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Stories for Reprint
Medical Debt Growing Among Uninsured and Insured Alike
By Ekaterina Pesheva
At 27 and in robust health, Angi Meyes of St. Louis was not too concerned that she didn't have health insurance from her full-time job at a coffee shop. But last spring, when she developed a staph infection in her breast, the lack of insurance became a problem.
Meyes was rushed to the emergency room where she was fed antibiotics intravenously. Two days later, the infection had progressed to a full-blown abscess. Meyes needed surgery immediately. In the pre-op room at Barnes-Jewish Hospital, Meyes wondered how she'd be able to pay for her treatment, but doctors and nurses assured her that the surgery was not a choice, but a medical necessity. The operation, and weeks of follow-ups for wound dressing and drainage, left Meyes with a $13,000 bill. Thus, she joined the ranks of millions of Americans facing medical debt.
Medical debt is a growing problem nationally. Almost 20 million American families had problems paying medical bills in 2003, according to a national study by the Center for Studying Health System Change (HSC), a non-partisan research policy group funded by The Robert Wood Johnson Foundation, a philanthropic organization devoted to improving health care in the United States.
Few states, however, have gauged the extent of medical debt.
Sidney Watson, a law professor at St. Louis University, is currently conducting a series of studies to measure the problem of medical debt in the state of Missouri.
"I am concerned about access to health care," Watson says. "There seems to be an impression that people who don't have insurance can just go to a hospital and get free care, and this is simply not true. People still get billed. They still have to pay."
Meyes had to. Fortunately for her, the hospital had a plan whereby they assigned a caseworker to every uninsured patient requiring immediate treatment. The caseworker helped Meyes fend off collection calls, which are often the most dreaded part of living with medical debt.
"That alone was such a huge relief, not having to deal with collectors," Meyes says.
The caseworker applied on Meyes' behalf for Medicaid, the joint state/federal insurance program for the poor and disabled. Meyes didn't qualify because she didn't have a disability. The next step was to apply for assistance with the hospital. Meyes got a 100 percent of her debt forgiven, a highly unusual outcome.
"If I hadn't gotten the financial assistance from the hospital, they should have been happy with 10-20 bucks a month until it was gone," Meyes says. "I wasn't going to bankrupt myself over that."
But not all hospitals offer such programs. When they do, only a small number of debts is forgiven.
As was the case with Meyes, most people who fall prey to medical debt, often face medical emergencies suddenly. Thus, they don't have the luxury of shopping around for the cheapest service.
Those most often plagued by medical debt are people who slip through the cracks of the U.S. health-care system: the low-income uninsured people, part-time workers or full-time employees who can't afford soaring health insurance premiums offered by their employers and do not qualify for state and federal aid.
However, the problem is becoming more and more prevalent even among families of the once-robust middle class who have health insurance, says Robert Seifer, director of the Boston-based Access Project, a non-partisan group that assists the indigent, uninsured and underinsured.
"We have consistently found high levels of low to moderate-income people with medical debt," Seifer says.
A study by the Commonwealth Fund, a private foundation that supports independent research on health and social issues, found that 62 percent of people with medical bill problems were insured at the time the care was provided.
For people with insurance, medical debt comes from the cost-sharing component of the plan, such as co-pays, deductibles and non-covered services, all of which are being increasingly tipped against the insured, with employees trying to curb the cost of insurance.
People without health insurance remain the most vulnerable. Paradoxically, they are being charged up to four times what insured patients must pay for the same procedure. This is because insurance companies can negotiate pay rates with hospitals and obtain volume discounts.
"Charges for even the simplest treatment - particularly in a hospital - are often multiples of what an insurance company would pay and well out of reach for an uninsured person of limited means," Seifert says.
Medical debt has ripple effects across the board.
"People with medical debt are less inclined to return to a provider to which they owe money, which is a serious access issue particularly in areas where there may be a limited number of safety net providers," Seifert says. "Medical debt can also cause credit difficulties that hinder the ability to get a mortgage, secure other types of consumer loans, sometimes even to rent an apartment or get a job. Nearly one-half of all personal bankruptcies have a medical event or medical debt as a major cause."
What is the solution - a system overhaul or small steps such as hospitals offering discounts to uninsured individuals similar to discounts offered to insurance companies?
"The discounts help, but a $5,000 bill doesn't look that different from a $10,000 bill to someone who has no money," Seifert says. "Hospitals and other medical providers - this isn't just a hospital issue - should adopt and make known charity care and other financial assistance policies that are consistent with their mission of serving their communities. The problem doesn't completely go away, though, unless everyone has health insurance that doesn't have a lot of gaps - and the trend, even for people lucky enough to have insurance, seems to be going the other way at the moment."
While hospitals have been most often blamed for their predatory collection practices, medical debt is a system-wide problem, Watson says. Hospitals must make money or at least break even to continue their services, and thus face many pressures. For example, certain hospitals' bond ratings depend on their accounting books being free of uncollected accounts. This may drive hospitals to be aggressive in their bill collection.
After her study is complete, Watson and her team will make recommendations to state policy makers on how to address the problem of medical debt. Watson's project is part of a five-state study, which will allow researchers to see how unique Missouri is compared to other places in the country.
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