A BIG, unfortunate and expensive illustration for health reform

The Wall Street Journal had this tragic story last week about a Merced man — who was insured — but still socked with a $1.2 million hospital bill (not counting thousands in doctor’s office bills also).

What happened to Jim Dawson, of Merced, that landed with debt that could bankrupt him is a textbook example of what health consumer advocates have been fighting to reform for years.

Dawson had a good job with Valero Energy Corp., a big oil refinery. He had Valero-sponsored comprehensive health insurance policy, and a regular primary care physician who knew his medical history, *should* not have been vulnerable to medical-financial angst. That’s at least what many think. But Dawson’s story shows how anyone can be vulnerable.

First thing that went wrong: His primary care physician, and subsequent specialists were not able to diagnose a staph infection until six months after his first doctor’s visit — and by that time, the infection had ended up in his blood stream.

Next: He ran up against a lifetime cap on his health coverage — a max of $1.5 million (which, incidentally is considered generous. Most policies have a cap of $1 million, but where set in the 1970s when the purchasing power was equal to $6 million today, according to WSJ)

Lastly: Dawson and his wife, in combing through their hospital bills, realized the hospital had inflated various items at tens and hundreds of times their actual cost on the street. For instance, stockings for $791, when they could have purchased them for $12; oxygen for up to $6,675 PER NIGHT, when it could have been rented for $250. All those numbers added up to “Disneyland numbers,” admitted the hospitals chief medical officer.

The Dawson case highlights a number of issues:

*DISCLOSURE OF QUALITY AND COST:

Dawson visited many providers who were unable to accurately diagnose him at first. Still, Dawson (or his insurance) paid all these providers full price for their conjecture. If providers were asked to account — or disclose — for why Dawson’s staph infection went undiagnosed for so long, then

  1. Dawson’s infection would not have spread as far or been as costly and
  2. Other consumers could decide whether or not to see that provider.

* LIFETIME CAPS:

The fact that lifetime caps have not been reset since the 1970s, combined with costly medical technologies that are used in health care will mean that more and more Americans will reach their lifetime caps.

* HOSPITAL OVERCHARGING

Even the chief medical examine at Dawson’s hospital admitted his bill amounted to “Disneyland numbers.” Given that Dawson’s hospitalization occurred earlier this year, he should qualify for a discounted rate under AB774 (Chan), which was enacted in January. It requires hospitals to offer the Medicare-negotiated rate for patients who are uninsured, or spend more than 10 percent of their annual income on health costs.

Unfortunately, until this is sorted out, the Dawsons are making $30 payments to various hospitals. At that pace, with at least $1.2 million in the red, I estimate it will take them 3,333 years to pay off (not including interest).

Health Access California promotes quality, affordable health care for all Californians.

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