Unbiased Analysis of Today's Healthcare Issues

California Hospitals Charge Fair Prices to the Uninsured

Written By: Jason Shafrin - Sep• 10•13

Why is that?  Because in 2006 California passed the Hospital Fair Pricing Act.  Melnick and Fonkych (2013) describe the bill as follows.

The Hospital Fair Pricing Act…mandated that hospitals develop formal, written financial assistance policies and limit the  prices they charge uninsured patients with low to moderate incomes…Under the law, hospitals must limit the amounts they collect from eligible patients, who are either uninsured patients with annual household incomes at or below 350 percent of the federal poverty level…or patients who are insured but have annual medical expenses exceeding 10 percent of family income…A hospital’s maximum prices to these eligible patients cannot exceed the highest amount of payment that the hospital would receive from any government-sponsored program, including Medicare, Medi-Cal (California Medicaid), and Healthy Families (California’s Children’s Health Insurance Program).

How did hospitals respond to the law? Over 95 percent of all California hospitals reported that they offered free care to uninsured patients with incomes at or below 100 percent of poverty. However, higher-income uninsured patients still faced the risk of high prices based on billed charges.

Further, this policy did not help improve the accuracy of the billed charges to Medicare. Medicare billed charges are as ridiculous as ever. As shown in the figure below, Medicare payments equaled 20 percent of billed charges by California hospitals in 2010, down from 43 percent in 1997. Thus, although the uninsured are paying less for hospital care, the insured may be paying relatively more.

Courtesy of Health Affairs:



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  1. […] Here’s a news flash: If you are uninsured, there is a risk of being overcharged for hospital services. In California, the risk is 0. Jason Shafrin of The Healthcare Economist explains why here. […]

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