News of the Day ... In Perspective1/03/2007
New York limits hospital charges to uninsured
Effective beginning today in New York State is a hospital pricing law that conditions state funding to hospitals on their ending overcharges of the uninsured who earn less than three times the poverty level. Its citation is NY CLS Pub Health § 2807-k.
This law probably protects more than half of all hospital patients in New York State. These patients cannot be charged more for medical care than the hospital would charge an insurance company (“highest volume payor”), Medicare, or Medicaid. This new law also prevents aggressive collection practices, such as foreclosing on someone's home.
Hospitals that fail to comply will lose $850 million in state funds for charity care. For non-emergency cases, a proposed regulation would limit application of this law to those patients who use their local hospital.
According to AAPS General Counsel Andrew Schlafly, this law will discourage insurance companies, which are oligopolies, from continuing to force or persuade hospitals to overcharge the uninsured. Insurance companies like hospital overcharging of the uninsured because it drives more people to buy full insurance.
With this new law, there should be less economic pressure to buy low-deductible insurance. And although there is the risk that hospitals will continue to overcharge the uninsured, particularly those above three times the poverty level, it is likely that many patients below the threshold will opt for self-payment rather than costly insurance premiums.