02/24/2012 01:18 pm ET Updated Apr 25, 2012

Californians Caught in the Middle

What if your hospital charged you $21 per aspirin? And what if the same hospital charged a patient hit by a drunk driver more than the value of her house because she had no insurance?

Well, that's California. We are caught in the middle of two injustices: hospitals that routinely charge outrageous prices for basic services and then turn around and provide a tiny fraction of their profits in charity care for the needy. This drives up the cost of health care for everyone.

SEIU-United Healthcare Workers West, the largest union of health care workers in California, wants to improve health care here. Part of our plan is submitting two November ballot initiatives that will bring balance and fairness to the system.

The Fair Healthcare Pricing Act would require hospitals to limit charges to no more than 25% above a hospital's total patient care expenses, which hospitals can adjust to account for Medi-Cal, California's Medicaid program, and other qualifying losses. Right now, on average, California hospitals charge 450% and as much as 1,000% of the actual cost of providing care when they treat patients in their facilities.

The Charity Care Act would require not-for-profit hospitals to apply at least 5% of net patient revenue each year to charity care for the needy. That means nearly $1 billion in new hospital resources for the most vulnerable residents of our state. These hospitals have more than $42 billion in reserves (nearly half the state's general fund budget), yet they are granted tax-exempt status for the purpose of treating the needy. In 2010, they applied less than 2% of net patient revenue to charity care.

Californians have tremendous anxiety about medical bills, and they lack the tools to properly evaluate their hospital bills. Hospitals know this, and they also know that when it comes to matters of life and death, patients don't have a choice.

While other industries have suffered during the country's recession, in 2010 the hospital industry had a net income of more than $4.1 billion (according to the California Office of Statewide Health Planning and Development). Its operating margins were more than 575% higher than 2006. Hospitals in California can afford to rationalize their prices and they can afford to provide additional charity and still be profitable.

An aspirin should not cost as much as lunch for two. Crutches don't cost $600. Eye drops aren't $151 and lotion doesn't cost $44. If you are in a life-threatening accident, you shouldn't be nearly assured personal bankruptcy.

It's no wonder there is overwhelming public support for both initiatives. They are good public policy that will help consumers. We look forward to the debate this fall.

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