Most adults with medical debt owe some of it to hospitals, study finds

  • A new study from the Urban Institute found that 73% of adults with medical debt owe at least some of it to hospitals.
  • Twenty-six percent of those who owe hospitals had tabs of $5,000 or more, compared to 6% who owed only non-hospital providers.
  • Debt is not uncommon, even with health insurance. A study found that 63% of adults with delinquent medical debt had it when they had insurance.

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A new study suggests that millions of Americans who have overdue their medical bills could very well be in debt of $1,000 or more.

According to an Urban Institute report based on mid-2022 survey data, 39% of its cohort said they had less than $1,000 in debt, while the remainder (61%) had more than that, including includes 21% of those with at least $5,000 in debt.

“Unlike things like mortgages and auto loans, medical debt doesn’t really choose,” says Berneta Haynes, a staff attorney and medical debt expert at the National Center for Consumer Law.

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“We don’t choose when we get sick…so the medical debt is a bit of a surprise,” Haynes said.

A study by the Urban Institute found that 73% of adults with medical debt owe at least part of it to a hospital. In addition, most of the patient’s large bills were owed to the hospital. About a quarter, 26%, had her tab of $5,000 or more, while he was the 6% of patients who owed payments only to non-hospital providers (i.e., doctors or dentists). .

“There are probably many explanations for this difference,” said study author Michael Kapman.

“When people go to the hospital, they tend to face more expensive procedures, may have greater health problems, and there is a lot of unpredictability about the fees and out-of-pocket costs they face. It’s possible, said Karpman, principal investigator in the institute’s Center for Health Policy.

Debt is not uncommon among insured persons. Nearly two-thirds, or 63%, of adults who overdue their medical bills, a study found, incurred it while they had insurance. Another 21% incurred it when the patient had no insurance, and 16% incurred the liability during the period when they were initially insured but subsequently lost it, or vice versa. was.

Overall, an estimated 41% of people (about 100 million adults) face medical debt ranging from less than $500 to more than $10,000, according to a Kaiser Family Foundation report.

There are various reasons why people are unable to pay their debts. According to Haynes, the two main causes are chronic health conditions and lack of insurance, or often both.

Additionally, many health care plans have deductibles that are high enough to pose an affordability issue for some patients. The deductible is the amount you pay out of pocket before your insurance plan begins covering your care (although you may still need to pay copays or co-insurance.

For example, various studies show that if a patient has a deductible of $1,000 and is billed for that amount at once for surgery or hospitalization, it may be more than they have saved. For example, more than half of households will have trouble paying her $1,000 bill unexpectedly, according to a 2022 Bankrate study.

“Having to pay a $1,000 deductible is out of the realm of reality for many people and can lead to risky decisions like putting on a credit card or issuing a medical credit card. there is.

The average deductible for employer-provided health insurance in 2022 was $1,763, according to the Kaiser Family Foundation.

Other sources of unpaid medical debt are short-term health insurance and health-sharing ministries, according to the American Hospital Association. These plans typically have lower premiums but are not required to cover specific services or pre-existing conditions or limit copayments.

One of the biggest culprits of large unexpected medical bills historically is the unknowing involvement of out-of-network providers in your care, often in hospitals. Then you will receive your bill and find that your insurance does not fully cover those charges.

However, there are signs that the No Surprises Act has reduced many instances of large unexpected bills. The law, which will take effect in 2022, will generally prevent you from being charged at out-of-network rates (although consumers should continue to be vigilant of such charges due to billing errors).

If your hospital charges you a lot for medical bills, be aware that many have financial assistance programs. Not all for-profit hospitals offer it, but non-profit facilities are required to do so, Haines said.

Check the back of your bill to see if it has information about financial assistance programs, she said.

Hospitals often use the federal poverty level of 250% as a cutoff to determine a patient’s eligibility for free or reduced costs, notes the Urban Institute study.

Federal poverty levels vary by household size and are adjusted annually. In 2023, that amount will be $30,000 for a family of four. So that her 250% is $75,000.

Separately, note that the three major credit bureaus (Equifax, Experian, and TransUnion) made some changes in the last year to how they handle overdue medical claims.

As of last July, once you’ve paid off your medical debt that appears on your credit report, that debt is removed (which previously could have been on your record for seven years). In addition, consumers have had their unpaid medical debt sent to a collection agency and the time it takes for it to appear on their credit report has been extended from six months to one year.

The credit companies also said they will stop including health care debts under $500 in their credit reports in the first half of this year. They still plan to do it, according to a spokesperson for the Consumer Data Industry Association.

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