Medical debt soars as the ranks of uninsured swell
By Anne Gonzales
Sacramento Business Journal
November 28, 2008
More than 40 percent of Americans can’t pay medical bills, likely to rise
The number of Americans struggling with medical debt is on the rise. And with almost 19 percent of its population uninsured, the Golden State is likely to feel the sting of unpaid medical bills.
Figures on medical debt aren’t yet available for California, but because medical debt is closely tied to the number of people who are uninsured or underinsured, the state is likely to see some of the worst effects of growing medical debt, said Anthony Wright, executive director of Health Access, a statewide health care consumer advocacy coalition.
The problem is compounded by the economic downturn, growth in unemployment and home foreclosures.
The number of working-age Americans struggling with medical debt grew from 34 percent in 2005 to 41 percent in 2007, bringing the total to 72 million people, according to a recent study by the Commonwealth Fund, a private foundation aimed at expanding health care access to Americans. Another 7 million people over age 65 have unpaid medical bills, bringing the total to 79 million people.
According to the study, 39 percent of those with medical bill problems or debt say they have used up all of their savings to pay their health care bills; 29 percent are unable to pay for basic necessities such as food, heat or rent; and 30 percent took on credit card debt to pay for medical bills.
The report cited a “perfect storm” of rising health care costs and more people lacking insurance or having inadequate coverage, which forces more patients to pay out-of-pocket for treatment. Twenty-four percent of adults under the age of 65 with medical debt owe $4,000 or more, while 12 percent owe $8,000 or more.
“When we talk about medical debt, we’re really talking about key issues of coverage and insurance,” Wright said. “There are only five or six states that have a higher rate of uninsured consumers. In California, we’re also less likely to get coverage on the job, and we’re more likely to be denied for pre-existing conditions than the vast majority of Americans.”
Wright cited recent reports that indicate medical bills play a part in almost half of U.S. bankruptcy filings.
“Medical debt is one of the most prevalent factors in bankruptcies, right up there with divorce,” he said. “Of those filing bankruptcy who had medical bills, the majority were insured, but clearly not fully covered.”
Salaries not rising with premiums
Other organizations are monitoring the growing health care crisis emerging in California. A report released in October by Families USA shows that health care premiums rose five times faster than earnings for California workers between 2000 and 2007.
The report found:
* Between 2000 and 2007, family health care premiums in California rose by 95.8 percent while median earnings went up only 19.3 percent.
* For family health coverage provided through workplaces in California, annual premiums rose from $6,227 to $12,194, an increase of $5,967.
* The median annual income of California workers climbed from $25,740 to $30,702, an increase of $4,962.
The report said the premium hikes happened despite “thinner coverage,” meaning that many insurance plans offered fewer benefits with higher deductibles, co-payments and other out-of-pocket expenses. The combination of higher health costs and slow wage growth is causing more California families to join the ranks of the uninsured and underinsured, bringing the number of uninsured people in the state to 6.6 million, or 20.4 percent of the non-elderly population, the Families USA report said.
“Skyrocketing health care costs were a problem in California before the current economic downturn, and slow wage growth or job losses now only make matters worse,” said Ron Pollack, executive director of Families USA, a nonprofit, non-partisan group advocating quality, affordable health care for Americans.
At the same time, the number of people qualifying as medically indigent in Sacramento County spiked dramatically in the past year, according to Keith Andrews, division manager of primary health services for the county. The number of patients showing up at area emergency rooms who qualify as medically indigent, meaning they have no access to health care coverage, went up 150 percent from July to September, compared to the same three months in 2007.
Hospital inpatient admissions of medically indigent people went up 60 percent, and the number of medically indigent patients seeking specialty referrals went up 15 percent.
“This tells me a lot of people are showing up at area hospitals and (emergency rooms) without insurance,” Andrews said. Since he’s been managing the primary health services divisions, demand has gone up 4 percent to 6 percent a year.
Special pricing
Those who buy their own insurance or get coverage through their workplace can still can find themselves with medical bills they can’t afford to pay.
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