A Personal Experience with Emergency Room Care and Insurance

On Halloween, my sixteen-year-old daughter slipped and fell on some broken glass. She came home from a party with a nasty-looking gash on one of her fingers, and I persuaded her to go to a local emergency room. After she filled in some forms and I presented our family insurance card and ascertained that the E.R. was in-network, we were shown to a patient bay with a hospital bed and chair. A doctor examined the wound and confirmed that it warranted stitches. Not very long after that, his assistant came by and numbed my daughter’s finger with novocaine. Then he put in two stitches and covered the wound with a small bandage. On a busy night, we were in and out of the facility in less than three hours, and we left happy to have received professional care.

Shock at Hospital Bill: A Closer Look at Health Care Costs

A few weeks later, we got a bill, and my immediate reaction was relief. It said, “Current balance: $150.00.” I thanked our lucky stars for having an insurance plan that covers E.R. visits. But the other figures in the bill were startling. The hospital’s top-line charge was $11,339.96, which was split into $6,346.39 for a “Minor Procedure,” $4,985.25 for “Emerg Room,” and $8.32 for “Drugs/Detail Code.” Our insurer didn’t appear to have coughed up anything near this sum to the hospital, though. The bill contained three more lines, which said insurer “Payments $2,358.17,” insurer “Adjustments $8,208.79,” and “Total payments and adjustments $10,566.96.”

I set aside the bill for payment and didn’t think about it again until the murder of Brian Thompson, the chief executive of UnitedHealthcare, and the reaction—startlingly unsympathetic in some quarters—that it provoked. (The chief suspect in the killing, a twenty-six-year-old named Luigi Mangione, was arrested carrying a handwritten note in which he said big health insurers were abusing the country for profit.) The outpouring of vitriol against health insurers renewed the debate about the U.S. health-care system and sent me in search of my E.R. bill. How can a hospital charge eleven thousand dollars for a couple of stitches? Would the quoted price have been the same if we didn’t have insurance? And how did the hospital and the insurer settle on these so-called adjustments of more than eight thousand dollars?

Discrepancies in Patient Satisfaction and Health Care Issues

In a system that delivers high-quality care to those who can afford it and successfully navigate it, but enrages many people who encounter its restrictions and outlandish costs, the answers to these sorts of questions are often hard to find. In 2023, when researchers from KFF, the health-care research organization, surveyed about thirty-six hundred enrollees in group plans, individual plans, Medicare, and Medicaid, eighty-one per cent of respondents rated their plans positively, but more than half—fifty-eight per cent—also reported experiencing a problem during the previous twelve months, such as having a pre-authorization request denied or discovering that their insurer had paid a smaller proportion of a bill than they expected. Among people who were “high utilizers” of care—meaning they had visited a health facility more than ten times in the previous twelve months—or who were undergoing mental-health treatments, the proportion reporting problems was about seventy-five per cent, or three in four.

Reconciling Positive Insurance Ratings with Health Care Challenges

How can these findings be reconciled? Knowing you have coverage in case of illness is reassuring, so it’s not surprising that most people rate their insurance positively, the KFF researchers noted. But any health-care system must be judged on how it treats the sick, and in the U.S. system, it seems, the sicker you are, the more likely you are to experience problems, including those of the nightmarish variety which people have been airing on social media since the murder of Thompson.

Rising Denial Rates Highlight Issues in Health Insurance Claims

Anger at having treatments denied or delayed is particularly prevalent. Another study from KFF that was published last year found that, in 2021, insurers offering individual plans in the Obamacare marketplace denied seventeen per cent of health-insurance claims involving in-network doctors and hospitals. For reasons that aren’t entirely clear, the denial rate seems to vary by treatment, type of health-care plan, and insurer. In a recent report on Medicare Advantage, the privately run arm of the public health-care system for seniors, the majority staff of the Senate Permanent Subcommittee on Investigations found that between 2020 and 2022 denial rates for post-acute care—treatment provided to individuals recuperating from sudden illnesses or serious medical procedures—more than doubled, from 10.9 per cent to 22.7 per cent. Insurers “are using prior authorization to protect billions in profits while forcing vulnerable patients into impossible choices,” the report said.

Physicians Report Adverse Effects of Insurance Prior Authorization

The complaints aren’t just coming from patients and their families. For many medical professionals, trying to deal with the vagaries of the insurance system is now an unavoidable feature of their work. In a survey of physicians that the American Medical Association carried out last year, seventy-eight per cent of the respondents said that prior-authorization requirements had led to delays in necessary care, and twenty-four per cent said they had led to a “serious adverse event” for a patient in their care.

Evolution of the U.S. Health Care System and Its Challenges

The American health-care system has long been an unwieldy hybrid of public purpose and private profit-seeking, and in recent years it has come to be dominated by a handful of private insurers. (UnitedHealth Group is the largest. It employs more than four hundred thousand people, and had revenues of $371.6 billion in 2023.) Health insurance started out with individual policies designed to cover catastrophic illnesses. Employee insurance plans date to the postwar years, when big corporations were eager to attract workers and the federal government made employer-provided benefits tax free. Then Lyndon Johnson introduced Medicare and Medicaid as part of his Great Society programs.

Widespread complaints about health insurers restricting access to care first arose in the nineteen-nineties, with the emergence of Health Maintenance Organizations (H.M.O.s), which promised lower-cost coverage but came with narrow provider networks and rigid pre-authorization requirements. Larry Levitt, the executive vice-president of health policy at KFF, who has studied the U.S. health-care system for decades, recounted to me how the backlash against H.M.O.s led to the spread of P.P.O.s (“Preferred Provider Organizations”), which had fewer restrictions. But, as costs kept increasing, “the insurers have gradually reinstated many of the restrictions we saw in the nineteen-nineties,” Levitt said.

Simultaneously, the role insurers play in the system has expanded, particularly through Medicare Advantage. This year, more than half of all Medicare beneficiaries—some thirty-three million Americans—enrolled in private plans, which, unlike traditional fee-for-service Medicare, often include dental, vision, and hearing coverage. The private insurers claim that they are able to provide coverage at lower cost, but Levitt said it’s more complicated than that. “They game the system and end up getting paid more by the federal government, so the cost per patient goes up,” he said. Also, the Medicare Advantage plans have more restrictions on coverage, including smaller provider networks and strict pre-authorization requirements, which insurers seem to be policing more rigorously than ever.

In addition to imposing mental and physical burdens on patients and their families, the endless haggling over pre-authorizations and billings bloats costs. In 2021, private health insurers and government insurance programs spent $925 per capita on administration, whereas comparable countries spent just $245 per capita, according to a study published earlier this year by the Peterson-KFF Health System Tracker, a joint project of the Peterson Center on Health Care and KFF. And these figures only tell part of the story—they don’t include the money that health-care providers themselves, like hospitals and doctors’ offices, spend on administrative tasks, such as billing and dealing with insurers. Of course, patients, policyholders and taxpayers ultimately bear these costs, too.

Focussing exclusively on health insurers can create a misleading picture. “Most of the additional dollars the U.S. spends on health go to providers for inpatient and outpatient care,” the Peterson-KFF study said. In 2021, Americans, per capita, paid $7,500 to providers, whereas other comparable countries spent $2,969. As well as incurring high administrative costs, hospitals and other health-care facilities spend a lot of money paying their medical staff and investing in things such as medical equipment and new wings. “Many big hospitals, and hospital chains, are involved in arms races,” Levitt said. “They want nicer facilities and expensive new technology.” The fact that most hospital chains are still technically not-for-profits hasn’t prevented them from raising their prices aggressively, he added.