Trouble Paying Medical Bills: 2015 Versus 2005
After having read my colleague Devon Herrick’s Health Alert discussing the New York Times’ survey (conducted with the Kaiser Family Foundation) of adults having trouble paying medical bills, I had a look back and compared the 2015 results to those a similar survey from 2005. The results are almost exactly the same!
Despite a large decrease in the proportion of working-age people categorized as “uninsured” (even though many have actually become dependent on Medicaid, a joint state-federal welfare program, instead of actual insurance) one quarter of us still have trouble paying medical bills.
- In 2015, 15 percent spent “all or most” of their savings on medical bills. In 2005, it was 12 percent.
- In 2015, 10 percent “borrowed money from friends or family” and nine percent “increased credit card debt.” In 2005, eight percent reported “borrowing money or taking out another mortgage.”
- In 2015, 32 percent “put off/postponed getting health care you needed.” In 2005, 29 percent of adults report “they or someone in their household skipped medical treatment, cut pills, or did not fill a prescription in the past year because of the cost.”
- In 2015, three percent declared personal bankruptcy because of medical bills, the same as 2005.
What is also interesting is that although respondents blame drug companies and insurers for the high cost of health care, the cost of seeing a physician was a bigger contributor to trouble paying medical bills than the cost of prescriptions. In 2015, 65 percent of those who had trouble paying medical bills struggled to pay for doctor visits, but only 52 percent struggled to pay for prescriptions. In 2005, the proportions were 85 percent and 56 percent.
Further, individuals are still struggling to succeed as consumers:
- In 2015, 10 percent tried to negotiate with a doctor, hospital, or other provider, versus 11 percent in 2005.
- In 2015, 34 percent said their doctor never explained the cost of a procedure and 29 percent said it rarely This looks to have deteriorated since 2005, when 35 percent said costs were never explained, but only 17 percent said costs were rarely explained.
Despite headlines proclaiming a significant decline the share of Americans without insurance, it appears Obamacare failed to improve people’s financial ability to pay for health care.
I’m skeptical of surveys like this. There was a program on TV last week that explored the propensities of people to spend vs. save and invest for the future. The thrust of the program was that the area of the brain that relates to emotions like pleasure and the instant gratification that creates it tends to trump the area that relates to discipline and saving for the future which a lot of people view as boring. One behavioral economics expert was quoted as saying that 67% of American adults couldn’t come up with $2,000 within 30 days to handle an unexpected car repair, home repair or medical bill. Coming up with the money meant not just tapping savings but also putting the bill on a credit card or borrowing from a family member or friend. It appears that the brain wiring in most of us drives us to seek pleasure now rather than save for the future which requires deferred gratification.
As for the benefit of Obamacare and the reduction in the uninsured population, I think the more important issue is the significant increase in the number of people who can be assured that they will actually get care and treatment if they have a very expensive medical event that requires surgery and / or hospitalization.
Barry, Obamacare picks winners and losers. I will point out that Tampa Bay School’s charge teachers $1,168 a month to add two children to the School’s PPO. So these children are uninsured and when they go to the exchange their only option is an over-priced guaranteed issue HMO with a $6,850 deductible that they must purchase with after tax dollars or pay large IRS fines. This is happening to all of the school districts in Florida, Texas and Colorado. Obamacare is manufacturing uninsured children in America.
Hospitals will charge 10 times more for an uninsured child than an insured child. I don’t think running a $5,000 bill into $50,000 is really one of Obamacare’s winners. You need to help Hillary because she is having a terrible time with Obamacare and is saying that Obamacare is preventing full-time employment. Again, young people are losers with Obamacare. Hillary now wants more tax credits to pay the Obamacare deductibles and you should be the 1st one to say how is Hillary going to pay for that? Is Hillary going to borrow the money and make our Grand kids spend their lives paying this deductible tax credit off plus interest?
Agreed, but the point is the proportions have not changed. People’s perceptions have not improved.
Ron – Hearing your description of how employee health insurance is structured in school districts in states like FL, CO and TX at least helps me to understand why state and local taxes are considerably higher in NJ, NY, MA, IL, CA among other Blue states than in the states that you reference. In those blue states, teachers receive family coverage for which they pay very little toward the premium. Only since Chris Christie became governor, they now have to contribute 1.5% of their salary toward the cost of their health insurance whereas before that, they paid nothing at all. In NYC, most employees still pay nothing. In NJ, teachers with at least 25 years in the system even get health insurance in retirement. It’s expensive for taxpayers to provide those benefits.
By the way, going back to your Community College of NH health insurance link, I have no idea what makes their premium so expensive at $31,000 per year. One of my former colleagues retired at the end of 2015 and picked up COBRA coverage for his wife at a cost of $435 per month which is amazingly, about 1% less than I paid for similar coverage for my wife four years ago. Two relatives are federal employees in the Philadelphia, PA area. Both have Blue Cross PPO family coverage. The total annual cost is a bit over $15,500 per year and their share of that is 25% or about $325 per month.
I keep asking what your answer is for people who can’t pass underwriting and all you tell me is that employer coverage terminates if they can no longer work. If they can’t work and lose their source of income, it’s likely that they can no longer afford to pay their underwritten insurance premium too if that’s what they have. Not everyone has a fat savings account that they can draw down indefinitely or family members who can bail them out.
Barry, you say, “If they can’t work and lose their source of income, it’s likely that they can no longer afford to pay.” That’s not what the TERMINATION notice says that we are TERMINATING your insurance because we think you won’t pay the premium. I had a client that took 4 years to die and she didn’t lose her coverage or their second home they had by the lake. You can’t say that they probably wouldn’t pay so lets just TERMINATE their insurance.
That’s the problem with your one-size-fits-all Obamacare because we all don’t have the same problems as NJ. My son’s employer charges $1,100 a month to add the family on to insurance. Not everybody is a government employee Barry.
My answer Barry is people shouldn’t lose their coverage and then we wouldn’t have the problem with them wanting a new insurance company to pay their medical bills after they are sick. Why do you insist that insurance companies should terminate sick people and then have another insurance company, who didn’t collect premiums for years while they were healthy, now have to pay the expenses. It seems pretty simple to me.
If you can’t explain the $31,000 a year in New Hampshire then you couldn’t explain the $41,000 a year premium for Miami-Dade County employees. Or, here is another one for you. $45,936 a year COBRA in Massachusetts.
http://www.eastlongmeadowma.gov/index.aspx?NID=478
Employer pays $1914 a month and the employee pays $1,914 a month while they are working. Employer-based health insurance is getting out of hand Barry.
Of course it is government employees so somebody is being scammed.
“Why do you insist that insurance companies should terminate sick people and then have another insurance company, who didn’t collect premiums for years while they were healthy, now have to pay the expenses?”
I don’t expect them to, Ron. If you ever bothered to actually listen to what I’ve said, you would know that I would be OK with high risk pools that actually worked which means they provide people who can’t pass underwriting with insurance that they can afford. That means big subsidies from either the states or the feds so the aggregate premium paid works for the insurer and the portion of the premium paid by the sick person works for him or her.
There are special needs plans within Medicare or Medicaid that pay insurers upwards of $60,000 per year to cover sick people with complex needs. There is no reason why the same couldn’t be done for people who can’t pass underwriting other than political willingness to spend the money. That way all of your healthy people could get their cheap coverage and the sick folks won’t have to fend for themselves. Of course, taxpayers would be the ultimate source of the needed subsidies to fund the high risk pools and for politicians, that’s been too heavy a lift historically.
Conservatives are willing to further erode the tax base to provide healthy people with unpaid for age based tax credits so they can buy their underwritten insurance for a lower net cost than they would have to pay without the tax credit but to spend the tax dollars needed to make high risk pools actually work is a non-starter. It doesn’t compute. You could even earn a nice commission selling those high risk pool policies, Ron.
Barry, how can you switch employer-based insurance easy termination into, your words, “you would know that I would be OK with high risk pools that actually worked which means they provide people who can’t pass underwriting”
Barry there wouldn’t be such a need for high risk pools if insurance companies couldn’t terminate their sick customers.
I think you must be a Blue Cross CEO the way you defend terminating sick people after they have paid premiums for 20 years.
How can insurers terminate sick customers who never became customers in the first place because they couldn’t pass underwriting?
You want to focus on employer coverage as it relates to people who get too sick to keep working and I want to focus on people who don’t have employer coverage but can’t pass underwriting. Both are important issues that need to be addressed. Presumably, high risk pools could serve both groups if politicians would vote to fund them adequately but, historically, they haven’t done so.
More to the point, what would you do with the people who can’t pass underwriting if you were starting with a clean sheet of paper and there was no such thing as employer coverage?
Surveys in general are suspect. In surveys people often respond to what you they think you want to hear — or at least respond in ways they think makes them appear smart. In addition, survey instruments are often designed to elicit the response the reviewer wants. They are also interpreted in ways that further the researcher’s interests.
Years ago the Harvard Hippies, who write about medical bankruptcy, did a survey of bankruptcies. They proclaimed half of all bankruptcies were the result of medical bills. But, upon closer inspection, the threshold they used for a “medical bankruptcy” was declaring bankruptcy while having $1,000 in medical debts. People who study consumer finance defaults will tell you that people who declare bankruptcy have tens of thousands of dollars in consumer debts and credit card balances that would curl you hair. Owing a debt to a medical provider you did not pay is not the result of our bankruptcy in those instances.
Plus, the recent survey did ask about other causes of bankruptcy, and there is clear correlation between medical debt and other sources of debt as factors.
“… our long-term objective is … (to make) sure that in a country as wealthy as ours, nobody should go bankrupt if they get sick.” President Obama, April 30, 2013.
There are no data that suggest or confirm that the Patient Protection and Affordable Care Act of 2010 (Health Reform) has reduced the number or severity of personal bankruptcies. Turns out that a careful analysis confirms we never had a crisis of so-called “medical bankruptcies”. And, note that Health Reform’s #1 goal, “affordable, quality coverage for all”, will be ineffective here – because the presence of coverage does not prevent so-called “medical bankruptcies”. More importantly, Health Reform contains provisions that, over time, are likely to lead to greater (not less) out of pocket medical expenses – particularly because of employer-responses to the looming High Cost Health Plan tax (Cadillac Tax). That is, Health Reform may ultimately INCREASE the number of “medical bankruptcies” – just as higher deductibles, coupled with American’s propensity to live payday to payday have increased the challenge of covering out of pocket medical expenses.
Unfortunately, all the pre-Health Reform build up and talk about eliminating so-called “medical bankruptcies” were based on studies that that deliberately overstated the number of Americans whose bankruptcy resulted from unpaid medical bills. Turns out that medical expenses were almost always just a small percentage of the total indebtedness. For example, the 2007 study showed that the majority of the indebtedness discharged in bankruptcy, whether the bankruptcy was medical or nonmedical, had little to do with unpaid medical bills. IIn one of those studies, the average indebtedness discharged was approximately $45,000, of which approximately $5,000 was medical debt. Who reasonably believes that among those who filed for bankruptcy, that had there been no medical debt, that those with an average non-medical debt of $39,634 would have foregone filing for bankruptcy? On the other hand, would those individuals who had an average of $4,988 in medical debt have filed for bankruptcy if they had no other debts (versus, the other $39,634)?
For comparison, 2007 Congressional testimony by bankruptcy law expert Todd J. Zywicki confirmed that the concept of “medical bankruptcy” as used to justify Health Reform was little more than oft-repeated myth:
“… Perhaps some here think that medical care is too expensive these days. I express no opinion on whether that is the case or if so what should be done to address the problem. It does seem obvious however, that bankruptcy law is not the appropriate place to try to deal with the problem of an overly expensive health-care system. …”
“… Medical debt, medical problems, and the rising costs of health care are a source of concern for many families today. And sadly these problems sometimes land them on the steps of America’s bankruptcy courts. … At the current time, there is little evidence that medical bankruptcies are creating some sort of crisis for the bankruptcy system or that the frequency of medical bankruptcies has been rising over time. … current data does suggest a few tentative conclusions. First, some medical data is present in many bankruptcy cases, perhaps approximately half of cases. Second, in a relatively small number of cases, large medical debts are the primary cause of bankruptcy filings. Third, in some cases, medical debts combined with other debt such as mortgage, automobile or credit card debt to lead to a bankruptcy filing. Fourth, in the overwhelming majority of cases, there is either no medical debt at all, or the amount of medical debt present is relatively small and unlikely to be the proximate cause of the debtor’s bankruptcy. Fifth, bankruptcies are insured in general at the same rate as the general population. …”
Plus, a few years ago Brett Skinner of the Fraser Institute used the same methods to estimate “medical bankruptcy” in Canada and concluded the rate was the same or slightly higher – in a country where medical care is “free”!
It demonstrated how wrongheaded the analysis of “medical bankruptcy” is.
The continued transition to high deductible health plans will prolong the year-to-year increase in the individual’s share of cost of medical/pharmacy benefits.