Buried Under Medical Debt

Jennifer Liss
October 23, 2006

January looked to be the beginning of an exciting year for Logan Roberts. A recent college graduate, the twenty-six-year-old started a contract IT job in Atlanta. He was engaged. Having worked construction to put himself through school, Roberts was debt-free. Because he had just started working, Roberts didn't have health insurance -- yet. But he wasn't concerned because he'd always been in great health.

Then one afternoon, his stomach began to cramp. The pain increased and soon became unbearable. He checked himself into a public hospital where his appendix was removed. Twenty-four hours later he was released.

And then the bill came. $22,000.

"When I received it, honestly, I laughed," he recalled. "'You've got to be kidding me,' I thought."

According to a Commonwealth Fund report [PDF] released this year, 35 percent of young adults -- insured and uninsured alike -- report problems paying their medical bills. And one in five young adults report having to pay off medical debt over time.

"Educational debt in some ways is expected," said Mark Rukavina, executive director at The Access Project in Boston. "It can be quite substantial and difficult to manage, but [education] is generally something people do of their free will. It is sometimes called 'good debt.'"

"Medical debt," he continued, "is unexpected and involuntary."

According to Rukavina, medical debt can also be "contagious," when the resources of family and friends are tapped in an effort to help a loved one. And financial burden, he said, is just one side of the coin. The other side is greater health risks: people who are already in debt often delay getting much-needed health care to avoid incurring more debt.

Logan Roberts was part of the 38 percent of college graduates who are without health insurance during their first year post-graduation. And even while making $200 a day and depleting his nest egg, he couldn't begin to make a dent in his medical debt.

"I wrote the hospital an email," he explained. "I said 'I appreciate the surgery. I'm not trying to get out of paying you what you deserve, but you need to reduce it or you'll finish getting paid in 30 years.'"

He went online looking for help and discovered something shocking. Because he was uninsured, the hospital was charging Roberts an inflated rate, significantly higher than what an insurance company would have been charged for the same services if Roberts had been insured.

Andrew Cohen, community research coordinator with The Access Project, explains that inflated rates are common practice [PDF]. He believes that most hospitals don't expect to ever receive the full amount charged to uninsured patients. The costs hospitals suck up are then written off as charity-care. Cohen said that even insured patients are often charged inflated rates for services that are not covered by their insurance.

When Roberts called The Access Project, Cohen counseled him on how to negotiate his bill with the hospital. Some of the tips Cohen offered included: Get an itemized bill. Speak to a manager, not a clerk. Ask if they have a charity care program. Tell them what you can afford. Come up with a payment plan. Arm yourself with the appropriate information. Advocate for yourself.

Cohen believes bill negotiation is a "win-win" situation: By working with patients who want to pay but can't afford the full bill, hospitals receive more money than they expect and patients get to save their credit rating.

"Just about everyone who calls me is surprised by the extent that this kind of self advocacy really works," Cohen said. "I found that the young people I work with respond really well to this kind of advice. That they can raise their voice and they will be heard."

Self-advocacy worked for Roberts. He ended up paying a fraction of his initial bill: $4,900. But still, he nixed his honeymoon, scaled back on his wedding, and couldn't afford a kitchen table for the first few months of his marriage. And he applied for credit cards -- for the first time -- to start paying off debt.

"My mentality is that nothing in life is free, and it shouldn't be or you take it for granted. I didn't mind paying a bill, I just didn't want to pay an inordinate bill," Roberts explained. "I was stressed out. My wife was stressed out. It punched us in the gut, but it didn't kill us."

Advocates for fair health care stress that medical debt is a problem for both the insured and uninsured. But the uninsured and the poor are at a greater risk. Young people are uninsured for a variety of reasons: they just graduated from college or high school and don't have work (or extra money for insurance); they work part-time or as contract workers; or they're kicked off their parent's insurance when they turn a certain age. Almost 14 million 19- to 29-year-olds lack health coverage, and almost half of them are paying off medical debt, according to the Commonwealth Fund.

Insurance policies built on sand

"Kate," who requested that her real name not be used, was insured when her medical crisis began. In August 2005, the small company in Massachusetts where her husband worked began offering health insurance. An insurance company representative met with employees and their families to discuss their new policy.

"He sat in my house and repeatedly said that we would have no deductible, no co-payment, that we would be able to see any doctor we wanted," Kate explained, her voice breaking. "If you read the contract, it is very confusing. I asked a bunch of questions, and he didn't really answer."

Over the following year, bad health plagued Kate, who is 22-years-old. She had a miscarriage, followed by a difficult pregnancy, followed by a very serious gall bladder infection. Kate said that insurance representative told her that her coverage would begin Sept. 1, but at the hospital, when she was miscarrying, she was told her coverage would not be activated until Nov. 1. Over the course of the next year, her insurance covered a fraction of what she understood it would cover.

Kate and her husband owe $40,000. And they are expecting more bills.

Before getting pregnant, Kate saved and prepared. "We thought we were safe. We had no debt. We wouldn't have had her (the baby) if we didn't have the money."

Misunderstanding insurance policies (or being misled) is quite common, said Rukavina. Policy language, he said, can be very ambiguous and opaque. Often, Rukavina said, people don't even read their policy, which stays filed in the HR department of their company. Instead, they read the brochure; the language is easier to understand but the information is not complete.

"The devil is in the details with insurance," said Rukavina.

The Access Project is currently researching "junk" policies, or "leaf" policies, in which the customer, like Kate, is covered for practically nothing. "People often pay [their insurance company] religiously for years," Rukavina said, "and then get paid nothing once they get sick."

When asked if she has considered looking into legal action against her insurance company, Kate sighs. "I don't know how. I don't even know where to go. We don't even have a leg to stand on. We can't afford a lawyer. We can't take a chance we're going to owe more."

Sarah Collins, senior program officer at The Commonwealth Fund, said that there is a misconception that young Americans don't use as much health care as older people. "It can be something as simple as pregnancy. There are 3.5 million pregnancies among the 19-29 age group each year," she said. "Just because people are younger doesn't mean they don't use the health care system. Even the cost of something like a pap smear or a throat culture...can be really high."

Kate tries to negotiate with the hospitals and the insurance companies. But in many ways, she feels like she's already lost. "Planning how to get the hospital to bring down the debt is very time consuming. I have to call them all the time. I have a 7-week-old. And I get kind of heated when I talk to the hospital. I don't want to scream around the kid. I feel totally trapped. It is not like a car or a house, if you are sick you need to go to the doctor. You need to go to the hospital."

Rukavina explained that people purchase health insurance for two reasons: to improve their ability to access care and to protect themselves from financial ruin. Unfortunately, he said, even people with health insurance often face disabling debt. And while the individual patient can learn how to advocate for his or herself, the problem is systemic.

With this year's elections on the horizon, health care ranks near the top of the list of issues Americans of all ages are concerned about. Rukavina suggests that now is an ideal time for young people to demand that candidates articulate their positions on affordable health care and the federal and state regulation of insurance companies. And more importantly, the elected officials must be encouraged to keep their promises after November 7. It is so unfair for anybody to suffer financially who is already suffering, by struggling and dealing with illness. They are struggling financially for no other reason than they got sick.

Jennifer Liss is a writer living in San Francisco.



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