Insured patients cost more than self-paying patients in hospitals, analysis finds

As inflation costs and concerns continue to grow, a new analysis published by HealthCare.com’s Health Care Insider found that insured patients admitted to hospitals increasingly cost the hospitals more than self-paying patients did.

Privately insured patients cost hospitals an average of over $1,700 more on inpatient stays than self-paying patients or those who weren’t charged, according to an analysis of inpatient hospitalization cost data since 2000.

Those with health insurance cost hospitals more than self-paying patients for 10 major hospitalizations ranging from heart attacks to bone fractures, with heart attack costing the most.

On average, the insured cost $17,381 for the ten inpatient types of stays compared to self-payers costing $12,144, a difference of $5,237.

The cost for heart attacks was $22,599 per hospital stay for the insured compared to $6,191 for self-payers, the analysis found, a margin of $16,408 or 365%.

Treatments for coronary atherosclerosis (artery disease) also cost $5,216 more for privately insured inpatients than for self-payers.

“One factor in the growing discrepancy between insured and self-pay patient costs is hospitals’ tiered charge system, which assesses private insurers higher charges than they do cash pay customers, particularly those that negotiate in advance,” Bill Ashley, CEO of Allied National, a third-party claims administrator, said of the findings.

“As healthcare costs have grown faster than inflation over the past two decades, cash pay patients have been able to cover less of the costs,” he added.

“The second factor,” Ashley says, “is that self-payers may voluntarily limit use of health services, for example, by leaving the hospital early or declining marginally beneficial services.”

The irony of the findings, David Balat, who leads the Texas Public Policy Foundation’s health-care reform initiatives, told The Center Square, is that “health insurers exist supposedly to mitigate our financial risk when we get sick. You’d think that their significant purchasing power would offer the best rates, but in reality, that’s not the case at all. It’s often more economical to pay by cash rather than using your insurance coverage. This is evidence of a broken system that requires reform.”

The Texas Public Policy Foundation’s Right on Health Care proposals, authored by Balat, focuses on patient-centered reforms. It’s designed to make prescription drugs more affordable, increase access to medical professionals and new models for delivering care, increase price transparency, and allow insurers and employers greater flexibility to select coverage options.

“Texas made great strides toward putting patients back in control of their health care decisions in the last legislative session,” Balat said, adding that he hopes in the next session they will accomplish even more.

TPPF’s policy proposals include allowing individuals and small groups to create association health plans, approving licensure reciprocity for physicians and nurses and licensure or a pathway for assistant physicians, and allowing doctors to provide drugs directly to patients, cutting out the middlemen to reduce costs.

Other initiatives include mandating that medical providers and facilities give patients the prices for non-emergency procedures and treatments before they are performed, protecting patients from payment discrimination and strengthening patients’ rights in third-party negotiations. TPPF also recommends that Texas request a 1332 waiver from the federal government under the Affordable Care Act, which allows states to take control of their health-care exchange.

“We want to give patients as many choices as possible by letting states take control of their ACA exchanges, approving licensure reciprocity for physicians and nurses, and helping under-served and rural areas get better access to care,” Balat says.

“Texas has a tremendous opportunity to be the national leader in patient-centered health care reform and to set the example for states around the country.”