Share of Cost, California’s Hospital Fair Pricing Act Reduced The Prices Actually Paid By Uninsured Patients
California’s Hospital Fair Pricing Act, passed in 2006, aims to protect uninsured patients from paying hospital gross charges: the full, undiscounted prices based on each hospital’s chargemaster. In this study I examined how the law affects the net price actually paid by uninsured patients—a question critical for evaluating the law’s impact. I found that from 2004 to 2012 the net price actually paid by uninsured patients shrank from 6 percent higher than Medicare prices to 68 percent lower than Medicare prices; the adjusted collection ratio, essentially the amount the hospital actually collected for every dollar in gross price charged, for uninsured patients dropped from 32 percent to 11 percent; and although hospitals have been increasingly less able to generate revenues from uninsured patients, they have raised the proportion of services provided to them in relation to total services provided to all patients. The substantial protection provided to uninsured patients by the California Hospital Fair Pricing Act has important implications for federal and state policy makers seeking to achieve a similar goal. States or Congress could legislate criteria determining the eligibility for discounted charges, mandate a lower price ceiling, and regulate for-profit hospitals in regard to uninsured patients.