America’s health care system grows increasingly complex for all parties, and this leads to repercussions even in the Tri-Cities area. At issue are the discrepancies between the prices charged for medical care and the amount usually paid for those charges in reality. It is unusual, to put it mildly, for health care agencies to be paid the full amount they charge. Insurance companies have the tremendous latitude to negotiate the exact amount disbursed, while the insured, to put it bluntly, tend to declare bankruptcy rather than face the staggeringly inflated prices. This disparity between the “sticker price” of health care and the amount paid has led the Tri-Cities to pursue a policy called the “collateral source rule,” which prevents the defendant in a personal injury suit from showing in court that the plaintiff or their insurance paid less than the full rate for their health care.
The city’s position is that, as the instances of injured people ever paying the charged price for medical care are very rare, then it is unfair to tort defendants to force them to pay out for the full amount. After all, a tort recovery is meant to replace precisely what was wrongfully damaged, not more.
The case used as an example was a personal injury suit brought after a city vehicle hit a local resident on Buffalo Road in 2017. Johnson City Medical Center billed that resident $9,728 for emergency room care and $194,468 for shoulder surgery. However, in the end, Ballad Health considered those expenses discharged for a Medicare payment of only $13,443.71. This is less than 10% of the original charge. This is far from unusual.
However, others believe that removing or reducing the role of the collateral source rule serves only the insurance companies. The collateral source rule helps to stop insurance companies from reducing their damage payouts for medical injuries. This decline in medical bill reimbursement, which can confidently be predicted to be a large decline, would primarily affect the defendants directly. The amount they could expect to gain after being wrongfully injured by city property could decrease precipitously, and there is little clarity about how this would affect the insured compared to the uninsured. It would also remove the incentive for attorneys to represent them.