by Adrienne Snavely
Medical debt can affect anyone of any age in any state in any income bracket. Medical debts account for more than half of debt collections on credit reports. One in three Americans struggle to pay medical bills, and 70% of them are insured. Having a bill go into collections damages a person’s credit rating. People with medical debt can also fall into credit card debt, bankruptcy, or home foreclosure. They may deplete their retirement or college savings. The person may also forego future needed medical treatment to try to save money. An expense of $400 is found to be too much for 52% of Americans, and a patient’s deductible is most always over $1,200.
Most people who have difficulty paying medical bills are individuals and families that have insurance, not the uninsured. They may be gradually paying these bills over time or have bills they simply cannot pay. Out of pocket spending can exceed the amount of the deductible after a major health event, including getting care from physicians outside of network. There are coverage limits and exclusions which create additional costs for patients to cover. Debt may also result from insurance premiums that are unaffordable.
Bills that may have been affordable before no longer are if the health event keeps the person from bringing in income. Illness or injury also compromises a person’s ability to manage all the paperwork that follow – keeping track of what has been paid and what is still owed. The problem of medical debt and collections is worsened by the complexity and lack of transparency in the system. The complexity of third party reimbursement is a source of confusion and misunderstanding between the patient, physician, and insurer. Some patients were surprised to find out how much they owed for care that they thought was covered.
Obamacare provides some tools to attempt to make insurance coverage easier to understand and transparent for patients. The summary of benefits and coverage (SBC) is to be a summary of what a plan covers and the deductibles to each benefit written in plain language with no fine print. It must also include what is not covered, so patients have an idea of what costs will be out of pocket. Implementation of this requirement has been incomplete. Another regulation sets new standards for the explanation of benefits (EOB), which summarizes what claims have been paid or denied. Transparency reporting is required by all plans, including employer-sponsored ones. Plans are to report data on enrollment, claims payment practices, claims denials, and patient expenses, and other information requested by the Secretary of Health and Human Services. This transparency provision has not yet been implemented. Consumer assistance programs (CAP) are to be established in every state. This program is to help patients with questions about their coverage, resolve disputes, file appeals, and collect data on patient experiences with health plans.
Increasing deductibles are not making insurance premiums more affordable, and also increase the risk of medical debt, even to those who have insurance. More transparency in the details of plans cannot eliminate medical debt, but can help patients see the differences between plans and resolve any billing questions. At MediBid, price transparency helps patients plan for expenses and reduces the chance of unexpected debt.
Pollitz, Karen; Cox, Cynthia. “Medical Debt Among People With Health Insurance.” Private Insurance. Kaiser Family Foundation, 7 Jan 2014. Web. 23 Jan 2015.
Pollitz, Karen. “Medical Debt Among Insured Consumers: The Role of Cost Sharing, Transparency, and Consumer Assistance.” Policy Insights. Kaiser Family Foundation, 8 Jan 2015. Web. 23 Jan 2015.