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New Bill Aims To Stop Hospitals Overcharging The Uninsured

Tuesday, April 2, 2002

New Data Shows Hospitals Provide Minimal Care to Uninsured Without Charge; Many Hospital Provide No Such “Charity Care”

SACRAMENTO, CA-In light of data showing how little care is provided to uninsured families without charge, elected officials and a diverse coalition of consumer groups unveiled new legislation today at a Capitol press conference aimed at helping more uninsured Californians cover their medical expenses when they become ill and incur big hospital bills they cannot afford.
Authored by Senator Deborah Ortiz, Chair of the Senate Health Committee, and supported by Lieutenant Governor Cruz Bustamante, SB 1394 would prevent the practice of hospitals overcharging the uninsured-often well above the rates charged for insured patients. The bill would also ensure that uninsured patients are informed of their consumer rights and financial options, including government programs and the hospital’s own “charity care” policy, the circumstances by which they provide care without charge.
“For uninsured families, a medical illness can be not only a health problem, but a financial nightmare because of the exorbitant bills that they are charged,” said Senator Deborah Ortiz (D-Sacramento). “This bill simply requires hospitals to inform uninsured patients of their rights and the range of options available for paying for the healthcare they need.”
“I am troubled by reports that hospitals are charging uninsured patients their highest rates,” said Lt. Governor Cruz Bustamante. “Making health insurance more affordable and accessible is just common sense. SB 1394 won’t solve the problems of California’s uninsured overnight, but it will help hardworking families get the urgent services they need.” The bill would prevent the common practice of charging uninsured families the highest possible rate, often well in excess of what insured patients are charged. Instead, the bill sets the maximum charge to uninsured, self-paying patients at 150% of the Medi-Cal rate.
New data highlights the extent of the problem. Based on data filed by hospitals with the state for fiscal years 1995-99, research conducted by Consumers Union, a co-sponsor of the bill, reveals:
· The amount of charity care provided by California hospitals has decreased by approximately nine percent during that time.
· On average, California hospitals provide only approximately 1% of their total operating expenses on charity care.
· Eighty percent of California hospitals had an average charity care ratio to overall operating expenses of one percent or less over the five years studied.
· And of the 548 hospitals who filed reports with the Office of Statewide Health Planning and Development (OSHPD), 132 reported providing zero charity care. (See attached charts, which includes specific data on Sacramento hospitals.)
“Over six million Californians who lack health insurance-the vast majority in working families-have a tough time getting the healthcare they need,” said Viola Gonzales, president of Health Access California, the statewide health consumer coalition that is co-sponsoring the measure. “This data shows that hospitals are providing a relatively small amount of care without charge to those who cannot afford health insurance. Uninsured families are either foregoing the care they need, endangering their physical health, or getting billed the highest possible rates, which can lead to financial ruin.”
The groups point out that over 20% of California residents are without health insurance, and even though the emergency room is one of the few places they can get care, they often don’t. A recent report showed that uninsured adults in California are far less likely to go to the emergency room for care (12.1% had at least one visit in 1999), in contrast with those on private insurance (20.8%) or public programs (32.9%). (Health Insurance, Access, and Use: California. Tablulations from the 1999 National Survey of America’s Families. Urban Institute, Dec. 2001).
“Hospitals need to do a better job of letting their patients know that they may qualify for charity care,” said Earl Lui, senior attorney at Consumers Union, and also a Health Access board member. “We need better reporting by hospitals on the charity care they provide so we can judge how well they are serving their communities and to enable the state to develop more effective plans for helping the uninsured.”
SB 1394 would help patients find out about the availability of free or reduced-cost care by requiring hospitals to publicize their charity care policies in the hospital and the community. It would simplify the application process by establishing one uniform charity care application for all hospitals to use. Hospitals would be required to inform patients of their rights if their debt is sent to a collection agency and to tell them about nonprofit credit counseling services in the area. And SB 1394 would clarify the definition of charity care to ensure better reporting by California hospitals to the OSHPD.
The press conference announcing the new legislation featured David Smith and Kathy Van, recent Sacramento-area patients with hospital bills totaling thousands of dollars, and Alysa Meyer, a staff attorney with the Voluntary Legal Services Program that deals with families with large medical debts on a regular basis. Groups supporting the bill include AARP, ACORN, AFSCME, CA Church Impact, CA Federation of Teachers, CA Pan-Ethnic Health Network, CA Physicians Alliance, Coalition for Humane Immigrant Rights of Los Angeles, Congress of California Seniors, SEIU, Latino Issues Forum, MALDEF, National Council of La Raza, OWL, Western Center on Law and Poverty and other organizations.
Anthony Wright, HAC, 916-870-4782
Consumers Union, 415-431-6747

Consumers Union, publisher of Consumer Reports, is a nonprofit testing and information organization serving only the consumer. CU is a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.
Health Access California is the statewide umbrella consumer coalition working for quality, affordable healthcare for all. Formed in 1987, the coalition of over 200 organizations includes groups representing seniors, people with disabilities, communities of color, patients, labor, healthcare professionals, people of faith, children, and families across the state. Health Access was the main legislative sponsor behind the California HMO Patients Bill of Rights, and a leader in advocating for the creation and expansion of the state Healthy Families program.