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Tag: Medical debt

  • Medical debt is a profit center for banks and private equity

    Medical debt is a profit center for banks and private equity

    Noam N. Levey and Aneri Pattani report for Kaiser Health News on how people’s medical debt has become a profit center for banks and private equity firms. Banks and private equity firms now offer payment plans to pretty much all patients who cannot afford to pay their medical bills. It’s a multi-BILLION dollar business.

    Banks and private equity firms profit every time that patients can’t afford their medical bills. And, their profit margins are insane, as much or more than 29 percent! Hospitals don’t usually charge patients interest for late payments.

    Patients end up paying hundreds, if not thousands, of dollars extra because they sign up with these bank and private equity medical debt payment plans. Interest rates can be 11.5 percent! And, the rate can rise to 27 percent for about one in five patients who do not repay their loans during the promotional period.

    Not surprisingly, lower income patients tend to be burdened with larger interest rates because they are unable to make as large monthly payments as higher income patients.

    Financing plans for paying off hospital and other medical debt are common. Fifty million people report being on such a plan. While most of these people do not pay interest, more than ten million of them do. Banks and private equity firms not only get the interest but a cut of the payments owed.

    Interest payments on medical debt owed to hospitals and other medical providers is relatively new. And, at least at some hospitals, rates keep going up. Today, almost half of all UNC patients have loans with the top interest rate. Less than three years ago, fewer than one in ten paid the highest rate. Patients at UNC are no different from patients in many other states.

    Interest can easily amount to more than a third of the cost of the medical bill if people opt to pay it over five years. If their bill is $7,000, they will pay a minimum of $2,500 in interest at a rate of 13 percent. Many people end up giving up basic necessities like food and heat in order to repay these loans, according to a Kaiser Health News analysis. If they don’t repay their medical debt, their hospital can sue them or garnish their wages.

    You could be lucky and use a hospital that does not offer financing with interest. If you are offered financing with interest, you should not agree to it, if at all possible. And, if your bill seems too high, it’s worth verifying that it is accurate.

    Here’s more from Just Care:

  • 2022: Health care costs threaten the well-being of many Americans

    2022: Health care costs threaten the well-being of many Americans

    Fewer Americans are uninsured than ever–almost half the number before the Affordable Care Act took effect. But, rates of underinsurance are high, with millions of people having gaps in their coverage, millions skipping care and millions falling into medical debt because they cannot pay their health care bills. The Commonwealth Fund surveyed Americans and found that, too often, health care costs threaten their well-being.

    The big takeaways:

    • More than four in ten adults under 65 (43 percent) did not have adequate health insurance. People without insurance, people with gaps in insurance coverage during the year, and people who could not afford their care are included in this group.
    • Nearly three in ten people with employer coverage (29 percent) and more than four in ten people with coverage they bought in the individual market (44 percent) were underinsured.
    • Close to half of all people (46 percent) said that they had not gotten care or delayed getting care because of the cost. More than four in ten (42 percent) struggled to pay medical bills or were in medical debt.
    • Half of people surveyed (49 percent) said they could not afford to pay an unexpected medical bill of $1, 000 within 30 days, primarily people with low incomes (68 percent), Black adults (69 percent), and Latin/Hispanic adults (63 percent).

    Large numbers believe health care costs should be a top priority for the Biden administration and Congress. Democrats (68 percent), Independents (55 percent), and Republicans (46 percent).

    “Underinsured” is defined for people living above twice the federal poverty level as out-of-pocket health care costs over 12 months, excluding premiums, representing at least 10 percent of household income and for people living under twice the federal poverty level, representing at least 5 percent of household income ($27,180 for an individual and $55,500 for a family of four in 2022). Or, people whose health care deductible represented at least five percent of household income.

    People who lacked health insurance for at least a year tended to be young, poor, with one or more chronic conditions, living in the South, Latin/Hispanic. Undocumented individuals are not able to get affordable coverage.

    Because the US lacks a national health insurance program or even a national health insurance enrollment program, a lot of people who might be eligible for coverage based on their age, income and needs, go without coverage. More than half the people surveyed (56 percent) who had employer coverage but had been uninsured at some point during the year did not know that they were eligible to enroll in their state health insurance exchange plans because they lost their coverage.

    Americans likely would pay a lot less for their health care if the government set rates for all health care providers, as it does for people with Medicare. Because the US does not set provider rates–as all other wealthy countries do–these high rates drive high cost-sharing. Physician and hospital prices in the US are higher than anywhere else in the world.

    Close to one in four people with chronic conditions, such as diabetes, are not filling their prescriptions regularly because of the out-of-pocket cost.

    Of note, nearly one in four people with bills in collection said the bills stemmed from a mistake in billing. More than half of people with medical debt (56 percent) owed at least $2,000.

    Medical bills from out-of-network doctors at in-network hospitals represented almost half of all cost issues. These surprise bills are no longer permissible under the No Surprises Act, which took effect January 2022. But, the survey included a timeframe before then.

    When the public health emergency is declared over, likely in 2023, states will lose their improved federal matching funds. Inevitably, with less money, they will reconsider Medicaid eligibility and restrict coverage.

    Here’s more from Just Care:

  • Medical debt more prevalent among Medicare Advantage enrollees than traditional Medicare enrollees

    Medical debt more prevalent among Medicare Advantage enrollees than traditional Medicare enrollees

    Steffie Woolhandler, David Himmelstein et al. write in JAMA Network about medical debt, which more than 18 percent of American households shoulder. What’s particularly noteworthy is that people in Medicare Advantage are more likely to have medical debt than people in traditional Medicare with supplemental coverage and people with traditional Medicare only.

    We already know from a multitude of studies that millions of Americans hold significant medical debt. And, the most vulnerable Americans are most likely to have medical debt: People without insurance, people with disabilities and people requiring hospitalization. But, health care costs are so high and insurance coverage so rarely comprehensive that medical debt touches a broad swath of Americans.

    People in Medicare Advantage plans are, like the most vulnerable, most likely to find themselves burdened by medical debt. In 2016, one in four people with Medicare spent 23 percent or more of their income on medical care.

    Medical debt across the US averages about $2,306 per individual and $4,671 per household. The authors find that medical debt is likely to cause an increased risk of poorer social determinants of health. People with medical debt are often unable to cover their electricity, phone and gas bills, and have an increased risk of housing and food insecurity. Housing and food insecurity also cause poor health. “Unaffordable medical bills … contribute to a downward spiral of ill-health and financial precarity.”

    Here’s more from Just Care:

  • Avoid a lawsuit, don’t sign nursing home admissions form

    Avoid a lawsuit, don’t sign nursing home admissions form

    Noam Levey reports for Kaiser Health News on nursing homes that sue the friends or family of residents to collect debt. And, it appears not to matter whether the friend or family has power of attorney or control of the patient’s assets. What usually matters is that a friend or family member signed the nursing home admissions form for the patient.

    Searching through Rochester, New York court records, Levey found 238 instances in which 24 nursing homes sued patients, relatives or neighbors in order to try to collect on a patient’s debt, in a three-year period. More than 70 of those cases were targeted at someone other than the patient or the spouse, who often did not have power of attorney over the patient. In one case, the sister of a nursing home resident was sued for $8,000 by the nursing home, even though she had no control over his health or finances and no legal responsibility for his debts.

    Levey found 60 cases in which the local government sued to collect nursing home debt over that same three-year period.

    Federal law should protect people from these lawsuits. Nursing homes are not allowed to force patients’ friends and families to guarantee their bills. But, the fine print in the nursing homes’ admission agreements often include something that a relative or friend signs, unwittingly, giving the nursing home debt collection rights.

    In many lawsuits, the nursing home has no evidence that the person being sued should be responsible for the bill. But, the nursing homes win many of these cases via default judgments because the person they are suing ignores the suit or does not have the means to hire a lawyer to defend them.

    New York is not the only state where this is going on. Levey reports that lawyers in Kentucky, Massachusetts, Illinois and California suggest that it is not uncommon for a nursing home patient’s family or friends to be sued to collect debt in their states.

    A recent Kaiser Family Foundation poll found that around 14 percent of adults with medical debt report being threatened with arrest or a legal action. Five percent report being sued.

    Tip: If you help a family member or friend get admitted to a nursing home, do not sign any papers. Make sure that, if anyone signs, it is the patient who signs.

    Here’s more from Just Care:

  • Medical debt rising for people who pay through their credit cards

    Medical debt rising for people who pay through their credit cards

    Millions of people max out their credit cards, and an increasing number max out because of a costly medical condition. Patients want to pay their medical bills, or they must pay their bills in order to receive care. But, these days, using a credit card to pay medical bills likely means a medical debt hike because interest rates are rising, reports Bob Herman for StatNews.

    Using a credit card when you are unable to pay off the debt as required by the bank issuing the card is a risky proposition and a particularly risky one now. Interest rates are rising. Credit limits are shrinking. Failing to pay the minimum jeopardizes your credit rating and could lead to all kinds of toxic consequences, including wage garnishment and lawsuits.

    Each time the Fed raises its interest rate, the cost of borrowing money for just about any reason is likely to increase. Credit limits could shrink, leaving people with more debt on their credit cards than is permissible. They are potentially liable for higher penalties if they don’t pay the debt back. And, getting credit is also likely to be more difficult.

    If you can’t pay your medical bill, whatever you do, think twice before agreeing to a credit card from your hospital. The card might seem appealing and help you at the moment, but it could have exceptionally high interest rates. Credit card interest rates are already very high, as much as 21 percent. People who owe more are likely to be charged higher rates because they present greater credit risk.

    One hospital credit card, CareCredit does not charge interest for as long as 24 months if cardholders pay off their debt. But, people who do not pay off their debt can be stuck with interest from day one. And, the interest rate charged is currently 27 percent for new accounts.

    Anyone who is struggling to pay for medical care should look into Medicaid eligibility requirements in their state. Many states allow you to “spend down” to Medicaid eligibility levels, meaning that even if your income is above eligibility levels, if your medical expenses bring that income down to below eligibility levels, you could qualify for Medicaid. Assets will be considered, but the value of your home, if you own it, is not considered. If you qualify, Medicaid could retroactively cover some of your care.

    Here’s more from Just Care:
  • Cancer patients face particularly severe medical debt

    Cancer patients face particularly severe medical debt

    Noam Levey reports for Kaiser Health News on the particularly severe medical debt people with cancer often bear. Levey profiles a breast cancer patient who faces $30,000 of debt, along with constant threats from collection agencies. She, like many people with cancer, must make tradeoffs that no one should have to make to pay off the debt.

    Cancer kills hundreds of thousands of Americans each year. People with and without insurance, young and old. New treatments are saving more lives but at an extremely high price. More than six in ten people with cancer have had to reduce their spending on necessities like food and clothing because of the high cost of their treatment. One in four of them have been pushed into bankruptcy, been evicted from their homes or had their homes foreclosed on them.

    According to the National Cancer Institute, treating someone with cancer can cost more than $1 million in the first year. On average, it costs $42,000 in the first year. People with Medicare are not spared high out-of-pocket costs. Those with blood cancer typically pay $17,000 of their own money for treatment in year one.

    About 100 million Americans have medical debt. Having cancer has been found to increase your likelihood of medical debt by 71 percent. It also makes it more than twice as likely that you will declare bankruptcy than people without cancer. And, the data show that those with cancer in bankruptcy were more likely to die than those not in bankruptcy.

    People with cancer are more likely than other people with medical debt to owe a lot of money and are also more likely to believe they will never be able to afford to pay off the debt. A Kaiser Family Foundation poll found that about 20 percent of people with cancer who face medical debt owe more than $10,000.

    High out-of-pocket costs leave patients making unconscionable choices. Many end up forgoing life-saving treatment so as not to incur more costs. Research shows that 18 percent of people on chemotherapy stop treatment. Of those, nearly half stop treatment when their costs rise above $2,000.

    Here’s more from Just Care:

  • Medical debt plagues 100 million Americans

    Medical debt plagues 100 million Americans

    Noam Levey reports for Kaiser Health News that medical debt plagues 100 million Americans. Levey’s reporting is based in part on a Kaiser Family Foundation poll revealing that 41 percent of adults in the US have medical debt. The extent of this debt–which is likely over $200 billion total–has gone unrecognized because a lot of it is hidden in the form of credit card debt, loans from family members, and payment plans to physicians and hospitals.

    With income relatively flat relative to soaring costs, Americans are struggling more and more to save. Half of Americans do not have $500 in the bank, according to a Kaiser Family Foundation poll. About a third of people owe their providers less than $1,000 and about a half owe less than $2,500. But, one in four adults owe their health care providers more than $5,000. It is extremely likely that many of them will be in debt for the rest of their lives.

    Medical debt is the largest debt Americans bear–58 percent of all debt recorded in the US. People pay that debt in different ways. Fifty million adults pay their medical debt through payment plans with their health care providers. Ten percent of adults owe medical debt to a family member or friend. About 18 percent of adults pay their medical debt through their credit cards.

    Levey says that medical debt keeps families from securing other basic necessities. Poll data finds that more than six in ten people with medical debt cut back on food and clothing. Nearly half spend all their savings to pay off their debt. About one in six are pushed into bankruptcy.

    An independent analysis found that people with complex and chronic conditions bear a heavy proportion of medical debt. People with heart disease, stroke and cancer can have three or four times the amount of debt than others in better health.

    Likely thanks to Medicare, people over 65 are half as likely to experience medical debt as people under 30. The Affordable Care Act relies on corporate health insurers to cover people’s care and allows these corporate insurers to profit wildly in the process. As a result, people with coverage through their state health insurance exchanges can experience severe medical debt. Deductibles alone can be unaffordable.

    To collect on debt, hospitals engage collection agencies, which in turn go after patients with abandon. To escape debt, specialists are saying that cancer patients are forgoing treatment. Levey profiles one person who is harassed about a bill that she doesn’t owe over and over and over again. When will this insanity end?

    Here’s more from Just Care:

  • Poll: More than forty percent of adults have medical debt

    Poll: More than forty percent of adults have medical debt

    The Kaiser Family Foundation reports that more than 40 percent of adults have some medical debt, and fifty percent of adults are at risk of medical debt. Whether you are insured or uninsured, you are likely to be faced with medical debt, which could force you to forgo or delay medical care and jeopardize your health. [This Just Care post offers some ways to avoid medical debt.]

    On top of the 41 percent of adults with medical debt–including unpaid bills from doctors, dentists, hospitals and other health care providers–another 16 percent had medical debt that they were able to pay off in the past five years. About 20 percent of people with medical debt today say that they will never be able to pay that debt back. Only 33 percent of people with medical debt expect to be able to pay it back within a year.

    Because of the way the US health care system works, it is nearly impossible to budget for your health care costs. Copays tend not to be fixed and, even when they are, there is virtually no controlling the number and types of services providers deliver in most instances. Of course, each comes with its own copay.

    Health care debt can take a huge toll on people’s savings. More than forty percent of adults with debt say that they have used all or most of their savings to pay off their debt. Others say that in order to pay off their debt, they had to stop paying other bills, skip going to college, or move out of their home.

    Debt can take a toll on people’s credit rating, for example, keeping them from being able to buy a car or a home. As of July 2022, if you have fully paid off your medical debt, it will be removed from your credit report. Of course, that’s no help if you haven’t been able to fully pay off this debt.

    Moreover, the poll finds that people with medical debt can struggle to get medical care. Fourteen percent of them can’t get a doctor to treat them. People postpone care or skip it altogether at twice the rate of people without medical debt.

    People with low incomes and Black Americans are more likely to have to deal with collection agencies regarding their debt. They are also more likely to struggle to find a doctor to provide them needed care. And, they are also more often forced to switch residences to afford their housing costs and unburden themselves from medical debt.

    That said, more than one in four people with annual incomes over $90,000 (26 percent) have medical debt. Another 19 percent of them had medical debt in the last five years.

    Here’s more from Just Care:

  • Medical debt on the rise

    Medical debt on the rise

    New research from the Peterson Center on Health Care and the Kaiser Family Foundation finds that Americans are now holding at least $195 billion in medical debt. Nine in ten of them have health insurance. Emergency care, COVID-19 care and mental health care are the three biggest causes.

    Three million Americans owe more than $10,000 in medical debt, and 16 million Americans owe more than $1,000. Not surprisingly, the most vulnerable Americans face the greatest debt. Researchers say that “Medical debt can happen to almost anyone in the United States, but this debt is most pronounced among people who are already struggling with poor health, financial insecurity, or both,”

    In a separate survey of 1,250 people, researchers found that more than half (55 percent) say they have some medical debt. And, almost half of these people report not being able to purchase a home or put money aside for retirement as a result.

    Nearly seven in 10 people (69 percent) who purchase their own health insurance have medical debt and just over six in ten (61 percent) who have employer coverage have medical debt. Just under six in ten (59 percent) without health insurance report having medical debt.

    People with health insurance appear to have the same rate of medical debt as people without health insurance. But having health insurance limits the amount of debt people have. Health insurance deductibles have sky-rocketed over the last several years, presenting a barrier to care for many Americans. They are also a driver of medical debt.

    Employer plan deductibles average $1,669 in 2022 for people who work for large employers. People working in companies with fewer than 200 workers face even higher average deductibles, $2,379. And, individuals with state health insurance exchange plans and no subsidies faced average deductibles of $4,364 in 2020.

    Total average out-of-pocket costs for health care are now $12,530. That includes premiums, deductibles and copays. And, it represents about 20 percent of the typical person’s annual income, $67,521 in 2020.

    People not yet eligible for Medicare, with incomes between 100 and 400 percent of the federal poverty level, are entitled to subsidies on health insurance through the state health insurance exchanges, which can bring down their health care costs significantly. People with Medicare with low incomes are also eligible for government assistance paying premiums, deductibles and coinsurance, through Medicaid and Medicare Savings Programs.

    To minimize your costs, plan ahead. If you have Medicare, to save money, make sure you have the number of the local ambulance that takes Medicare on your phone and your refrigerator. If you’re in a Medicare Advantage plan, have the number of an in-network ambulance.

    Here’s more from Just Care:

  • Costs now keep one in three Americans from getting care

    Costs now keep one in three Americans from getting care

    A new Gallup and West Health study finds that almost one in three Americans are skipping care because of the cost. That’s a huge jump up in the number of Americans  skipping care because of cost in the last six months alone. The US has always rationed care based on the ability to pay, and the consequences are dire for more and more people.

    Costs are not only a barrier to care for people with average and lower incomes; they are a barrier to care for people with annual incomes of more than $120,000. One in five households with incomes above $120,000 a year have skipped getting care–seven times the proportion who skipped care less than one year ago.

    And, it’s hard to imagine a time when health care costs will stop increasing. The market does not control health care costs effectively. So, costs keeping going up for health care, including prescription drugs. That’s why every other wealthy nation regulates health care prices.

    The Gallup survey found that more than 12 million people knew someone who skipped care and then died as a result. One in five people knew someone whose condition worsened because the person skipped care.

    Nearly one in four Americans report that the cost of their health care is taking a toll on them financially. And one in three Americans with annual incomes under $48,000 are facing huge financial burdens because of their need for care. Deductibles, copays and coinsurance are all rising.

    Two in three Americans are in debt, and medical debt is the largest portion of debt. Literally, one in two Americans are now in medical debt. Medical bills are the biggest reason so many Americans are in debt.

    Most people no longer think their health care charges are reasonable. Rather, they don’t think they are getting their money’s worth. More than half (52 percent) reported that the health care they got wasn’t worth what they had to pay for it.  That’s up from last April, when 43 percent said their care wasn’t worth the cost.

    We pay more and more for our health care, yet we continue to fare worse, often significantly worse, than our peers in other wealthy country. Increasingly, however, the health care stakeholders responsible for our exorbitant health care costs control our policymakers, and keep them from regulating prices. We need to vote in more representatives who represent us.

    Here’s more from Just Care: