens when Jim goes to the hospital with chest pain. He doesn’t ask what the ER charge is, or what the charge is for starting an IV, or the IV fluids, or the chest x-ray, or the radiologist’s fee, or the emergency doctor’s fee, or the cardiologist’s fee. In fact, he probably doesn’t care one bit what any of this costs—as long as he has health insurance. The hospital will bill him some ungodly, astronomically inflated amount, say $40,000 for a two day stay. The health insurance company, or the government if he’s over 65 and on Medicare, has pre-arranged to pay only $8000 of the $40,000, and the hospital is happy to accept this amount as payment in full. Jim is happy (assuming his angioplasty was successful), the hospital is happy, everyone is happy. Except the poor shmoe who was in triage next to Jim having the same heart attack. He doesn’t have health insurance. And to cover his bill, he’s got to come up with the $40,000. In full.

Why do hospitals and doctors inflate their bills? It’s a game, to outwit the payers who are trying to pay only a fixed percentage of the “usual” bill. We charge a lot more, knowing that by doing this the insurance companies will pay a little more. It works just dandy, as long as no one is actually expected to pay the phony baloney “list price.”

According to the article, the local not-for-profit (that’s a joke, too—but a subject for another day) hospitals know that the Amish don’t have insurance, and are mostly holding fast on their demands that they pay up. Even though their paying up means paying far, far more than the hospital would accept from an insured patient. The hospitals also know that among the Amish and Mennonite communities, neighbors will chip in to make sure medical bills get paid. It’s a cash cow, and it looks like they plan to bleed this cow dry.

If you don’t have insurance, please discuss this in advance with your pediatrician or the office manager. We often have a “secret” discount or a second price sheet that is used for cash customers. Just don’t tell the insurance companies, or we’ll all be hosed.

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Tags: billing, hospital, insurance

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