Medical Debt Growing Patient Problem
Californians and Americans as a whole may have more access to healthcare services as the result of the Affordable Care Act, but they are also slowly drowning in medical debt.
A new study by NerdWallet concludes that Americans have been squeezed by the double whammy of the Great Recession and continually rising prices for medical services. The San Francisco-based healthcare finance research firm came to this conclusion by crunching data from the Centers for Medicare & Medicaid Services and other federal data, as well as commissioning a poll that was conducted on its behalf by Harris Interactive.
During the period between 2010 and 2013, Americans' median income dipped $2,300. But at the same time, their healthcare expenses rose by more than $1,800.That has led to a significant number of grim conclusions in the study. Among them:
• Medical debt is the largest category of consumer debt in collections, with about 20% of U.S. adults being contacted this year by bill collectors about a medical debt or debts
• Payments related to medical services account for more than one-third of all dollars (38%) paid to debt collection firms
• One in three cancer survivors incur more than $10,000 in medical debt
• Nearly two-thirds of those polled (63%) said they received a medical bill that cost more than they expected
• Nearly three-quarters of those polled (73%) said that if they had had more information on their medical charges they would be able to make better financial decisions
Medical debt in California has been a long-term problem that was exacerbated by the Great Recession. According to a 2012 study on the state of insurance issued by the UCLA Center for Health Policy Research, 2.6 million non-elderly Californians – about 8% of the total population – had medical debt in 2009. That increased by more than 400,000 after the onset of the Great Recession in late 2007. Although UCLA issues a state of the insurance report every two years, the 2014 report has yet to be published. NerdWallet officials say that California had the third-highest amount of medical debt collected among states last year, behind New York and Texas.
However, the NerdWallet study also concluded that the healthcare system, and hospitals in particular, do little to provide price transparency to their patients. It noted that some hospitals charge as much as 50 times more than other facilities for the same procedure. And among the most 100 frequently charged procedures by hospitals, there is up to a 25-fold difference in charges.
"The system Americans trust for their medical care is not very trustworthy when it comes to providing price transparency for procedures and error-free billing," said Christina LaMontagne, a NerdWallet Health general manager who authored the study. "Many Americans think they are getting the best care in the world, and yet the American household is more indebted to the medical system than ever before."
The study also noted that many providers furnish patients with bills that are often inaccurate. It cited a 2013 study issued by the Office of the Inspector General of the U.S. Department of Health and Human Services that found high rates of billing errors among Medicare charges that had been audited.
Among the hospitals on the list with high rates of billing miscues were Cedars-Sinai Medical Center in Los Angeles, Community Regional Medical Center in Fresno and California Pacific Medical Center in San Francisco.
“Over 80% of the medical bills clients send to us have errors. Our clients feel overwhelmed by the cost of healthcare,” said Pat Palmer, chief executive officer of the Virginia-based Medical Bill Advocates of America.
