Bungling the Easy Stuff

Hospitals are still overcharging the poor. Obamacare was supposed to fix that too. What went wrong?

By Steven Brill Monday, Dec. 16, 2013
    • Evan Vucci / AP

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    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.

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