Bungling the Easy Stuff
One of the patients featured in the TIME cover story I wrote last March--"Bitter Pill: Why Medical Bills Are Killing Us"--was Emilia Gilbert, a school-bus driver. Gilbert was 61 years old in 2008 when she slipped and fell one evening in her backyard in Fairfield, Conn.
She was taken to the emergency room at Bridgeport Hospital, where she was treated for some cuts and a broken nose. She left a few hours later with a bill for $9,418, which included $6,538 for CT scans and $239 for a routine blood test. The charges, I found, were based on something called the hospital chargemaster--a list of hugely inflated prices that no one could explain or defend.
Medicare--which by law pays hospitals and other providers their actual costs, including overhead--would have paid Bridgeport Hospital just $825 for those CT scans and $13.94 for that blood test.
When Gilbert, who was earning about $22,000 a year, was unable to pay, she was sued by the hospital, which is part of the Yale--New Haven Health System. A judge ordered her to pay off her bill in $20 weekly payments over six years.
But that was before Obamacare.
Tucked onto page 737 of the law, enacted on March 23, 2010, is a provision that was supposed to eliminate that kind of dunning and overbilling. Section 9007 of the Affordable Care Act instructs the Internal Revenue Service to take away the tax exemption for nonprofit hospitals like Yale--New Haven unless they become aggressive about informing patients clearly of the availability of financial aid and take steps to learn whether patients need such assistance before they hand over their bills to lawyers or debt collectors.
More important for Gilbert and hundreds of thousands of patients like her, Section 9007 says the IRS can now take away a hospital's tax exemption if it tries to charge patients who needed financial aid more than the average amount paid for services by insurance companies and Medicare. In other words, hospitals cannot try to make people like Gilbert pay the inflated chargemaster prices.
That's a big deal. And it's been black-letter law for more than 3 1/2 years.
So how can it be that, two months ago, Jeremy Kopylec, a warehouse worker who lives in Northford, Conn., was sued by Yale--New Haven Hospital for $6,129? The suit, filed on Oct. 3, has to do with the bill Kopylec incurred four years earlier, when he was taken to the emergency room after what he says was a "minor motorcycle accident."
At the time of the accident, Kopylec says, he had just gotten a job following a period of unemployment, but "my insurance hadn't kicked in yet. So they came after me for the whole bill ... I told them I could not afford it."
"I spent about 2 1/2 hours in the ER, and all they really did was clean up some road rash," Kopylec, 27, recalls, adding that "since the marshal came with the summons, I've worked out a plan to pay all of it off in monthly payments" of $100, extending over the next five years.
That Kopylec did not get the protection that Obamacare now requires is not a matter of Yale--New Haven violating the law. It's not about a website not working. Nor is it about Republican efforts to sabotage the law or some judge blocking it.
Under Section 9007, the only step left to enforce the law was for the Treasury Secretary or his designees at the IRS to issue specific regulations instructing hospitals like Yale--New Haven how to comply. Without the instructions, the hospitals have nothing to comply with.
Then Treasury Secretary Timothy Geithner, or current Treasury Secretary Jack Lew, could have written the regulations with his staff the day after the law was signed, and there is nothing John Boehner or Ted Cruz could have done about it. After posting the rules in the Federal Register and a brief comment period, the regulations would have taken effect.
Instead, the rules were not drafted and published in the Federal Register until June 26, 2012--more than two years after Obamacare was passed. And that was just an initial draft called "Proposed Regulations." The American Hospital Association then complained--no surprise--that the drafted rules were too prescriptive.
Nothing has happened since. No final rules have been issued. So there are still no restraints on hospital bill collections or chargemaster charges for the neediest patients.
Asked what happened to the regulations, Assistant Treasury Secretary for Tax Policy Mark Mazur, who oversees the IRS and is the Administration's point man for tax issues related to Obamacare, said, "These things take time. It's something we're actively working on." Did the nearly four-year delay have anything to do with the Administration's need for the hospitals to help in the rollout of Obamacare by encouraging and assisting patients to enroll? "No," said Mazur, a highly regarded veteran tax-policy expert. "We're working as fast as we can, and we can't and don't look at political implications."
"We have not changed our financial assistance policies because Yale--New Haven Health has a long established, robust financial-aid policy," said Vincent Petrini, a spokesman for Yale--New Haven Hospital. He was referring to policies that he described when I was writing "Bitter Pill"--and which didn't help Emilia Gilbert in 2008 or Jeremy Kopylec in October. "Lawsuits are extremely rare," he added. "They are all still individually approved by our management oversight committee and are considered a last resort."
A docket search of Connecticut superior courts reveals 34 collection cases filed this year through November by Yale--New Haven. As with Kopylec's suit, they all seem to be for bills based on chargemaster rates, but I cannot know for sure. Other cases may have been filed in other courts.
Only a sliver of these cases ever result in suits; most result in consumers paying up before they are finally sued, after they have been hounded by enough threatening letters or phone calls (and after their credit ratings have been torpedoed).
Since Obamacare was signed into law, there have been more than 3.5 million personal bankruptcies filed in the U.S. Some 60%, or more than 2 million, are estimated to have involved medical debt as a key factor. So the delay in writing these regulations has likely had an enormous toll in bankruptcy filings and in damaged credit ratings.
Yes, Obamacare has already done landmark work in protecting the truly poor from health care costs by dramatically expanding Medicaid coverage (except in states like Texas, where Republican governors are so obsessed with sabotaging the law that they have blocked the expansion). But writing these billing regulations would have been easy, would have applied in every state and wouldn't have cost a penny.
A scan of other relatively obscure but important provisions written into Obamacare reveals similar failures by the President and his team to execute even the easy stuff.
Another section of Obamacare requires all hospitals to "establish (and update) and make public ... a list of the hospital's standard charges for items and services." In other words, under Obamacare, the chargemaster would finally see the light of day. But first Secretary of Health and Human Services Kathleen Sebelius and her staff had to write guidelines for how the list was to be put together.
That, too, hasn't happened. Hospitals are still not required to list prices for consumers, although in response to TIME's "Bitter Pill" story, the Centers for Medicare and Medicaid Services did release a one-shot mass of data in May. But only someone with expertise in working with spreadsheets could extract the prices from that data. "We do not have an update on the timeline for implementation of this provision at present" was all Sebelius spokesperson Erin Shields would say about the hospital-price-list requirement.
Lew, in consultation with Sebelius, was also supposed to issue an annual report, beginning presumably in 2011, spelling out the charity care provided by every hospital. But the charitable-giving report "has not been issued," says Treasury spokesperson Victoria Esser, who explained that Treasury is working with the Department of Health and Human Services "to identify and gather the appropriate information."
Obamacare is the President's signature domestic achievement. It's bad enough that the design and launch of its insurance-exchange website was bungled and required emergency treatment. But at least for that there is the excuse, lame though it may be, that building this gargantuan e-commerce platform was hard.
But that they also haven't yet delivered on the easy stuff related to the President's highest priority suggests that the Obama team was so lacking when it came to turning law into reality--better known as governing--that the website never had a chance.
By Steven Brill
Brill, who with this issue begins a series of columns on Obamacare, is writing a book about the business and politics of health care to be published in 2014 by Random House