Medical Debt; It’s Not Just a Problem of the Uninsured

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January 23, 2014 by Lisa Brammer

According to a recent study conducted by the Kaiser Family Foundation, 1 in 3 Americans reported having difficulty paying their medical bills. It’s pretty easy to imagine this as a predicament of the uninsured or even the underinsured, but most of the people featured in this study struggled with medical debt while covered under health insurance plans that would be considered, by today’s standards, to be fairly typical middle-of-the-road plans.

The people they interviewed were from a diverse demographic with most of them having a work-sponsored group plan. They ranged in age anywhere from twenty-something through their sixties with incomes ranging from $10,000/year – $100,000/year. They lived in a variety of states with some being single while others were heads’ of their households.

The one thing most of them had in common was the fact that this medical debt was the first time they had ever been in a serious credit or financial situation. It seems that since they had not anticipated the accident, illness or pregnancy they were caught ill-prepared to handle the debt that followed.

As insurance plans premiums continue to escalate, more and more individuals and businesses alike are selecting health plans with more affordable premiums. The term “affordable” is actually a euphemism for “I guess I’ll pick ‘this one’ since it costs the least.” Choosing lower-cost premiums unfortunately results in increased cost-sharing in the form of larger co-pays, deductibles, and coinsurance. According to a Kaiser Family Foundation report, total insurance premiums increased by 80% and workers contributions of their health insurance premiums increased by a whopping 89% between 2003 and 2013.

The report also showed that sometimes—through no fault of their own— people’s medical bills grew alarmingly larger than expected because during a hospitalization out-of-network doctors were used for part of their care. Out-of-network providers are typically paid at a much lower rate causing both deductible and coinsurance costs to increase. The study revealed that even if a patient did their homework and chose an in-network provider within an in-network facility, sometimes an out-of-network provider—such as an anesthesiologist—was used for part of their care.

There are also those instances when families thought they had income and assets to cover their medical bills only to have a major health event render them unable to work. This was either due to the event or because they had to quit or reduce their hours to become a caregiver to the ill or injured. The lost incomes cascaded into all aspects of their lives affecting their ability to not only pay their medical bills, but regular household expenses as well.

Many people in the study also commented on the overwhelming volume of bills they received during a significant health event, noting how difficult it was to keep track of what was paid, what was owed and what had already been sent to a collection agency.

The report also found that paying medical debt with a credit card only added to their financial problems as interest on the already unaffordable charges mounted.

The sad truth is all interviewed thought and expected their health insurance would protect them from financial ruin if they ever have a serious illness or injury, but in truth, that turned out not to be the case. Some ultimately recovered from medical debt issues while others had to permanently reduce their standard of living.

The study also reported that while the Affordable Care Act may establish affordability standards for health insurance premiums, it does not for copays, coinsurance, deductibles and other out-of-pocket expenses. Even with limits on total OOP expenses in place cost-sharing will continue to be higher that what most people can afford if a major health event occurs.

Knowing what we know now, it’s not surprising that another study by the American Hospital Association reported that uncompensated care—hospital care provided for which no payment was received from the patient or insurer (charity care excluded) costs continue to escalate from $3.9 billion dollars in 1980 to a record $45.9 billion dollars in 2012.

It now seems that having a fairly comprehensive health insurance plan does not always provide the financial protection either the patient or provider thought they had.

Founded in 1950, United Credit Service, Inc. is a full service revenue cycle management and debt collection agency in Wisconsin providing highly effective, customized one on one management and recovery solutions for our business partners. We offer pre-service collection solutions as well as traditional back-end collections. Visit our website at or call 877-723-2902.


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