Mark Shea is fond of saying “History can be summed up in two phrases: ‘What can it hurt?’ and ‘How was I to know?’” (see, for example, here). That’s a nice snappy way of saying that the unintended and unforeseen consequences of an act can be devastating. Today’s Denver Post has a story about people who are probably trying to do something good that is likely to have some bad consequences for the very people they’re ostensibly trying to help.

The Post’s direct links are notoriously unreliable, so here’s a summary. State civil rights authorities are launching an investigation into the potential disparate impact on minorities of current hospital billing practices toward uninsured patients. “Disparate impact” is the legal phrase for unlawful discrimination that isn’t necessarily intentional. If a practice ends up treating, say, ethnic minorities substantially worse than the general population is treated, then “disparate impact” can be claimed and, if the party in question is subject to civil rights laws, the authorities can order remediation. Many of these cases settle before trial. The Post story even mentions a for-profit hospital chain that has settled a similar case.

The theory seems to be that (a) hospitals bill uninsured patients differently than they bill patients with insurance and (b) members of ethnic minorities are more likely to be uninsured than are members of the general population, then the billing of uninsured patients discriminates against the members of ethnic minorities. The solution they’re seeking is (1) for uninsured patients to be billed at rates more like those used for insured patients and (2) for hospitals to pledge not to take some uninsured patients to court over collection issues.

Now here’s where the problems come in. In the ten years I’ve been in healthcare, every provider I’ve worked with bills uninsured patients at a higher rate than they bill insured patients for a pretty good reason. Providers offer insurance companies discounts as an incentive for getting paid promptly. In fact, a big part of my job is haggling over how many days (10, 30, 40, whatever) that a given insurance company should have to pay our claims. The insurers who send the most patients tend to get steeper discounts and longer periods for payment than the smaller insurers, kind of like the way Wal-Mart can buy butter a lot cheaper than your neighborhood bakery can. Volume discounts and discounts for prompt payment are standard business practices for just about every business and, as people are prone to forget, healthcare in the U.S. is still a business.

Every so often in my company there are folks (usually from a nursing background) who want us to establish lower rates for uninsured patients or, as they like to call them, “self-pay” patients. Every time the response is the same. Data ends up demonstrating that the so-called “self-pay” patients are often more accurately referred to as “no-pay” patients (or, at a minimum, “fractional-pay”). Since very few of the uninsured patients actually pay enough to cover the cost of providing service, those that do pay have to cover not only their own costs, but also those of the patients who pay little or nothing. (Yes, there is charity care and that’s an important part of the work of any healthcare provider, but as a practical matter there are to limits to the amount of charity care that any single provider can carry.)

The first part of the problem is that the proposed solution gives hospitals an even larger incentive to refuse treatment to uninsured patients. Most hospitals already are quite skittish about accepting uninsured patients for elective admissions. If the hospital is sure that they won’t have any way to enforce the payment obligation of the patient, that will mean more hospitals will require payment up front. Very few uninsured people will be able to receive care.

Worse yet, this could serve as further incentive for hospitals to close their maternity and emergency departments. Federal law requires hospitals that have maternity facilities to accept all women who show up in labor and hospitals that have emergency units to accept all patients who are experiencing emergencies. If a hospital sees that its survival is threatened by the bad debt generated by those units, it well may discontinue these vital services. There’s no reason to believe that this is intended, but it sure could hurt.