Healthcare Costs in New Jersey: Hidden Fees Hit Consumers

Governor Phil Murphy recently signed into law a new transparency law that prevents Garden State businesses from profiting from credit card surcharges added to bills. We all hate paying that little extra that some restaurants and retailers add to our bills when we pay with Visa, Mastercard or American Express, and this law will help us avoid them. Consumers deserve to know how much they are being charged, especially in these inflationary times.

However, lawmakers are missing out on a greater opportunity to protect consumers from unknown hidden costs. They should expand their focus from pesky credit card overcharges to potentially financially devastating healthcare overcharges.

Unknown and inflated healthcare bills can lead to years of medical debt, bankruptcy, and hospital lawsuits that jeopardize wages and seize assets. New Jersey hospitals have even sued patients over unpaid bills during the coronavirus pandemic. In a typical story, Gina Gonzalez of Woodbridge was forced to sell her car to pay a $13,500 settlement resulting from a lawsuit filed by Trinitas Hospital.

I have seen firsthand the financial devastation caused by hidden health care costs as a former head of the New Jersey state health plan. Sometimes these increases took the form of exorbitant “facility fees” added to care, even telehealth. But more often than not it was just ordinary price gouging.

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For example, Mark Gottlieb of Little Ferry received a $250,000 hospital bill, $89,000 of which was out of pocket, for surgery after a car accident. Richard Kodack of Morris County received a $9,000 hospital bill, of which $7,323 was owed out of pocket, for a 20-minute ambulance ride. With such well-documented healthcare overbilling, price transparency is urgently needed to protect patients.

Due to the opacity of the status quo, 11% of New Jersey residents and 17% of New Jersey residents of color have medical debts in collection. Early in my career, I was a bankruptcy law clerk in New Jersey and saw countless heartbreaking stories of individuals and families caught in spirals of medical debt, often due to circumstances beyond their control. Many have gone bankrupt due to outrageously priced and hidden routine treatments. I remember looking at their faces as they left the courtroom hopelessly.

In today’s predatory healthcare system, patients are asked to sign up for a lifelong guarantee to pay all consequential expenses as a condition of care. No wonder the prices are so high. In what context is it acceptable to potentially burden someone with debt that could cost them everything, all while they are in their most vulnerable state?

State legislators can address this anti-consumer dynamic in health care by codifying and enforcing federal rules on hospital and health insurance price transparency at the state level. These rules require hospitals and insurers to post their actual prices online, including secret negotiated rates, so consumers can buy affordable treatment and feel confident that it won’t result in financial ruin.

Federal regulations have been plagued by non-compliance and lack of standards. Many hospitals get around the rules by using cost estimators, which allow hidden fees and surcharges to feed into the final bills. But robust state legislation can introduce significant price transparency for residents.

Just as the state Division of Consumers will inspect New Jersey businesses for compliance with this credit card surcharge law, a state agency can enforce the law to ensure that healthcare companies offer upfront prices that match to the final bills of the patients.

“All residents and visitors doing business in New Jersey deserve the utmost transparency regarding their transactions,” Murphy said signing into credit card legislation. The governor and state legislators should follow the courage of their convictions and extend this principle to health care, where it can have a much more significant impact in protecting ordinary consumers.

Christin Deaconisa former director of operations, policy and health benefits planning for New Jersey.