I don’t find anything persuasive in Charles Kinney and Fred Allardyce‘s Sunday Projo op-ed arguing in favor of legislation that would make insurance companies responsible for the uncollected debt related to the unmet deductibles and co-payments of their subscribers. Mr. Kinney and Mr. Allardyce begin by immediately linking uncollected debt to preventative care…

Our health-care system is undeniably broken. Insurance premiums are soaring, putting preventive health care out of reach for many. Employers and insurers are shifting costs to others by turning to plans with higher deductibles and co-payments. The result is a physically unhealthy society and a fiscally challenged health-care system overburdened by increasing numbers of people facing health-care crises with no means to pay.
One of the major issues hospitals are facing is the increase in bad debt — patients who do not pay their bills. For patients who do not have the means to pay, we provide free care.

But in any rational economic analysis, preventative care is an odd area to single out if you are concerned about “dangers” of consumer driven healthcare. As we’ve gone through in detail before here at Anchor Rising, it does not make fiscal sense to use an insurance-style system to pay for preventative medicine; it never has and never will. If you are really interested in seeing everyone be able to take advantage of preventative care opportunities, paying for them through the insurance system is an especially bad idea, as insurance programs can only increase costs to consumers when they include services that are widely used.
By linking uncollected debt and preventative care, Mr. Kinney and Mr. Allardyce are functioning as standard-issue, risk-averse big-business executives in search of ways to separate individuals from their money as quickly and as predictably as possible. The most efficient way for a hospital to do this is to force people to pre-pay for the services most likely to be used. That’s good for organizational financial planning and good for the cash-flow and balance sheet of a hospital, but has nothing to do with controlling health care costs or making healthcare affordable.
What is especially egregious about Mr. Kinney and Mr. Allardyce’s argument is that, at the same time they are pursuing a government-created fiscal advantage of dubious (and probably negative) value to the healthcare consumer, they are also advocating for their organizations to be insulated, by law, from the practical financial realities of their business…

If a patient has private insurance, such as United Healthcare or Blue Cross, and he or she doesn’t respond to reasonable collection efforts for co-payments and/or deductibles, we have to write off 100 percent of that loss at the present time. The role of the hospital turns from caregiver to debt collector. This burden should not be placed on the shoulders of non-profit hospitals; debt collection should be the responsibility of the commercial insurance companies.

The fundamental flaw in this argument is that hospitals aren’t caregivers; nurses and doctors are. Contrary to Mr. Kinney and Mr. Allardyce, it is precisely the primary job of a hospital and its administrative staff to do the mundane, daily things that need to get done so that the primary caregivers have an environment where they can function with maximum effectiveness. The hospital worries about keeping the lights on and the water running and making sure that supplies are delivered to the right places, while the nurses and doctors worry about the caregiving. A hospital administrator who says he shouldn’t have to worry about collecting the money to pay the bills makes about as much sense as one who says that he should be given land for free, because hospitals shouldn’t have to worry about the details of financing and mortgage payments when deciding how best to expand their facilities to provide improved care.
Healthcare is a people business. If you don’t want to deal with people, you should be in a different business.
ADDITIONAL INFORMATION
Roland Benjamin, who knows as much about the relationship between employers and insurance companies as anyone in Rhode Island, offers more detail on why making insurers responsible for uncollected hospital debts is a bad idea, in the form of a letter he sent on this issue to the House Corporations Committee…

Relieving hospitals from the most fundamental of business processes (collecting fees from users) is simply continuing the trend of requiring more from our insurance carriers and the employers that pay them. In effect, House Bill 7057 and Senate Bill 2414 referred to House Corporations on 3/18 will require insurance carriers that currently have no direct financial relationship with individuals to establish one from the ground up. The cost of doing so will present in premiums passed through to employers
Of particular note are three concerns:

1. Assuming the carriers can seamlessly transition to a broad financial arrangement with members, the costs of administering these relationships will be born more heavily by Consumer Directed Plans. While these plans are the subject of contention from the provider side, they represent the most viable means of applying consumer dynamics to the health care economy.
2. Should a patient fail to pay a bill from a hospital, the hospital will go after the carrier, who in turn will go after the employer, since they will have a statutory obligation to keep insuring the individual and thus no collection effort leverage. The result, should an employer refuse to make this payment on behalf of an employee (and due to privacy requirements will not know for whom or what they would be paying), the employer’s account could be affected, thus leaving the entire employment base without insurance.
3. There is no indication that failure to collect payment from privately insured individuals represents a significant burden to hospitals as a percentage of total operating expenses. Thus, a solution attempting to solve this issue, at the expense of a massive administrative restructuring in the industry, will only serve to escalate overall costs.

As a studied buyer of insurance products for more than 100 participants in my plan, I simply do not want to pay for this coverage. I urge that the House Corporations Committee not recommend passage of this bill.