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Prohibits hospitals from overcharging uninsured patients

September 7, 2004
The Honorable Arnold Schwarzenegger
Governor of California
State Capitol
Sacramento, CA 95814
Re: Request for Signature on SB 379 (Ortiz): Hospital over-charging of uninsured patients
Dear Governor Schwarzenegger:
Consumers Union, the nonprofit publisher of Consumer Reports magazine, respectfully requests your signature on SB 379 (Ortiz). The bill seeks to help the uninsured who must resort to hospital emergency rooms for healthcare. Hospitals bill the uninsured, who are typically low-income, the highest rates for care, often much higher than the rates billed to insured patients. Such bills can run into the tens of thousands of dollars, or even more. Medical debt is one of the leading causes of bankruptcy in the United States.
California has approximately 6.2 million uninsured, of which about 80% are in working families. The uninsured face serious problems in getting healthcare. Without insurance, many uninsured people put off seeking care until their problems become much more serious. When they do seek care, they must often resort to hospital emergency rooms. When the receive their bill, they find they are paying at rates far higher than what private insurers or public programs reimburse hospitals for those very same services.
The lives of uninsured people can be devastated by the financial and emotional toll of extraordinarily high hospital bills. After leaving the hospital, uninsured patients may still have serious health problems. Yet at the same time, they are often harassed by debt collectors. If they are unable to pay the extraordinarily high bills, hospitals will report the unpaid debt to a credit reporting agency, ruining the patient’s credit record. Bankruptcy is often the last resort for
consumers in this situation.
Many hospitals do not inform the uninsured about alternatives to paying such costly bills out of pocket. Some hospitals, for example, offer “charity care” to patients meeting their income and other criteria. But there is no requirement that a hospital inform an uninsured patient about its charity care policy, let alone provide an application to an uninsured patient. Similarly, there is no requirement that a hospital inform uninsured patients about other options, such as Medi Cal or Healthy Families, or county indigent programs. While some hospitals may take such common sense measures, many do not.
Due in part to extraordinary media attention on the plight of the uninsured with high medical debt, some hospital associations have adopted voluntary guidelines on this issue. Voluntary guidelines can be ignored at any time, they may result in arbitrary treatment where one patient receives a benefit, but a similarly-situated one does not. There is no possible enforcement of a voluntary guideline, no public scrutiny over how many patients receive a benefit. There is no provision for any outreach or publicity about these voluntary guidelines so it is not clear how many patients will ever hear about them. After all, hospital charity care has always been a “voluntary” undertaking by hospitals, and we have many examples where qualified patients were never told about it, or were even denied applications for charity care after asking.
Therefore, we still need legislation to address this problem. Legislation ensures a uniform playing field for all hospitals. We strongly support SB 379.
Earl Lui
Senior Attorney
cc: Senator Deborah Ortiz