Wall Street Journal
John Stockman thought he just had a terrible stomach ache when he went to the emergency room at UCHealth Memorial Hospital Center while on vacation in Colorado Springs, Colo., last year. It was a clot that had partially blocked the flow of blood from his intestine.
By nightfall the next day, Mr. Stockman, 62, was on a ventilator after emergency surgery to remove 4 feet of damaged bowel.
Over the next months, the Tennessee resident’s heart would stop. He would have seven more surgeries. He would survive weeks in intensive care with an open belly wound. He would beg doctors to let him die.
And he would learn firsthand how confounded patients feel in a U.S. health system where a fast-moving stream of procedures and tests can lead to an avalanche of bills most people can’t understand and never expected. Over the course of the out-of-state treatment for his illness, Mr. Stockman had more than 400 individual charges in bills. They added up to more than $1 million.
The prices charged for health care vary widely depending on your in- or out-of-network status and your insurer’s undisclosed price agreements with hospitals. In one example from Mr. Stockman’s case, he was charged more than 30 times what a Medicare patient would pay for a particular procedure.
The total charges were about eight times what they would have been for in-network care, according to Cigna Corp. , Mr. Stockman’s health insurer. Even when insurance policies cover out-of-network emergency care—as Mr. Stockman’s did—if those charges go beyond what an insurer considers “customary and reasonable,” all bets are off on who will pay.
The undisclosed tiers of pricing are helping drive up U.S. health-care spending, which grew 3.8% in 2017 to $3.5 trillion. The overwhelming charges in many cases are, after long negotiations, absorbed by insurers, and those costs trickle down into higher premiums, copays and deductibles for consumers, say health-industry experts, including the trade group America’s Health Insurance Plans.
Prices—not a higher level of utilization—are a big reason the U.S. spends nearly twice as much as 10 other high-income countries on medical care, according to a report this year in the Journal of the American Medical Association. Medical-care prices have risen far faster than overall inflation for decades.
The complexity of billing is itself costly—Mr. Stockman eventually had to hire a consultant to sort out and negotiate his bills. About 8% of total U.S. health spending goes toward administrative costs, JAMA said. By comparison, only about 1% of health-care spending goes toward administrative costs in France and Japan.
“The fragmented and complex health care system is a big factor in health-care spending,” said David Blumenthal, president of The Commonwealth Fund, which supports research on health-care issues. “The net effect is confusion on patients, especially those that are sick. It adds a layer of powerlessness to illness.”
For the Stockmans, the barrage of charges felt crushing. Mr. Stockman and his wife, Rhea, tried to work through hundreds of out-of-network charges from different entities involved in the treatment, collection letters threatening possible legal action and lengthy insurance appeals.