"Drinks are on me!" The wealthy lawyer declares. After a few, the priest and the lawyer are debating the constitutionality of the latest healthcare laws. The homeless guy is just there for free beers and starts arguing with both of them. A fight breaks out and all three end up hospitalized. The diagnosis is the exact same for all three - concussion from a bottle to the head. The treatment costs the hospital $900. This includes paying the doctors and staff for their time, supplies, equipment, and building maintenance. Hoping to make some money for a new cancer center, the hospital wants all three to pay $1,000 each for a total profit of $300. So here's what happens:
The Homeless Guy: Obviously, this guy isn't going to pull out a wad of cash and pay his bills. The billing department can't even get a real name out of him. No address, no credit cards, nothing. Fortunately for him, the hospital is legally required to provide a certain amount of "charity care" for patients who lack the ability to pay. So they are now $900 in the hole. The homeless guy walks away and lives happily ever after. Through donations to the hospital and fundraisers, they are able to raise $800 for this patient and bring this down to a $100 loss.
The Priest: This guy makes about $20,000 a year as a small-town preacher. He doesn't have health insurance. If the hospital asks him to pay $1,000 then that is 5% of his total yearly income in one hospital visit! Fortunately for him, the government has set up an insurance program to help him pay these hospital bills. This program is called "Medicaid." So the priest pays $50 to meet his required amount due for access to the services. The hospital sends the remaining $950 bill to the State Medicaid office who then say "we're have done extensive research and the price of your services should be somewhere around $850. We want you to stay profitable, so here's $851." The hospital has now received $901 between the medicaid office and the priest's payment. The priest walks away and vows to never drink again.
The Lawyer: After a few hours in the hospital, he is asked for some basic information about insurance. He is covered through his employer's insurance company and gives them a card with all of the details they need on it. He pays a fee of $50 for the services and the insurance is billed for the remaining $950. They return the bill and say "Nope. Remember? We agreed to send all of our patients to your hospital if you give us a ~ 5% discount. Here's $900." So now they've made $950 off the Lawyer. The Lawyer walks out and says "Man, this hospital bill stuff is confusing... I need a drink."
After trying to understand how this all works, you bang your head against the wall in a moment of frustration. You go to the hospital and receive the exact same $900 of service. Lucky for you, you're a wealthy entrepreneur so you're not worried about the bill because you assume it will be somewhere between $900 and $1,000. You receive your bill in the mail and to your surprise, it is $1,249. Why so high? The hospital is currently at an operating loss of $49 and still needs that $300 for the Cancer center. So you get billed for the extra $349. Clear as mud?
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