[In the past five years, more than half of U.S. adults report
theyve gone into debt because of medical or dental bills. "Debt is no
longer just a bug in our system. It is one of the main products. We
have a health care system almost perfectly designed to create debt."]
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SICK AND STRUGGLING TO PAY, 100 MILLION PEOPLE IN THE U.S. LIVE WITH
MEDICAL DEBT  
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Noam Levey
June 16, 2022
NPR
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_ In the past five years, more than half of U.S. adults report
they've gone into debt because of medical or dental bills. "Debt is no
longer just a bug in our system. It is one of the main products. We
have a health care system almost perfectly designed to create debt." _


Medical Debty, cafecredit (CC 2.0)

 

Elizabeth Woodruff drained her retirement account and took on three
jobs after she and her husband were sued for nearly $10,000 by the New
York hospital where his infected leg was amputated.

Ariane Buck, a young father in Arizona who sells health insurance,
couldn't make an appointment with his doctor for a dangerous
intestinal infection because the office said he had outstanding bills.

Allyson Ward and her husband loaded up credit cards, borrowed from
relatives, and delayed repaying student loans after the premature
birth of their twins left them with $80,000 in debt. Ward, a nurse
practitioner, took on extra nursing shifts, working days and nights.

"I wanted to be a mom," she said. "But we had to have the money."

The three are among more than 100 million people in America ―
including 41% of adults ― beset by a health care system that is
systematically pushing patients into debt on a mass scale, an
investigation by KHN and NPR shows.

The investigation reveals a problem that, despite new attention from
the White House and Congress, is far more pervasive than previously
reported. That is because much of the debt that patients accrue is
hidden as credit card balances, loans from family, or payment plans to
hospitals and other medical providers.

To calculate the true extent and burden of this debt, the KHN-NPR
investigation draws on a nationwide poll 
[[link removed]]conducted
by KFF (Kaiser Family Foundation) for this project. The poll was
designed to capture not just bills patients couldn't afford, but other
borrowing used to pay for health care as well. New analyses of credit
bureau, hospital billing, and credit card data by the Urban Institute
and other research partners also inform the project. And KHN and NPR
reporters conducted hundreds of interviews with patients, physicians,
health industry leaders, consumer advocates, and researchers.

The picture is bleak.

In the past five years, more than half of U.S. adults report they've
gone into debt because of medical or dental bills, the KFF poll
[[link removed]] found.

A quarter of adults with health care debt owe more than $5,000. And
about 1 in 5 with any amount of debt said they don't expect to ever
pay it off.

"Debt is no longer just a bug in our system. It is one of the main
products," said Dr. Rishi Manchanda, who has worked with low-income
patients in California for more than a decade and served on the board
of the nonprofit RIP Medical Debt. "We have a health care system
almost perfectly designed to create debt."

The burden is forcing families to cut spending on food and other
essentials. Millions are being driven from their homes or into
bankruptcy, the poll found.

SHARE YOUR STORY

Are you dealing with medical debt of your own? NPR and KHN would like
to hear from you as we report this special series on medical
debt. _Share your story here
[[link removed]]._

Medical debt is piling additional hardships on people with cancer and
other chronic illnesses. Debt levels in U.S. counties with the highest
rates of disease can be three or four times what they are in the
healthiest counties, according to an Urban Institute analysis
[[link removed]].

The debt is also deepening racial disparities.

And it is preventing Americans from saving for retirement, investing
in their children's educations, or laying the traditional building
blocks for a secure future, such as borrowing for college or buying a
home. Debt from health care is nearly twice as common for adults under
30 as for those 65 and older, the KFF poll found

Perhaps most perversely, medical debt is blocking patients from care.

About 1 in 7 people with debt said they've been denied access to a
hospital, doctor, or other provider because of unpaid bills, according
to the poll. An even greater share ― about two-thirds ― have put
off care they or a family member need because of cost.

"It's barbaric," said Dr. Miriam Atkins, a Georgia oncologist who,
like many physicians, said she's had patients give up treatment for
fear of debt.

Patient debt is piling up despite the landmark 2010 Affordable Care
Act.

The law expanded insurance coverage to tens of millions of Americans.
Yet it also ushered in years of robust profits for the medical
industry, which has steadily raised prices over the past decade.

Hospitals recorded their most profitable year on record in 2019,
notching an aggregate profit margin of 7.6%, according to the federal
Medicare Payment Advisory Committee
[[link removed]].
Many hospitals thrived even through the pandemic.

But for many Americans, the law failed to live up to its promise of
more affordable care. Instead, they've faced thousands of dollars in
bills as health insurers shifted costs onto patients through higher
deductibles.

Now, a highly lucrative industry is capitalizing on patients'
inability to pay. Hospitals and other medical providers are pushing
millions into credit cards and other loans. These stick patients with
high interest rates while generating profits for the lenders that top
29%, according to research firm IBISWorld
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Patient debt is also sustaining a shadowy collections business fed by
hospitals ― including public university systems and nonprofits
granted tax breaks to serve their communities ― that sell debt in
private deals to collections companies that, in turn, pursue patients.

"People are getting harassed at all hours of the day. Many come to us
with no idea where the debt came from," said Eric Zell, a supervising
attorney at the Legal Aid Society of Cleveland. "It seems to be an
epidemic."

In debt to hospitals, credit cards, and relatives

America's debt crisis is driven by a simple reality: Half of U.S.
adults don't have the cash to cover an unexpected $500 health care
bill, according to the KFF poll.

As a result, many simply don't pay. The flood of unpaid bills has made
medical debt the most common form of debt on consumer credit records.

As of last year, 58% of debts recorded in collections were for a
medical bill, according to the Consumer Financial Protection Bureau
[[link removed]].
That's nearly four times as many debts attributable to telecom bills,
the next most common form of debt on credit records.

But the medical debt on credit reports represents only a fraction of
the money that Americans owe for health care, the KHN-NPR
investigation shows.

* About 50 million adults ― roughly 1 in 5 ― are paying off bills
for their own care or a family member's through an installment plan
with a hospital or other provider, the KFF poll found. Such debt
arrangements don't appear on credit reports unless a patient stops
paying.
* One in 10 owe money to a friend or family member who covered their
medical or dental bills, another form of borrowing not customarily
measured.
* Still more debt ends up on credit cards, as patients charge their
bills and run up balances, piling high interest rates on top of what
they owe for care. About 1 in 6 adults are paying off a medical or
dental bill they put on a card.

How much medical debt Americans have in total is hard to know because
so much isn't recorded. But an earlier KFF analysis
[[link removed]] of federal
data [[link removed]] estimated
that collective medical debt totaled at least $195 billion in 2019,
larger than the economy of Greece.

The credit card balances, which also aren't recorded as medical debt,
can be substantial, according to an analysis of credit card records
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the JPMorgan Chase Institute. The financial research group found that
the typical cardholder's monthly balance jumped 34% after a major
medical expense.

Monthly balances then declined as people paid down their bills. But
for a year, they remained about 10% above where they had been before
the medical expense. Balances for a comparable group of cardholders
without a major medical expense stayed relatively flat.

It's unclear how much of the higher balances ended up as debt, as the
institute's data doesn't distinguish between cardholders who pay off
their balance every month from those who don't. But about half of
cardholders nationwide carry a balance on their cards, which usually
adds interest and fees.

Bearing the burden of debts large and small

For many Americans, debt from medical or dental care may be relatively
low. About a third owe less than $1,000, the KFF poll found.

Even small debts can take a toll.

Edy Adams, a 31-year-old medical student in Texas, was pursued by debt
collectors for years for a medical exam she received after she was
sexually assaulted.

Adams had recently graduated from college and was living in Chicago.

Police never found the perpetrator. But two years after the attack,
Adams started getting calls from collectors saying she owed $130.58.

Illinois law prohibits billing victims for such tests. But no matter
how many times Adams explained the error, the calls kept coming, each
forcing her, she said, to relive the worst day of her life.

Sometimes when the collectors called, Adams would break down in tears
on the phone. "I was frantic," she recalled. "I was being haunted by
this zombie bill. I couldn't make it stop."

Health care debt can also be catastrophic.

Sherrie Foy, 63, and her husband, Michael, saw their carefully planned
retirement upended when Foy's colon had to be removed.

After Michael retired from Consolidated Edison in New York, the couple
moved to rural southwestern Virginia. Sherrie had the space to care
for rescued horses.

The couple had diligently saved. And they had retiree health insurance
through Con Edison. But Sherrie's surgery led to numerous
complications, months in the hospital, and medical bills that passed
the $1 million cap on the couple's health plan.

When Foy couldn't pay more than $775,000 she owed the University of
Virginia Health System, the medical center sued, a once common
practice  [[link removed]]that the university
said it has reined in. The couple declared bankruptcy.

The Foys cashed in a life insurance policy to pay a bankruptcy lawyer
and liquidated savings accounts the couple had set up for their
grandchildren.

"They took everything we had," Foy said. "Now we have nothing."

About 1 in 8 medically indebted Americans owe $10,000 or more,
according to the KFF poll.

Although most expect to repay their debt, 23% said it will take at
least three years; 18% said they don't expect to ever pay it off.

Medical debt's wide reach

Debt has long lurked in the shadows of American health care.

In the 19th century, male patients at New York's Bellevue Hospital had
to ferry passengers on the East River and new mothers had to scrub
floors to pay their debts, according to a history of American
hospitals
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Charles Rosenberg.

The arrangements were mostly informal, however. More often, physicians
simply wrote off bills patients couldn't afford, historian Jonathan
Engel said. "There was no notion of being in medical arrears."

Today debt from medical and dental bills touches nearly every corner
of American society, burdening even those with insurance coverage
through work or government programs such as Medicare.

Nearly half of Americans in households making more than $90,000 a year
have incurred health care debt in the past five years, the KFF poll
found.

Women are more likely than men to be in debt. And parents more
commonly have health care debt than people without children.

But the crisis has landed hardest on the poorest and uninsured.

Debt is most widespread in the South, an analysis of credit records by
the Urban Institute shows. Insurance protections there are weaker,
many of the states haven't expanded Medicaid, and chronic illness is
more widespread.

Nationwide, according to the poll, Black adults are 50% more likely
and Hispanic adults 35% more likely than whites to owe money for care.
(Hispanics can be of any race or combination of races.)

In some places, such as the nation's capital, disparities are even
larger, Urban Institute data shows: Medical debt in Washington, D.C.'s
predominantly minority neighborhoods is nearly four times as common as
in white neighborhoods.

In minority communities already struggling with fewer educational and
economic opportunities, the debt can be crippling, said Joseph
Leitmann-Santa Cruz, chief executive of Capital Area Asset Builders, a
nonprofit that provides financial counseling to low-income Washington
residents. "It's like having another arm tied behind their backs," he
said.

Medical debt can also keep young people from building savings,
finishing their education, or getting a job. One analysis of credit
data found that debt from health care peaks for typical Americans in
their late 20s and early 30s, then declines as they get older.

Cheyenne Dantona's medical debt derailed her career before it began.

Dantona, 31, was diagnosed with blood cancer while in college. The
cancer went into remission, but when Dantona changed health plans, she
was hit with thousands of dollars of medical bills because one of her
primary providers was out of network.

She enrolled in a medical credit card, only to get stuck paying even
more in interest. Other bills went to collections, dragging down her
credit score. Dantona still dreams of working with injured and
orphaned wild animals, but she's been forced to move back in with her
mother outside Minneapolis.

"She's been trapped," said Dantona's sister, Desiree. "Her life is on
pause."

The strongest predictor of medical debt

Desiree Dantona said the debt has also made her sister hesitant to
seek care to ensure her cancer remains in remission.

Medical providers say this is one of the most pernicious effects of
America's debt crisis, keeping the sick away from care and piling
toxic stress on patients when they are most vulnerable.

The financial strain can slow patients' recovery and even increase
their chances of death, cancer researchers have found.

Yet the link between sickness and debt is a defining feature of
American health care, according to the Urban Institute, which analyzed
credit records and other demographic data on poverty, race, and health
status.

U.S. counties with the highest share of residents with multiple
chronic conditions, such as diabetes and heart disease, also tend to
have the most medical debt. That makes illness a stronger predictor of
medical debt than either poverty or insurance.

In the 100 U.S. counties with the highest levels of chronic disease,
nearly a quarter of adults have medical debt on their credit records,
compared with fewer than 1 in 10 in the healthiest counties.

The problem is so pervasive that even many physicians and business
leaders concede debt has become a black mark on American health care.

"There is no reason in this country that people should have medical
debt that destroys them," said George Halvorson, former chief
executive of Kaiser Permanente, the nation's largest integrated
medical system and health plan. KP has a relatively generous financial
assistance policy but does sometimes sue patients. (The health system
is not affiliated with KHN.)

Halvorson cited the growth of high-deductible health insurance as a
key driver of the debt crisis. "People are getting bankrupted when
they get care," he said, "even if they have insurance."

WHAT THE FEDERAL GOVERNMENT CAN DO

The Affordable Care Act bolstered financial protections for millions
of Americans, not only increasing health coverage but also setting
insurance standards that were supposed to limit how much patients must
pay out of their own pockets.

By some measures, the law worked, research shows
[[link removed]]. In
California, there was an 11% decline in the monthly use of payday
loans after the state expanded coverage through the law.

But the law's caps on out-of-pocket costs have proven too high for
most Americans. Federal regulations allow out-of-pocket maximums on
individual plans up to $8,700.

Additionally, the law did not stop the growth of high-deductible
plans, which have become standard over the past decade. That has
forced growing numbers of Americans to pay thousands of dollars out of
their own pockets before their coverage kicks in.

Last year the average annual deductible for a single worker with
job-based coverage topped $1,400, almost four times what it was in
2006, according to an annual employer survey
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KFF. Family deductibles can top $10,000.

While health plans are requiring patients to pay more, hospitals,
drugmakers, and other medical providers are raising prices.

From 2012 to 2016, prices for medical care surged 16%, almost four
times the rate of overall inflation, a report
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the nonprofit Health Care Cost Institute found.

For many Americans, the combination of high prices and high
out-of-pocket costs almost inevitably means debt. The KFF poll found
that 6 in 10 working-age adults with coverage have gone into debt
getting care in the past five years, a rate only slightly lower than
the uninsured.

Even Medicare coverage can leave patients on the hook for thousands of
dollars in charges for drugs and treatment, studies show
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About a third of seniors have owed money for care, the poll found. And
37% of these said they or someone in their household have been forced
to cut spending on food, clothing, or other essentials because of what
they owe; 12% said they've taken on extra work.

The growing toll of the debt has sparked new interest from elected
officials, regulators, and industry leaders.

In March, following warnings from the Consumer Financial Protection
Bureau, the major credit reporting companies said
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would remove medical debts under $500 and those that had been repaid
from consumer credit reports.

In April, the Biden administration announced
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new CFPB crackdown on debt collectors and an initiative by the
Department of Health and Human Services to gather more information on
how hospitals provide financial aid.

The actions were applauded by patient advocates. However, the changes
likely won't address the root causes of this national crisis.

"The No. 1 reason, and the No. 2, 3, and 4 reasons, that people go
into medical debt is they don't have the money," said Alan Cohen, a
co-founder of insurer Centivo who has worked in health benefits for
more than 30 years. "It's not complicated."

Buck, the father in Arizona who was denied care, has seen this
firsthand while selling Medicare plans to seniors. "I've had old
people crying on the phone with me," he said. "It's horrifying."

Now 30, Buck faces his own struggles. He recovered from the intestinal
infection, but after being forced to go to a hospital emergency room,
he was hit with thousands of dollars in medical bills.

More piled on when Buck's wife landed in an emergency room for ovarian
cysts.

Today the Bucks, who have three children, estimate they owe more than
$50,000, including medical bills they put on credit cards that they
can't pay off.

"We've all had to cut back on everything," Buck said. The kids wear
hand-me-downs. They scrimp on school supplies and rely on family for
Christmas gifts. A dinner out for chili is an extravagance.

"It pains me when my kids ask to go somewhere, and I can't," Buck
said. "I feel as if I've failed as a parent."

The couple is preparing to file for bankruptcy.

_ABOUT THIS PROJECT_

_Diagnosis: Debt is a reporting partnership between KHN and NPR
exploring the scale, impact, and causes of medical debt in America._

_The series draws on the "KFF Health Care Debt Survey," a poll
designed and analyzed by public opinion researchers at KFF in
collaboration with KHN journalists and editors. The survey was
conducted Feb. 25 through March 20, 2022, online and via telephone, in
English and Spanish, among a nationally representative sample of 2,375
U.S. adults, including 1,292 adults with current health care debt and
382 adults who had health care debt in the past five years. The margin
of sampling error is plus or minus 3 percentage points for the full
sample and 3 percentage points for those with current debt. For
results based on subgroups, the margin of sampling error may be
higher._

_Additional research was __conducted by the Urban Institute_
[[link removed]]_,
which analyzed credit bureau and other demographic data on poverty,
race, and health status to explore where medical debt is concentrated
in the U.S. and what factors are associated with high debt levels._

_The JPMorgan Chase Institute __analyzed records_
[[link removed]]_ from
a sampling of Chase credit card holders to look at how customers'
balances may be affected by major medical expenses._

_Reporters from KHN and NPR also conducted hundreds of interviews with
patients across the country; spoke with physicians, health industry
leaders, consumer advocates, debt lawyers, and researchers; and
reviewed scores of studies and surveys about medical debt._

_KHN_ [[link removed]]_ (Kaiser Health News) is a national
newsroom that produces in-depth journalism about health issues.
Together with Policy Analysis and Polling, KHN is one of the three
major operating programs at __KFF_
[[link removed]]_ (Kaiser Family Foundation). KFF is
an endowed nonprofit organization providing information on health
issues to the nation._

* medical debt
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* Medical bills
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* Medicare
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* Medicare for All
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* bankruptcy
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