Tuesday, January 5, 2016

qotd: KFF/NYT survey demonstrating the burden of medical debt, even with insurance

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Kaiser Family Foundation
December 2015
The Burden of Medical Debt: Results from the Kaiser Family
Foundation/New York Times Medical Bills Survey
Prepared by: Liz Hamel, Mira Norton, Karen Pollitz, Larry Levitt, Gary
Claxton and Mollyann Brodie

Previous Kaiser surveys have found that about a quarter of people say
they or someone in their household had problems paying medical bills in
the past year, and a 2014 Kaiser report provided a qualitative look at
some of the circumstances and consequences of unpaid medical bills
through interviews with people who had sought credit counseling for
medical debt. But to date, there has been little research providing a
quantitative look at the causes of medical bill problems and the impacts
they have on people's families, their finances, and their access to
health care.

To fill this gap, the Kaiser Family Foundation and The New York Times
conducted an in-depth survey with 1,204 adults ages 18-64 who report
that they or someone in their household had problems paying or an
inability to pay medical bills in the previous 12 months.

Prevalence of problems paying medical bills among different groups

Insurance status has a strong association with
medical bill difficulties, with over half (53 percent) of the uninsured
saying they had problems paying household medical bills in the past
year. However, as previous surveys have shown, insurance is not a
panacea against these problems. Roughly one in five of those with health
insurance through an employer (19 percent), Medicaid (18 percent), or
purchased on their own (22 percent) also report problems paying medical
bills. In fact, overall among all people with household medical bill
problems, more than six in ten (62 percent) say the person who incurred
the bills was covered by health insurance, while a third (34 percent)
say that person was uninsured. Among those with private insurance
(either through an employer or self-purchased), their plan's deductible
makes a difference in ability to afford health care bills, with those in
higher deductible plans more likely to report medical bill problems than
those in plans with lower deductibles (26 percent versus 15 percent).

To explore these relationships further, we used a statistical technique
called logistic regression analysis to isolate which demographic
characteristics are the strongest predictors of problems paying medical
bills when holding other factors constant. In that analysis, income,
insurance status, and all 3 measures of health status (being in fair or
poor health and having a disability or chronic condition) had a
significant and strong association with problems paying medical bills,
even after accounting for the influence of the other demographic
factors. Having a private insurance plan with a high deductible also
remained a significant predictor, even after controlling for other
factors, as did being under age 25 and having minor children at home.

Circumstances leading to problems paying medical bills

Among those who report problems paying medical bills, two-thirds (66
percent) say the bills were the result of a one-time or short-term
medical expense such as a hospital stay or an accident, while 33 percent
cite bills for treatment of chronic conditions that have built up over
time. These shares are similar for people who faced medical bill
problems with and without insurance coverage.

Asked which types of bills made up the largest share of what they owed,
the most common responses are emergency room visits (21 percent) and
hospitalization (20 percent), followed by dental care (12 percent) and
diagnostic tests like X-rays and MRIs (11 percent).

Among who say their bill problems were the result of a one-time or
short-term medical expense, just under one in five (18 percent) cite an
accident as the main cause. Most of the others name illnesses, pain,
dental issues, or surgery, suggesting that although most bill problems
are caused by one-time events, these events are often acute episodes of
illness or expensive surgeries, medications or tests, rather than
injuries caused by accidents.

Financial status of those with bill problems

About three in ten (31 percent) of those with medical bill problems say
the total amount of the bills they had problems paying was $5,000 or
more, including 13 percent who report bills adding to at least $10,000.

Many of those with medical bill problems report struggling with bills of
lower amounts, including 24 percent of the insured and 22 percent of the
uninsured who say their bills amounted to less than $1,000. While these
lower amounts may seem small, even a bill of $500 or less can present a
major problem for someone who is living paycheck to paycheck. In fact,
when asked to describe their financial situation, about six in ten (61
percent) of those who've had problems paying medical bills say they
either just meet their basic expenses (43 percent) or don't have enough
to meet basic expenses (18 percent).

Even among the insured, those who have faced medical bill problems are
significantly more likely than their counterparts who haven't had such
problems to say they are either just getting by or don't have enough to
make ends meet (55 percent versus 22 percent).

Compared to those without medical debt, those who've had medical bill
problems are also less likely to say they have a credit card (53 percent
versus 77 percent), a retirement savings account (43 percent versus 62
percent), or some other type of savings (17 percent versus 38 percent).

About three in ten (29 percent) say that someone in their household had
to take a cut in pay or hours as a result of the illness that led to the
medical bills, either because of the illness itself or in order to care
for the person who was sick.

Medical bill problems among those with health insurance

While problems paying medical bills are more common among the
uninsured, more than six in ten (62 percent) of those who had problems
paying medical bills say the person who incurred the bills was covered
by health insurance when treatment began.

Of those who were insured when the bills were incurred, three-quarters
(75 percent) say that the amount they had to pay for their insurance
copays, deductibles, or coinsurance was more than they could afford.

About three in 10 (32 percent) of those who had problems paying medical
bills while insured say they received care from an out-of-network
provider that their insurance wouldn't pay for. For many, these bills
came as a surprise.

About a quarter (26 percent) of the insured who had medical bill
problems say they had a claim denied by their insurance company.

The impact of medical bills on families

Among those with medical bill problems, almost identical shares of the
insured (44 percent) and uninsured (45 percent) say the bills have had a
major impact on their families.

A few groups among those with medical bill problems are more likely to
say the medical bills have had a major impact on their families,
including people with bills amounting to $5,000 or more (66 percent),
those who say the family member who generated the bills has a disability
(57 percent), and those who describe their financial situation as not
having enough to meet basic expenses (56 percent).

Sacrifices made to pay medical bills

Even among those with health insurance, people who've faced medical bill
problems report making various sacrifices in order to pay these bills,
including significant changes to their employment, financial situation,
or lifestyle. Overall, about seven in ten report cutting back or
delaying vacations or major household purchases (72 percent) as well as
reducing spending on food, clothing and basic household items (70
percent). About six in ten (59 percent) say they used up all or most of
their savings in order to pay medical bills. Substantial shares say that
someone in their household took on an extra job or worked more hours (41
percent), borrowed money from family and friends (37 percent), or
increased their credit card debt (34 percent). Roughly a quarter (26
percent) say they took money out of a retirement, college, or other
long-term savings account. Smaller – but not inconsequential – shares
say they changed their living situation (17 percent), took out another
type of loan (15 percent), borrowed from a payday lender (13 percent),
or sought the aid of a charity or non-profit (12 percent) in order to
pay medical bills.

These sacrifices are reported by people in all walks of life, and not
just the uninsured or those with precarious financial situations.

Effects of medical bills on ability to get needed health care

Overall, about three in ten (31 percent) of those who faced problems
paying medical bills say they had problems getting other health care
they needed directly as a result of these problems.

More broadly, many of those with medical bill problems report delaying
or skipping health care over the past 12 months because of the cost – at
rates 2 to 3 times those of their counterparts who did not have problems
paying medical bills, regardless of their insurance status.

Effects of medical bills on household finances and ability to afford
basic needs

Medical bills can also lead to problems meeting other financial
obligations and paying for basic necessities. Among those with medical
bill problems, about six in ten of both the insured (62 percent) and the
uninsured (62 percent) say they've had difficulty paying other bills as
a result of medical debt. Over a third in each group (34 percent of the
insured and 39 percent of the uninsured) say they were unable to pay for
basic necessities like food, heat, or housing as a result of medical bills.

Most of those with medical bill problems report having other kinds of
debt, including credit card debt (56 percent), car loans (46 percent),
student loans (33 percent), mortgages (32 percent), payday loans (17
percent), and other outstanding loans (31 percent).

For some of those with problems paying medical bills, medical debt makes
up a large share of their total debt. About one in five (22 percent,
including 17 percent of the insured and 34 percent of the uninsured) say
their medical bills represent all or almost all of their total
non-mortgage debt.

The survey also finds that once medical bill problems start, it can be
difficult to make them stop, and that for some, medical bills can start
a cascade of other bill problems.

While almost half (47 percent) say they've also had problems paying
other unrelated bills in the past year, medical bills appear to be
either the sole problem or the main trigger of bill problems for the
other half, including 31 percent who say they've only had problems with
medical bills, not other types of bills, and 19 percent who say their
problems paying other bills started as a result of their medical bills.

Financial consequences of struggling to make payments

Once a person has problems paying medical bills, their insurance status
appears to make little difference in their ability to pay bills on time.
Among those with medical bill problems, similar shares of the insured
and uninsured say they've been late on a payment (62 percent and 63
percent, respectively) or missed a payment (55 percent and 61 percent)
for a medical bill in the past year.

Likely as a result of missed or late payments, almost six in ten (58
percent) of those with medical bill problems say they've been contacted
by a collection agency in the past year, mostly because of medical bills
alone (25 percent) or a combination of medical bills and some other type
of debt (20 percent).

Overall, 11 percent say they've declared bankruptcy at some point and
that medical bills were at least a partial contributor to their bankruptcy.

From the Conclusion

Insurance features like cost-sharing, provider networks, and confusing
billing practices can all lead to medical bill problems among the
insured. While higher deductibles and other forms of cost-sharing have
helped to keep health insurance premium growth at historically low
levels in recent years, the survey highlights the consequences these
changes can have for people.

The survey also shows that medical bill problems can have real and often
lasting impacts on individuals and families in terms of their standard
of living, their financial stability, and their ability to access needed
health care. While insurance provides some protection against incurring
medical bill problems in the first place, once these problems occur, the
effects on individuals and families are often as serious for the insured
as they are for the uninsured.

Full report (32 pages):
https://kaiserfamilyfoundation.files.wordpress.com/2016/12/8806-the-burden-of-medical-debt-results-from-the-kaiser-family-foundation-new-york-times-medical-bills-survey1.pdf

***


Comment by Don McCanne

These excerpts from the Kaiser Family Foundation/New York Times Medical
Bills Survey of adults 18 to 64 confirm once again that our multi-payer
health insurance system falls far short in preventing financial
insecurity for those with medical needs. This survey expands on our
knowledge base by demonstrating the deplorable consequences of the
financial hardships created by this system.

These deficiencies cannot be corrected by merely tweaking our current
dysfunctional financing system. A massive infusion of funds would be
required under the current system if we wish to reduce the negative
financial consequences, but the political and policy communities
currently oppose any increase in spending. In fact, their current
approach is to control spending by increasing barriers to care through
unaffordable cost sharing and narrower networks designed to reduce
access. Obstructing access to care might reduce spending, but preventing
beneficial health care is the opposite of what a health care financing
system should be doing.

Think of that. It is bad enough that people have the misfortune to
suffer medical disorders, yet we add to that grief by perpetuating a
system that dumps personal financial hardship on top of their medical
misfortunes.

The efficiencies of a single payer system would save enough to more
assuredly enable access to appropriate health care services by removing
cost-sharing barriers to care, not to mention the benefit that
absolutely everyone would be included. What are we waiting for? The
status quo is unequivocally unacceptable.

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