Some make ends meet by forgoing treatment
By Julie Appleby
USA TODAY
August 31, 2005

Medical progress has helped Americans live longer, but the exploding cost of those breakthroughs has polarized the nation: More than one in four Americans are faltering under the burden of health costs, while almost half — those lucky enough to be healthy or wealthy — are untouched.

The rest are a mix of those who say they worry about whether they will be able to pay routine medical bills in the future and those who have already started cutting corners — skipping treatments or not taking prescriptions — because of the costs.

Other findings from a nationwide survey of adults by USA TODAY, the Kaiser Family Foundation and Harvard School of Public Health show that medical inflation is creating financial problems even for those who most assume should be able to handle the costs — those with health insurance.

Sixty-two percent of those struggling to pay medical bills have health insurance, underscoring how increasing premiums, deductibles and gaps in coverage are affecting families.

The survey, a wide-ranging look at the impact of medical costs on the nation’s families, found that 28% of adults were unable to pay for some form of medical care in the past year. That’s nearly double the 15% who reported such a problem in 1976.

Medical costs are a growing burden for middle-income families with children, as well as for the working class, people with chronic illnesses, the disabled and the uninsured. Many who cannot pay skimp on health care, go without prescription drugs or simply ignore their bills, the survey showed.

“The cost of health care is going up much faster than people’s wages,” says Drew Altman of the Kaiser Family Foundation, a non-partisan research group not affiliated with the Kaiser medical group. “Families are paying about (on average) $1,000 more now just for health care premiums than they were five years ago.”

Surprisingly, costs are less of a problem for the elderly, most of whom are covered by Medicare, even though it has seen a 71% increase in monthly premiums since 2000. The survey found that the elderly were far less likely than those under 65 to have skipped treatments or drugs or to have reported that they did not have enough money for medical care.

Overall, the hardest hit by medical costs are the uninsured.

Next are adults under age 65 with insurance who have household incomes of less than $75,000, an analysis of the survey data found. Those in that vast swath of Middle America were far more likely than those richer or older to report not having enough money to pay for medical costs in the past year (33%), to have paid $1,000 or more in out-of-pocket costs for care (31%) or to have skipped medical treatment or a prescription because of the cost (34%).

Wealthier households and those who report few health problems — two groups that represent nearly half of Americans — had little or no difficulty with medical costs.

“Whenever you say there’s a health care crisis, most Americans say, ‘Gee, it must be my neighbor, not me,’ ” says Uwe Reinhardt, an economics professor at Princeton. “That’s because most Americans are not very sick. But when they really do need several different drugs, it can very quickly be very expensive.”

Conducted this spring, the telephone survey of 1,531 adults comes after four years of back-to-back double-digit increases in health insurance premiums.

Premiums for policies offered by employers have risen more than 57% since 2000, with the average family policy costing $9,950 last year, according to a separate employer survey by the Kaiser Family Foundation. Workers pay an average of $2,661 toward that cost. Other findings of the USA TODAY/Kaiser/Harvard poll include:

•More than one in five Americans currently have an overdue medical bill.

•Nearly two out of 10 say health care costs are their biggest monthly expense after rent or mortgage payments.

•Almost three out of 10 estimate they paid $1,000 or more out-of-pocket for health care in the past year on top of premiums.

For some, medical expenses are not a disaster. Paying the bills may mean only putting off buying new cars or redecorating the house. The survey found that 39% of people are very satisfied with what they pay for their health insurance.

Carola Schmidt, of Sheridan, Wyo., has health insurance through her husband’s job. She says it has about a $1,000 annual deductible and covers 90% of the cost of in-network care.

“We do have insurance, and it covers the majority of costs,” says Schmidt. “I hear a lot of complaining, but then people complain about the price of gas and the price of this or that. You have to put it in perspective. If you don’t have insurance, that’s a huge problem. I can’t complain.”

But for others, medical costs cut deeply into the family budget. They make do by going without recommended treatment, or they pile up credit card debt. Fifteen percent of those polled say they’ve been contacted by a collection agency over medical bills, and 12% report using up all or most of their savings because of medical bills.

Crystal Cox, 49, whose 58-year-old husband, Gary, died in October after five months in the hospital, has health insurance. But like many insurance plans, it covers only 80% of hospital bills. So Cox, who earned $12,000 last year at her job cleaning an elementary school, says she owes the hospital $20,000 for the treatment her husband received for strokes and complications of diabetes. The North Bangor, N.Y., resident shops at lowest-cost grocery stores and keeps her thermostat set low in the winter, looking to save wherever she can.

Because of her debt, she avoids going to the doctor herself, putting her among the 29% of those surveyed who reported that they, or someone in their household, had skipped medical treatment, cut pills in half or failed to fill a prescription in the past year because of cost. “I just don’t want to add more bills to what I’m already carrying,” Cox says.

As co-payments, premiums and deductibles rise, those facing financial difficulties are increasingly moderate-income families, such as Jeffrey Herchenroder’s, who have health insurance.

The 45-year-old high school teacher lives just outside Albany, N.Y., with his wife, Cindy, and two of his three children on an annual income of about $65,000. His oldest child just graduated from college. His job provides insurance, for which Herchenroder pays about $3,000 annually toward the premium; his employer pays the rest. He has rheumatoid arthritis, and his 11-year-old son has asthma and diabetes. They recently paid $1,000 for their share of the cost of an insulin pump. Everyone in the family takes at least one prescription drug. Each month, he estimates, the family spends $280 on drugs alone.

“We dip into credit cards, and it starts to become a big cloud,” he says. “We have good insurance but still some amount of (financial) trouble. Medical costs affect our lifestyle. We don’t vacation. We don’t eat out. I buy cars with blown engines and put new engines in them so we have something to drive. I’ve never owned a car newer than 6 years old.”

The most popular type of insurance plan today carries annual deductibles that last year averaged $287 for an individual plan and required patients to pay 20% of hospital or lab bills. As co-payments and deductibles grow, doctors and hospitals report that more patients are skipping out on their share. In response, some doctors, clinics and hospitals are demanding patients pay their co-payments upfront.

Michelle Barkenquast, 37, is a six-year breast-cancer survivor who lives in Homestead, Fla. She has health insurance through her job as a floral buyer for supermarkets. She pays 20% of costs for medical tests or 30% if the clinic or doctor is not in her insurers’ network. She recently turned down one of three tests — a CAT scan — her doctor wanted her to have.

“The place where I was going to have the test called a few days ahead of time and said I would be expected to pay at time of service. It was going to be nearly $3,000. I ended up having two of the tests run, so when I went in, it was about $750,” Barkenquast says.

Such co-payments can strain family budgets.

Kimberly Anderson, 31, of San Antonio, has insurance through her husband’s job. In the past year, she’s had two surgeries, and both her children had surgery for ear tubes. The family income is about $72,000, but their mortgage eats up $1,500 of that a month and payments on two new cars an additional $1,200. She says she and her husband, Jeff, owe about $1,500 to more than a dozen doctors and labs for the costs the insurance plan did not cover. Paying off those bills has fallen behind other priorities.

“You get bills from the anesthesiologist, the surgeon, the consulting surgeon, not to mention the bills for labs, X-rays and MRIs,” she says. “They’re all in collections right now. We’re a middle-income family. Our money goes to the bills and getting food on the table and getting stuff we need to have. Medical bills come last.”

She says the bills did not interfere with getting a mortgage on a new house because the Federal Housing Administration (FHA) didn’t count medical debt in its calculations.

Anthony Stout, 31, is a journeyman mechanic for heating and air conditioning systems, in Blackwell, Okla. His company provides health insurance for him, but not for his wife and six children. His children qualify for a state Medicaid health program, but his $15-an-hour job pays too much for his wife, Stacy, to qualify. She recently had a baby, a cost that was covered by the state program, and is just starting back to work, but she has no insurance.

Stout this past year had a lump removed from his shoulder and lost a week’s pay while out recovering. Luckily, it wasn’t cancer. He owes $2,000 for his share of the surgery; his insurance paid $8,000. “For me, $2,000 is a great percentage (of my income). My rent here may be cheaper than other parts of the country, but the medical costs are the same,” says Stout, who says he hasn’t yet paid the bill.

As a single working mom, Marvella Davis, 37, pays $100 a month for over-the-counter medications for her twin 12-year-old girls, Jasmine and Jamela, who have rheumatoid arthritis. Davis, whose $8-an-hour receptionist job in Dunwoody, Ga., doesn’t come with insurance, has no coverage. The girls are covered by Medicaid, but it doesn’t pay for ibuprofen, a common painkiller used to treat the painful joint condition. Because of the medical expenses, she sometimes has to borrow money from her mother to buy food.

“Their joints get so stiff that they can’t move,” she says. “I can’t not give it to them. But the grocery bill is hard to keep up with.”

In general, the survey found the elderly less affected by medical costs than working-age adults. People over age 65, even those with chronic conditions, are among those who report the fewest problems paying for medical care, illustrating the success of Medicare as it hits its 40th birthday. Eighteen percent of those 65 or over reported skipping a medical treatment or drug because of the cost, compared with 32% of those under 65, the survey showed.

Although the $250 she pays for Medicare and a supplemental policy is her biggest monthly payment, Glenda Cato, 68, says the money comes right out of her pension check and she isn’t suffering. That may be because she managed money well all her life, Cato says. Her house is paid off, and she has no credit card or car payment debt.

“That’s a lot of money because my income isn’t that much, but I know people who are paying twice that,” says Cato, of Sonora, Calif.

She considers herself lucky because she knows plenty of people who have no insurance. Her son, for example, has coverage, but his employer does not provide a family policy. So his wife and kids are uninsured.

“They just pay as things come along,” Cato says. “My grandson fell off his bike and had a big cut on his arm. That was $1,500. I think it’s a big problem in America that isn’t being addressed. People are doing without. They just don’t go for health care because they can’t afford it.”

The number of uninsured has grown in recent years, fueled mainly by workers losing insurance as they lost jobs in a slow economy. Census Bureau figures released Tuesday show 45.8 million uninsured in 2004, up from 45 million in 2003. But the number with insurance grew as well, so the percentage of people without insurance remained the same, at 15.7% of the population.

The USA TODAY/Kaiser/Harvard survey found 18% of adult respondents uninsured. Of the survey respondents who were uninsured, 6% said they didn’t think they needed coverage. But 70% said cost kept them from getting coverage.

Scott Bell, 28, chief installer for a furniture company, lives in Graham, Texas. His job doesn’t come with health insurance, so he pays his own medical costs. Bell, who has asthma, takes two prescriptions a month. Recently, he went to the emergency room with breathing problems.

“Between the bills from the hospital and the doctor, it came to $1,800, for just a couple of hours,” says Bell. “I just send what I can each month — usually around $30 — and they’ve never said anything.”

Bell says he pays $285 a month for his asthma medication, Advair. Sometimes he travels five hours to Mexico to buy it. “When I can go to Mexico, it only costs $40. Medical costs are probably my third-biggest expense, behind rent and my vehicle. Sometimes I have to go without, but most of the time, I can manage somehow or another. I do a lot of extra side jobs, every weekend.”

Kathleen Follett, 54, of Woodburn, Ore., works full time as a sales associate at Wal-Mart in the crafts and fabric department. She earns less than $20,000 a year. While Wal-Mart offers health insurance, she says it costs too much. Of the choices she had, the insurance plan she wanted would have cost about $38 a paycheck, or $76 a month.

Instead, Follett says, “I don’t go to the doctor for anything.”

Solutions to rising costs are elusive — and often temporary. Managed care held down increases during the mid-1990s, but backlash against the restrictions led the strictest types of plans to fall into disfavor and costs rose again.

Most health cost experts, such as Paul Ginsburg, an economist at the Center for Studying Health System Change, a non-partisan think tank in Washington, D.C., say there is no single answer to controlling rising costs. “I don’t see any silver bullet out there that is going to alter the trajectory of our health system, which is one of spending more and more to care for fewer and fewer people,” Ginsburg said at a press briefing in Washington, D.C., last week. One idea currently in vogue includes paying bonuses to doctors and hospitals that show they are improving quality or outcomes. The goal: making health care more efficient, safer and cheaper.

Another idea is to pass along more costs to consumers on the theory that they will become more judicious users of health care and will shop around for the best prices. One way to do that is through insurance plans with high deductibles.

Such plans come with at least a $1,000 annual deductible for individuals and $2,000 for families, meaning patients must themselves pay for care until reaching those limits. Some of the policies are coupled with new tax-free medical savings accounts. While high-deductible plans may lower monthly premiums, they could come as a shock for some patients: The average annual deductible last year for the most popular type of managed care plan was $287 for an individual, according to the Kaiser employer survey.

Supporters say such plans will counter the mistaken belief fostered during the HMO era, when few plans had deductibles and it generally cost $10 to see a doctor or get a prescription, that health care was cheap.

“It’s the first kind of reform targeted at consumers,” says Robert Helms, a resident scholar in health policy at the American Enterprise Institute, a conservative think tank in Washington, D.C. Managed care, he says, attempted to control costs by cutting payments to doctors and hospitals. “This really attempts to get individual consumers involved in decisions.”

Critics, such as Consumers Union, say this approach would hurt those with chronic conditions, who would have to pay even more for health care. Health savings accounts and high-deductible policies are still too new for any definitive studies showing whether they result in long-term savings or what financial effect they may have on people with chronic illnesses.

But at best, such solutions will only help slow health care inflation, say several economists such as Ginsburg and Reinhardt. New medical treatments, rising prices and growing demand from aging baby boomers are expected to continue to fuel rapid inflation for years.

“The underlying health care costs are not going to go down,” says Glenn Melnick, a researcher at Rand, a Santa Monica, Calif.-based think tank. “They will continue to grow annually in the 8%-to-10% range for as far as we can see. Managed care is over.”

As costs rise, so will the number of those struggling to pay. “If you were to repeat this survey every two years, you will find more and more moving into those categories where it’s difficult to pay those bills,” Melnick says. “Just because you don’t have a problem today, doesn’t mean you can’t be in one of these other groups next year.”