States move to put limits on surprise health care fees

Summary

Marketplace Morning Report Summary: "States Move to Put Limits on Surprise Health Care Fees"

Release Date: June 9, 2025
Host: David Brancaccio

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1. Senate's Big Spending and Tax Cutting Plan Faces Challenges

In the early part of the episode, David Brancaccio discusses the Senate's ongoing deliberations on a significant spending and tax-cutting proposal championed by President Trump. The plan, which aims to secure President Trump's signature by the Fourth of July, is encountering internal Republican conflicts. The primary contention revolves around adding to the national debt versus implementing cuts to unpopular programs. The situation is further complicated by the opposition of influential figures like Elon Musk, a prominent businessman who voices his concerns against the current proposals.

Key Points:

• Senate Negotiations: The Senate is actively working to refine the spending and tax-cutting plan, balancing fiscal responsibility with political feasibility.
• Elon Musk's Opposition: Musk's stance adds pressure on Republicans, highlighting disagreements within the party regarding the best path forward.
• Elimination of Taxes on Tips: A notable provision under consideration is the removal of taxes on tips, which could impact workers in service industries.

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2. The Complexities of Tipping and Taxation in the U.S.

The episode delves into the intricate dynamics of tipping within the United States, especially in the context of potential tax reforms. Daniel Ackerman reports on new data from TOAST, a payment processing firm, revealing regional variations in tipping behaviors.

Expert Insights:

• Lawrence Debo, Professor of Business at Dartmouth:
  "Tipping at the level we do is a very American thing." (01:44)
  Debo emphasizes the cultural uniqueness of tipping in the U.S. and shares his personal observations as a Belgian adjusting to these norms.

• Impact of Technology and Social Pressure:
  Debo explains that the proliferation of tipping is fueled by technological integrations, such as tip prompts on payment devices, and the visible pressure of peers deciding how much to tip.
  "Think the tip screen on the coffee shop iPad. And everybody behind you sees that, you're the one that tips." (02:21)

• Regional Tipping Variations:
  Data indicates that tippers in Delaware are the most generous, averaging over 22%, while California tippers are the least generous at just over 17%. Economist Uri Ganese attributes California's lower tipping rates to its higher minimum wage laws, which provide workers with a more stable income independent of tips.
  "California is among a handful of states where businesses have to pay at least minimum wage even if workers get tips on top of that." (02:44)

• Concerns Over Eliminating Tip Taxes:
  Jeremy Bearer Friend, a professor of tax law, raises alarms that removing taxes on tips could lead employers to reduce base wages, making workers more dependent on tips.
  "If we start subsidizing tips relative to wages, then we're going to have a greater share of compensation in the form of tips." (03:08)

• Calls for Raising Minimum Wage for Tipped Workers:
  Debo suggests that increasing the minimum wage for tipped employees would be a more equitable approach to enhancing their compensation, ensuring that their earnings are not solely reliant on variable tip amounts.

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3. Efforts to Curb Surprise Facility Fees in Healthcare

A significant portion of the episode focuses on the contentious issue of facility fees in the healthcare sector. These fees, often unexpected charges added to medical bills, are under scrutiny by 15 states aiming to regulate or eliminate them.

Case Study: Kari Greene's Experience in Oregon

• Incident: Kari Greene encountered a mysterious $92 charge labeled as a hospital fee after a routine rheumatologist visit. Despite the simplicity of the clinic setup, the fee was levied without clear justification.

• Legislative Response: Oregon lawmakers are evaluating a ban on facility fees for standard consultations and visits. Currently, such fees are permissible to cover the costs of maintaining emergency readiness, but their application to routine care remains contentious.

Expert Opinions:

• Reen Hensley Quinn, National Academy of State Health Policy:
  "What doesn't make sense is when patients get hit with these fees for routine office visits. You can prepare for those things." (05:35)
  Quinn points out the lack of rationale behind charging facility fees for non-emergency, everyday medical services.

• Molly Smith, American Hospital Association:
  "Limits on one could put vulnerable hospitals in a tight spot." (06:10)
  Smith voices concerns that restricting facility fees might financially strain hospitals, potentially impacting their ability to procure necessary supplies and maintain staff.

• Dr. Deidre Gifford, State Health Regulation Oversight:
  "It's like squeezing a balloon. The costs are still there. They just show up on one part of the bill instead of the other." (07:05)
  Gifford highlights the unintended consequence of shifting fees rather than addressing the underlying healthcare costs, suggesting that hospitals might compensate by increasing other charges.

Current Legislative Actions:

• Connecticut's Ban: Connecticut has already implemented a ban on facility fees for consultation and follow-up visits. While patient complaints have decreased, hospitals have increased their revenue from these fees, raising concerns about overall cost management.

• Data Gaps: There is a significant lack of comprehensive data regarding the prevalence and financial impact of facility fees, complicating efforts to create effective legislation.

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4. Brief Mention: Apple's Worldwide Developers Conference

Towards the end of the episode, David Brancaccio briefly touches upon the upcoming Apple Worldwide Developers Conference. Although not a primary focus, he notes that expectations are tempered with no major surprises anticipated, though some developments in artificial intelligence and system updates are on the agenda.

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Conclusion

This episode of the Marketplace Morning Report provides a comprehensive overview of ongoing legislative and economic challenges in the U.S., ranging from federal tax and spending plans to nuanced issues within the service and healthcare industries. By highlighting expert opinions and real-world cases, the report offers listeners a nuanced understanding of how these policies impact both workers and consumers across different regions.

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Notable Quotes:

• "Tipping at the level we do is a very American thing." — Lawrence Debo (01:44)
• "If we start subsidizing tips relative to wages, then we're going to have a greater share of compensation in the form of tips." — Jeremy Bearer Friend (03:08)
• "What doesn't make sense is when patients get hit with these fees for routine office visits." — Reen Hensley Quinn (05:35)
• "It's like squeezing a balloon. The costs are still there. They just show up on one part of the bill instead of the other." — Dr. Deidre Gifford (07:05)

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For more insights and detailed discussions, tune into the Marketplace Morning Report or visit Marketplace.org.

Transcript

[David Brancaccio]

Hey there and thanks for listening. We want to know more about our audience. Stick around at the end of this episode to hear about how you can help, provide feedback and have a chance to walk away with a $75 gift card. Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single purpose, making our communities healthier that comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@ multicare.org buy a ticket for a concert and you'll often see a facility fee tacked on. You can also see these on medical bills. David I'm David Brancaccio in Los Angeles. First it's Monday, and the Senate will get back to the hammering and sanding on the big spending and tax cutting plan trumpeted by President Trump, who wants something to sign by the Fourth of July. Republican infighting over adding to the national debt versus unpopular program cuts is the key challenge here, inflamed further by influencer and businessman Elon Musk's opposition to what's on the table now. One provision that both the House and Senate are working on in some form is eliminating taxes on tips. For some workers. Gratuities and levels of tipping have been more top of mind, with so many checkout systems urging consumers to chip in 20% or more by default. And there are new data from payment processing firm TOAST that finds tipping varies by region. Here's reporter Daniel Ackerman.

[Lawrence Debo]

Tipping at the level we do is a very American thing.

[Daniel Ackerman]

I'm Belgian, so tipping is to me a very, very strange phenomenon. You know, why should I tip a taxi driver?

[Lawrence Debo]

Lawrence Debo, a professor of business at Dartmouth, says it took him time to appreciate the nuances of US Tipping conventions, even as those conventions changed.

[Daniel Ackerman]

The pandemic made the frontline workers heroes.

[Lawrence Debo]

So it made sense to tip your delivery person extra. But Deebo says tipping has continued to proliferate thanks to a potent combination of technology and peer pressure. Think the tip screen on the coffee shop iPad.

[Daniel Ackerman]

You know, if the device is turned.

[Lawrence Debo]

And everybody behind you sees that, you're the one that tips.

[David Brancaccio]

Zero.

[Daniel Ackerman]

You don't want to do this, right?

[Lawrence Debo]

Not me. But it turns out what people enter on that screen varies based on where they live. The TOAST data found that the most generous tippers are in Delaware. They offer more than 22% on average. The lowest tippers are in California at just over 17%. But Uri Ganese, an economist at UC San Diego, says that's not because his fellow Californians are stingy.

[Daniel Ackerman]

The $20 minimum wage for fast food.

[Lawrence Debo]

Workers is a good reason for that, Gianzi says. California is among a handful of states where businesses have to pay at least minimum wage even if workers get tips on top of that. And he says the higher base pay means a more stable income. I really prefer to live in a.

[Daniel Ackerman]

Place in which there is a minimum.

[Lawrence Debo]

Wage that is respectful and you can live, you can pay your rent with it. But a no tax on tips policy could encourage employers to lower wages, says Jeremy Bearer Friend, a professor of tax law at George Washing University. If we start subsidizing tips relative to wages, then we're going to have a greater share of compensation in the form of tips, he says. The lowest earners who don't make enough to be taxed anyway wouldn't benefit from the policy change. And in the House's version of the budget bill, the deduction wouldn't apply to workers without a Social Security number or to workers married to someone without one. It's part of a pattern throughout this current administration to target our immigrant colleagues, immigrant family members, for different treatment. And for workers who will get the tax break, it could be risky to rely more on tips. Lawrence Debo of Dartmouth says how much a tipped worker takes home at the end of the day doesn't always match the effort they put in.

[Daniel Ackerman]

There's lots of discrimination. There is theft.

[Lawrence Debo]

He says raising the minimum wage for tipped workers could be a fairer way to boost compensation. I'm Daniel Ackerman for Marketplace.

[David Brancaccio]

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[Lawrence Debo]

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[David Brancaccio]

It's our best iPhone offer ever. Switch to T Mobile. Get a new iPhone 16 Pro with Apple Intelligence on us. No trade in needed. Even pay off your phone up to 800 bucks with 24 monthly bill credits. New line 100 plus a month on experience beyond Finance Agreement 999.99 and qualifying boarded for well qualified plus tax and ten dollar connection charge. Payout via virtual prepaid card. Allow 15 days credits and imbalance due if you pay off earlier. Cancel CT mobile.com go for an X ray, an ultrasound or even log into a telehealth consultation and you can get what's called a facility fee tacked on. Could be 15 bucks, could be several hundred dollars. Fifteen states are trying to limit these fees or at least require fair Alex Olgun reports.

[Daniel Ackerman]

Kari Greene was surprised to see a mystery $92 charge after a visit to her rheumatologist's office in Portland, Oregon. She told lawmakers she was confused why she was being charged a hospital fee for a routine visit at a doctor's office. There's no specialty equipment in the clinic room. There's some crinkly paper on the table, a couple chairs, a blood pressure cuff machine, hand washing poster on the wall. Oregon lawmakers are considering whether to ban hospitals and affiliated practices from charging these fees for consults or visits like the one Greene had. Right now, the government does allow hospitals to tack these fees on to any visit to cover the costs of running an ER ready for disasters. State officials accept that. That makes sense. That's more Reen Hensley Quinn with the National Academy of State Health Policy. What she says doesn't make sense is when patients get hit with these fees for routine office visits, you can prepare for those things. Why is the charge being levied for that? There's no comprehensive data on the frequency or cost of these fees. But Hensley Quinn says patients have been complaining about them more for a long time. Congress has talked about a fix, but there's been no action. In the absence of Congress taking this step, states are pursuing prohibiting certain facility fees. Hospitals bill in two categories, one for the doctor's services and the other facility fees can be a catch all for everything else, and often insurers don't cover the fees. Molly Smith with the American Hospital association worries limits on one could put vulnerable hospitals in a tight spot. I mean, hospitals need to purchase a lot of drugs, supplies, pay staff, whether it is again nurses or lab techs or even people who keep rooms clean. Connecticut has banned these fees for consultation and follow up type visits. I asked Dr. Deidre Gifford, who runs the state office that oversees this regulation. If it's working well, depends on how you define working. Fewer patients are complaining about the fees, but hospitals are making more each year from these charges. Gifford fears hospitals may have just up fees for other kinds of care. This is the problem with one off well intentioned fixes to high healthcare prices, gifford says. It's like squeezing a balloon. The costs are still there. They just show up on one part of the bill instead of the other. I'm Alex Olgan for Marketplace and Apple.

[David Brancaccio]

Wants to be known as the tech trend setter. But going into the Worldwide Developers Conference on the firm's campus in Northern California that starts today, Apple watchers are not expecting anything. Blow your hair back. Cool. More AI is expected and the Associated Press says one highlight will be new nomenclature for identifying system updates. Hold on to your hats. But there may be surprises at the the conference, so we'll be monitoring. In Los Angeles, I'm David Brancaccio. This is the Marketplace Morning Report from APM American Public Media. Really quick, before you go, please complete a short anonymous survey by going to marketplace.org survey. It should only take about 10 minutes and as a token of our appreciation, you can enter your name to win a $75 gift card. When you've completed the survey, you do all of us at Marketplace a huge favor by filling it out.