The consequences of medical debt
The Access Project, with other organizations February, 2003
The Consequences of Medical Debt
Summary of key findings:
* Having health insurance does not always protect individuals from out-of-pocket medical bills they cannot afford to pay. In our survey of low-income individuals in three communities, respondents with and without insurance were struggling with comparable levels of medical debt.
* Confusing and multiple bills, and the challenge of understanding what is owed and to whom, add to the problem.
* Provider practices - requiring cash payment upfront, flatly refusing care or suggesting people use other sources of care - made it harder for many respondents with medical debt to access care with any regularity. Patients often responded to these practices by not seeking care or filling prescriptions, or otherwise not complying with treatment regimens.
* Health care providers seem to be adopting more aggressive collection procedures, including turning over their accounts to collection agencies 30 to 60 days after a missed payment (instead of a more customary 150 to 210 days) and encouraging patients to pay off their medical bills with credit cards, a practice that burdens patients with not only large debts, but high interest payments as well.
* Many of the individuals we interviewed wanted to pay off their debt and had tried to negotiate payment plans, but found the terms of the plan very difficult to maintain given limited incomes and apparently inflexible hospital collection practices.
* Few respondents, in spite of very low incomes, were able to secure public assistance to defray the cost of their medical care. Many turned to family and friends for help, suggesting that communities may help relieve the burden of medical debt, but also share in it.
* Like other forms of debt, medical debt can have substantial financial consequences, including serious credit problems and, in extreme cases, personal bankruptcy. However, unlike other forms of debt, medical debt is often involuntary, the result of an event over which one has little or no control.
* Bankruptcy may offer a means to relief from medical debt and from the harassment of collection agencies and its attendant stress. This is particularly the case for the uninsured - people who are likely to have relatively fewer resources and be less able to make regular payments on their debt.
* Medical debt made it harder for respondents to achieve self-sufficiency; they were hindered in their ability to get a bank loan and other lines of credit, to save money, or to pay for basic goods and services.
* The effects of medical debt can be compounded if a health problem leaves a person unable to return to work. Because of the debt, people may be deterred from seeking the care needed to allow them to work. Job seeking may also be hindered by the fear of wage garnishments.
* Respondents told us that medical debt caused significant stress, anxiety and feelings of hopelessness. Medical debt can also be a source of embarrassment and shame, and many respondents were frustrated and angry that they were being financially punished for a medical event over which they had little control.
Health care is a business unlike most others. The customers are, by definition, in a vulnerable position by virtue of the medical problem for which they seek services. The providers of these services differ from sellers in most other markets because their product is essential and often life saving, and is governed by ethical responsibilities that exceed those that apply in typical commercial transactions. Purchases are often sudden and unplanned and, particularly for people without health insurance, may bring large financial burdens that are involuntary in the sense that they are not the result of a traditional consumer choice.
http://www.accessproject.org/downloads/med_consequences.pdf
Comment: Warning: this report is difficult to read. It is not a report of technical complexity. Rather it is a report that has a Dickensian quality, including the Tiny Tims whose suffering is compounded by medical debt, and the institutional and individual provider Scrooges with their passive automaticity when faced with the "need" to collect unpaid debts. The report is punctuated with quotations. If you cry easily, this may make you do so.
We are spending $1.66 trillion on health care this year. Our existing policies ensure that our administrative excesses will always be fully funded for the benefit of the insurers. But our policies are not designed to prevent medical debt for vulnerable patients. Yet only a very small portion of funds directed to the wasteful administrative excesses would be more than adequate to cover all medical debt. It is so tragic and so needless.
Let's change our policies. Let's reduce the waste by changing to an administratively efficient, public insurance program, and use the savings to provide everyone comprehensive coverage. Medical debt then could be relegated to the Dickensian novels where it belongs.