The ACA deductibles cap the providers' losses [View all]

[jberryhill]

The fact of the matter is that one of the things driving up the cost of health care for everyone are the unreimbursed expenses run up by people who have no health insurance.

What a $5K deductible means - on the other side of the equation - is that when a patient comes through the door, the hospital is looking at a maximum $5K loss.

Back when I was much younger, and my income was $12K a year, I had an event which incurred a $7500 hospital bill.

They chased me for a while over it, but the fact of the matter was that I was a grad student with no money, and I spent some time after that making $45 a day as a substitute teacher for a while after that. I don't know if things have changed, but there was no finance charge on that debt, and by the time I had real employment, the time had expired for it to be collectible anyway. After seven years, it dropped off my credit report.

Yeah, with high deductibles, some people are going to get bills they can't pay. You know what they are going to do? Not pay them. The upside - for everyone else - is that everything ABOVE that deductible WILL be paid.

The other consequence of that dynamic is that it will be a lot easier to negotiate away those bills. Let's say you run the hospital finance department. Someone racked up $50K for something, and they had a $5K deductible. You get $45K from the insurance company, and bill the guy $5K. You find out the guy has no money and can't pay the $5K. What are you going to do:

(A) Spend your staff time bugging a guy with no money for $5K

(B) Spend $1K on a law firm to get a default judgment the guy can't pay

(C) Sell it to a collection agency for $1K and they can try to collect until the statutory limit expires

(D) write it off as a 5K loss and take the tax benefit

If you answered (D), then congratulations, you just improved the bottom line.

At the end of the day, the hospital got $45K on a $50K bill, which is a lot better for the hospital - and everybody else - than getting 0 on a $50K bill.