Letter to CA Senate Health Comm Regarding Health Care for the Insured

The Honorable Deborah Ortiz
Chair, Senate Health and Human Services Committee
State Capitol
Sacramento, CA 95814

Re: AB 232 (Chan): SUPPORT

Hearing: Senate Health and Human Services Committee, July 9, 2003

Dear Senator Ortiz:

Consumers Union, the nonprofit publisher of Consumer Reports magazine, urges you to support AB 232 (Chan) when it is heard in the Senate Health and Human Services Committee. This bill would help people without health insurance receive needed health care at hospitals without risking their financial lives.

California has approximately 6.2 million uninsured, of which about 80% are in working families. The uninsured face serious problems in getting health care. 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. In a cruel irony, however, hospitals bill the uninsured-the working poor-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.

The recent revelations about Tenet hospitals charging outrageous prices to the uninsured illustrates the gravity of the problem. Hospitals may believe they need to put uninsured patients into "sticker shock" by sending inflated bills that no one else pays. However, this practice may simply backfire by making uninsured patients less likely to contact the hospital about payment. It also discourages uninsured patients from seeking care sooner, thus increasing the costs of care when they finally do come into the emergency room. The practice simply makes no sense since no one, let alone the working poor, can afford to pay the full retail rate for health care services. And, in fact, no one does pay the retail rate except for the working poor.

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.

AB 232 sets forth common-sense processes for hospitals to deal with uninsured patients that would avoid many of the problems discussed above.

1. Self-pay policy: AB 232 requires hospitals to have a self-pay policy for uninsured patients and to disclose it to patients.

2. Notice about alternatives to paying out-of-pocket: The bill requires hospitals to make reasonable efforts to get information from a patient as to whether or not private, public insurance (Medicare, Medi-Cal, Healthy Families), or charity care may cover some or all of the patient's charges.

3. Reduced financial liability for hospital charges to uninsured: AB 232 limits the financial liability of uninsured patients to the greater of the Medi-Care, Medi-Cal or workers' compensation fee schedule. This is a reasonable amount for a hospital to recover and would greatly assist the uninsured that must pay the bill out-of-pocket. AB 232 allows families of two earning 500% of the Federal Poverty Level (FPL); families of three or more at 400% FPL, and medically uninsurable individuals up to 700% FPL to benefit from the uninsured, self-pay allowance.

4. Delaying aggressive collection tactics: The bill prohibits a hospital, or a collection agency, from using its most aggressive collection tactics for six months. These tactics include placing a lien on a home, garnishing wages or seizing bank accounts. This time period gives the patient time to get enrolled on public insurance, for the hospital to determine whether the patient qualifies for charity care, or to negotiate a payment plan with a patient prior to commencing ultra-aggressive collection tactics.

5. Notice of consumer rights: Once a patient account is sent to collection, the bill requires hospitals to send a notice informing the patient of her rights under laws applying to collection agencies. Because some collection agencies are notorious for harassing consumers and violating the law, consumers need such a notice.

For all these reasons, we strongly support AB 232.

Sincerely,

Earl Lui
Senior Attorney
Consumers Union West Coast Regional Office

cc: Members and Consultants, Senate Health and Human Services Committee

View Files Sorted By Office: Consumers Union OPI, New York - Washington DC Office
West Coast Regional Office - Southwest Regional Office - Consumer Policy Institute

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