Study on free care

Thought you might be interested in this recent email post by my good friend Frank Cohen (frank@cpahealth.com):

I just finished reviewing a fascinating study that was published in the most recent issue of the Journal of Health Economics.  In a nutshell, using a more reasonable methodology, it found that physicians not only don’t lose money on uninsured patients, in many cases, they actually make money.  What was unique about this study compared to past studies is that the authors used the difference between the average insured reimbursement to uninsured reimbursement rather than the physician’s actual charge.  The thinking is that, if you calculated uninsured costs as the difference between actual charge and insurance payments, you would, in many cases, show a positive cost rather than a positive revenue.  For example, the researchers found that, while 25% of uninsured patients pay nothing, nearly 33% pay more than insurance pays. It found that the average uninsured payment to a physician was 50% more than Medicaid.  There were lots of other eye-opening stats that got my attention.  In fact, after reading the study in its entirety, I became convinced that the move towards consumer oriented healthcare may be the future for payment methodologies.  If, as this study concludes, physicians can do as well, if not better on uninsured patients, the move towards dropping managed care and charging patients directly may occur very quickly.