Yesterday we began a discussion about medical bills. We noted that medical malpractice awards are structured to cover the cost of care for patients who have been harmed. One of the primary reasons that these award amounts must be as high as they are is that the line by line medical costs for patients are too often inflated past recognition. This places stress on patients trying to pay these bills and on the American economy that must absorb the effects of an unbalanced medical care system.
The significant markups that hospitals insist on charging patients who are not on Medicare can be enough to break the banks of even upper middle class Americans. A recent TIME article gives multiple examples of what these markups look like practically. Just a single example notes that a Medicare patient will be charged $20.44 for a chest x-ray, while a privately insured or uninsured patient will be charged $283.00. This cost disparity clearly illustrates why so many medical malpractice judgments range in the millions of dollars but are not enough to ultimately care for the affected patients.
According to federal law, the amount that hospitals charge patients on Medicare must correctly approximate the hospital's cost of not only providing the service but also physician salaries, overhead and medical equipment. Why then do hospitals routinely charge insured patients many times the amount that Medicare patients are billed?
This is a complex question that must be studied in-depth. At a time when American incomes are declining and healthcare costs are skyrocketing, it is not the amount of medical malpractice judgments that should be coming under fire but the inflated line by line costs of medical care itself.
Source: TIME, "Bitter Pill: Why Medical Bills Are Killing Us," Steven Brill, Feb. 20, 2013