Medical bill bankruptcies enough to make you ill

May 17 01:00 2014 by ushadmin

Here’s the trouble with being sick: It’s a full-time job. It’s the ultimate in the 24/7 work cycle and it often sucks those around the ill into its thrust.

When you are sick — particularly when you are seriously ill — you do not have time to be an accountant, actuary, medical technician, consumer activist or medical economist.

You have neither time to shop nor strength to negotiate.

And yet that’s what we ask people to do when they become seriously ill — face their most taxing financial hurdle and scuttle through a Byzantine level of administrative wickets while they’re at it — ObamaCare or no ObamaCare.

Two million people a year file for bankruptcy because of unpaid medical bills in the U.S., making medical bills the No. 1 cause of such filings. And even among those who have health insurance, 20 percent — 56 million adults — will struggle with medical bills, reports Nerd Wallet Health. The organization estimated nearly 10 million adults with year-round health-insurance coverage will still accumulate medical bills they can’t pay off this year.

Again, the majority of these people have health insurance.

Moreover, as Karen Pollitz of the Kaiser Family Foundation told me, the problem is likely larger than that. That’s because, “People feel like they need to pay these bills so they start rolling it into other debt, using credit cards, home equity loans or lines of credit,” she said.

And there’s reason to panic. Medical bills, as Elisabeth Rosenthal reports in The New York Times, “can be reported rapidly to credit agencies, and often without notification. And even small unpaid bills can severely damage credit ratings.”

That’s what happened to one of the subjects in Pollitz’ study. Faced with a bill he could not afford, the former patient worked out a payment schedule with his health care provider. He made the first three payments faithfully and was then informed his bill was being sent to a collection agency. Once your bill is turned over to a collection agency, Pollitz says, that’ll knock 100 points off your credit score. “Easy,” she said.

Once that medical bill is in the hands of a collection agency, it swiftly becomes “a millstone around your neck,” Mark Rukavina, principal at Community Health Advisors, told The New York Times. As Rosenthal reports, the problem is multilayered. First of all, the lack of transparency in medical costs means that treating a brain hemorrhage at Cedars-Sinai Medical Center will cost you $167,860, while the same treatment just north at Sherman Oaks Hospital, will cost $31,668, according to The Wall Street Journal. Naturally, you don’t know that going in. And, since your brain is hemorrhaging, you might neglect to ask.

Secondly, no standard governs medical debts. Do you need to pay the bill in 60 days or a year? If you miss payments, should your debt go to a collection agency? Shouldn’t there be an exception for medical bills? Not according to the credit industry, which has lobbied against this.

Thirdly, Pollitz said, “Once you owe thousands of dollars in medical bills, chances are you’re pretty sick. That makes it much harder to advocate for yourself and to keep track. You’re not in a position to look at spread sheets.”

She cites one woman whose husband had open-heart surgery, accumulating 100 bills in four months. “When we analyzed the bills, we found mistakes,” Pollitz said. “We said, ‘Did you appeal this?’ She said, ‘I didn’t have time to appeal this.'”

The Wall Street Journal reports on Stephen Parente, a professor of health finance at the University of Minnesota, who estimates that 30 percent to 40 percent of bills contain errors. But that’s on the low end.

The Access Project, a Boston-based health care advocacy group, says it’s closer to 80 percent. Medical Billing Advocates of America says eight out of 10 hospital bills its members scrutinize contain errors, according to Consumer Reports, noting that overcharging can bring you closer to the lifetime spending cap most insurance plans impose.

And, no, this isn’t any better, and won’t get better, with the Affordable Care Act. That’s because we are increasingly paying higher deductibles — typically thousands of dollars — and, says Pollitz, “the vast majority of Americans don’t have thousands of dollars just sitting in a bank somewhere. They just don’t. Medical bills come up suddenly. Doctors and hospitals want to be paid right away. Some will work with you on a payment plan but many will just turn your account over to collections. It’ll destroy your credit.”

For this to get better, changes have to be made.

First, medical bills must be more transparent. Sure, it’s true that patients are individuals and costs can vary. But, surely physicians and doctors can give a ballpark estimate.

Second, the government should negotiate those fees, as governments do in other industrial societies.

Third, medical debt has to be treated differently than, say, a line of credit at Tiffany & Co. Racking up debt on your Visa is materially different from incurring debt for treatment for kidney failure.

Until we, as a society, recognize that, we can’t say we are a society that values human beings over financial markets.