04/28/2008 04:12 pm ET | Updated May 25, 2011

"Cash Before Chemo" Two Arguments for Health Reform

This is the story of MD Anderson's treatment of Lisa Kelly, an underinsured cancer patient. The hospital asked for $105,000 cash up-front before it would admit her.

This story comes from the excellent newspaper site of the">Wall Street Journal.

MD Anderson is shredded--as it should be--in this article, which notes that the hospital

is a nonprofit institution exempt from taxes. In 2007, it recorded net income of $310 million, bringing its cash, investments and endowment to nearly $1.9 billion.

But this is a larger system issue than one hospital's cruddy behavior. Uncompensated care is a large problem for many hospitals. So are low provider reimbursement rates from Medicaid and other sources. Given these financial realities, it is hardly surprising that hospitals start doing icky things to ensure that they receive their desired payment. When otherwise benevolent hospitals start demanding cash up-front from very sick people, it's time for health reform.

But there are two complications.

First, there is the matter of Ms. Kelly's limited-benefit AARP Medical Advantage plan. She bought the policy three years after she quit her job as a school bus driver to help take care of her mother. The policy cost $185 per month, which is an immediate tipoff of something. Mrs. Kelly took an incredibly bad gamble using this as her sole insurance plan.

Second, there is the awkward fact that the Kellys are by no means poor. I hasten to add that poor people and the uninsured are heavy targets of heavy-handed hospital tactics. Books such as Jonathan Cohn's book Sick serve up revolting examples of non-profit hospitals roughing up poor people. My favorite involved a Catholic hospital system suing a 62-year-old low-income former nun.

The Kellys' case, however, is different. It not the usual story of a low-income person who couldn't afford coverage. According to the article, they have substantial real estate investments, interest income, and other assets.

If there is a middle ground on the fearsome individual mandate debate, cases like the Kellys might point the way. I hate to say this, but it seems clear that the Kellys went in with open eyes, and made a bad choice. It is sad but appropriate that they be held responsible for Anderson's low-six-figure bill. If we implement an individual mandate for people who can easily afford health coverage, people like Mrs. Kelly would be spared the opportunity to make irresponsible choices. The real issues arise with the more pointed political and administrative trade-offs involving low-income people.

Saying that the Kellys are responsible for their foolish bet does not for one moment excuse a major and prosperous cancer center that failed to treat a frightened and sick patient with basic decency. As one official put things:

Asking patients to pay after they've received treatment is "like asking someone to pay for the car after they've driven off the lot," says John Tietjen, vice president for patient financial services at M.D. Anderson.

We've come to that. This story really provides two arguments for health reform: First, we must address the reality that people make bad gambles that don't pay off. Second, we must change the mentality of a healthcare system in which a cancer hospital administrator describes his work through analogies to a car dealer.

There is one humorous side note to an otherwise unfunny story. Ms. Kelly's bill included an erroneous (later fixed) $314 charge for an, um, male incontinence clamp. Given the behavior of some people in this story, Ms. Kelly could be forgiven for wanting to put this clamp to proper use.