CareTalk Podcast – Medical Debt is Too Easy to Get

60% of Americans say that they have medical debt. In this episode, John and David take a look at the growing problem of medical debt in the U.S. and dig deep into what is being done to curb it.

David Williams:

Welcome to CareTalk, your weekly home for incisive debate about healthcare business and policy. I’m David Williams, president of Health Business Group.

John Driscoll:

And I’m John Driscoll with CEO of CareCentrix. David, what do we have up today?

David Williams:

Well, John, the Olympics just kicked off in Tokyo. So, naturally, the sports news is about the National Football League. And they decided that teams are going to have to potentially forfeit games if they don’t follow the COVID protocols, or their players are unvaccinated.

John Driscoll:

Well, let’s step back a second and, say, everyone should be vaccinated, while it’s still under an emergency use authorization. We now have pretty good results. Over 100 million Americans have been vaccinated with incredibly protective effects.

It’s a little absurd that even though over 70% of the NFL players have been vaccinated, that you’ve still got four clubs that are closer to 50% vaccination. I mean, I can’t imagine that America’s game can’t convince America’s players, who are already putting their bodies at risk in football not to get… Explain this one to me, David.

David Williams:

John, I think people are sort of stuck in their ways. But one thing that changes is if you need the vaccination in order to have a job or hold a job, then you may change your mind. So, I think the idea of having people forfeit the games should make a difference. You saw the Vikings parted ways with their assistant coach, Rick Dennison, who wouldn’t get the vaccine. I’m not sure he was such a great coach anyway. But this is actually good to see some kind of a mandate, some kind of consequences. You see it now with healthcare leaders calling for everybody who works in healthcare to get vaccinated. So, I would say, go team.

John Driscoll:

I think it’s going to be an existential question for all of these pro sports. People are going to get vaccinated or they’re going to be out of the league. I mean, I just can’t imagine. I mean, the NFL players’ lifespan is almost 30 years lower than the average American, somewhere between 53 and 60. It is crazy that these players and some of the coaches are fighting.

But I do think that drawing a line around you’re either vaccinated and you’re allowed to work, or you’re not vaccinated and you’re going to be distanced by your employer’s going to be more and more the rule not just in professional sports, but also in healthcare.

David Williams:

Well listen, let’s stop talking about the football and about the pandemic. And let’s talk about something I haven’t heard about in a while, John, medical bankruptcy and medical debt. I haven’t heard of that. Does that mean that medical debt is no longer a problem in this country?

John Driscoll:

No, no, no, no, no. $2.7 trillion more medical debt according to Credit Karma, just since the pandemic, medical debt is actually flat, or up since the ACA. Medical debt are those deaths that patients owe after they’ve gotten through the medical industrial complex. It is a huge issue, David. It’s probably the biggest bankruptcy issue for all Americans.

David Williams:

Well, John, I read a lot of statistics about it, some of them conflict. But the general idea is 60% of people say they have medical debt. 53% of people say it’s more than $5,000. And over 70% say it’s prevented them from achieving a major financial milestone, like buying a home or having a kid. Now, sometimes people think those things are mistakes to do so maybe it’s good to have medical debt, John.

John Driscoll:

No, no, no, no. Over 500,000 people a year in the US declare bankruptcy. Nearly 70% of those folks, or 67% to be precise, actually declare bankruptcy because of medical debts. We’ve got a little bit of a delay of those debts probably because of COVID. But David, how in the world could we spend 20% of our GDP on healthcare with the passage of the ACA still have this problem where medical debt, bigger than student debt, is crippling Americans’ credit ratings and screwing up their lives.

David Williams:

Yeah, it’s a problem. We talked about the Affordable Care Act, which, has it helped? I mean, it’s hard to say because the number of bankruptcies does not necessarily seem to have fallen.

One of the challenges is you have these so-called high deductible plans. And since most people can’t afford $1,000 of unexpected bills, it’s no wonder that they get in trouble just trying to meet their deductible.

John Driscoll:

I think you’re getting too highfalutin. I just think that people, providers in America charge too much and deliver too little. I mean, 72% of the people who contract medical debt that is basically a communicable disease contract it by going to the emergency room. I mean, that’s where you enter the system. We have a such a system of non-profit hospitals, David, that 56% of our hospitals are non-profit. The ACA, the Obamacare passed a law that required those non-profit hospitals to provide free or reduced care to folks who were near or below the poverty line. And yet, nearly half of those non-profit hospitals still jam poor people with very big bills.

If you look at medical debt, in general, it hits the poor much more than it hits the middle class and rich people, like you. And it’s devastating

David Williams:

Well, John, what about Medicaid? I mean, I thought poor people are supposed to be able to get Medicaid. Medicaid doesn’t have those high deductible plans. So, how do poor people have medical debt? I don’t get it.

John Driscoll:

I think your high deductible issue is a canard, David. I think you’re trying to describe the issue from hospitals and doctors charging too much and not in any way making room for the average poor, or working-class patient that doesn’t know how to navigate the nonsense, and the complexity of the medical-industrial complex.

If it’s hitting the poor more frequently and half of all non-profit hospitals, which are more than half of the hospitals in the US, are still sending some of the highest bills to the people who are the least capable of paying it that’s a prescription for medical debt and bankruptcy. I mean, as you said, three quarters of the people with medical debt are postponing major life choices. You may not approve of those life choices, like having a child, but they would like to have the option. And it just doesn’t make sense.

70% of Americans have experienced some form of medical debt, whether it’s from the ER, or going to the doctor, or test results. The bills are complicated. And I think that the system is taking advantage, unwillingly perhaps, of the least capable folks to pay the most. It just doesn’t make sense.

David Williams:

John, I appreciate you identifying whatever canard I had thrown out there. I think I’ve been at the beach, not that that’s some sort of a duck or something. But let’s give some credit to the Affordable Care Act, Obamacare because you do see that the Medicaid expansion states, the ones that expanded Medicaid and more poor people can get Medicaid, they do have a lower amount of medical debt. And you see where the highest dollar amounts for medical debt are in the south, which is also where states haven’t expanded Medicaid. And the lowest debt is in the Northeast.

But to put it in perspective, John, medical debt, as you say, is now the biggest category of debt overall. And did you know, in fact, it’s bigger than credit cards, utilities, and phone bills combined?

John Driscoll:

No, it’s insane. It’s really insane. And I think that what you saw Bernie Sanders who, in many ways has a better nose and feeling for where some of the popular movements are likely to come from, at one point during the campaign talked about canceling all medical debt.

The reality is, because of what you just said, a lot of attention’s been around canceling student debt because that’s a big middle class issue. But medical debts actually significantly higher and affects more Americans. I think it’s we’re either going to fix this, or someone’s going to decide to just, just cancel all the bills.

David Williams:

John, I’m not a big Bernie bro like you, but I did go back to that campaign rhetoric and noted that he had called for canceling medical debt. I’m actually more in favor of that than I am of canceling student debt.

The thing about student debt is you take it on and the idea is you’re going to have human capital when you’re going to be able to pay it off over time, that’s how it should work. With medical debt you have almost the opposite, which is that you got sick, you’re probably less likely to work and be able to hold a well-paid job. You certainly didn’t say, “Oh, I’ll go…” With college, you can say, “I’ll go to community college, or I’ll go to state college versus a private school.” With the hospital, you often don’t really have a choice and you have no idea what something’s going to cost. So, I’m more in favor of canceling medical debt than I am student debt.

John Driscoll:

And how about Representative Katie Porter’s recommendation that we pass a law that does not allow medical debt in any way, shape, or fashion to affect your credit rating? Because she makes the very sensible point that you’re making, which is this isn’t [inaudible 00:09:23] a personal responsibility, or a choice. Often you’re getting medical debt because you had a baby and it came a little earlier and you were underinsured. You went to the emergency room at the wrong hospital, not realizing that your insurance didn’t cover it and they socked you with some big bill.

I mean, the thing about medical debt, David, is it’s really eroding people’s lives. I mean, half a million people going bankrupt every year, and medical debt being the largest cause of it. Imagine all of the credit ratings that are undermining… and your credit rating affects your cost of living post the time that it gets cracked. I mean, I think that Katie Porter idea is a great one.

But the only light at the end of the tunnel here, or the only light in the middle of this battle, I guess, is a better way of thinking about it is that people should know they can negotiate their bills with pretty much any provider when they can’t pay.

David Williams:

So, John, sometimes you see the light at the end of the tunnel is an oncoming train, which may be the case here.

Let’s talk about how medical debt is different from other kinds of debt because I agree with you. A lot of times these bills are inflated in the first place, or they should have been covered by insurance, or there’s just an error. It’s confusing. I’ll get somebody who’s trying to collect a so-called medical debt from me. And I’m like, “I don’t owe that. That number is a nonsense number that they just made up. And maybe it wasn’t even for services that I had.”

John Driscoll:

[inaudible 00:10:55] Talking about a personal experience you had in the last few months, are you?

David Williams:

No, I’m not, but I’m talking about something that happens to me all the time, John. I get these things and it’s ridiculous. What is it? And sometimes you say that you have these non-profits, they’re not non-businesses though, they’re just not paying taxes is probably what makes them a non-profit.

John Driscoll:

It’s really complicated. And every consumer should try to negotiate their bill. I mean, studies have shown that when you negotiate your bill down to what you can pay in 62% of the cases, or 60 plus percent of the cases people are successful at negotiating in the bill. And close to 20 to 30% more are partially successful at negotiating the bill. So, you’re in a really good shape if you know to negotiate and you can either through yourself or an advocate.

I mean, David, both you and I have been through circumstances where we’ve had complex medical bills because of ourselves, or our families, and you get them and they make no sense. They aren’t even right half the time. And you have to push back. Otherwise, you will be overcharged and, in many cases, unfairly charged by your healthcare providers.

David Williams:

John, you’re a well-known philanthropist, but I think you’re also a well-known sucker. So, you see these things where people are raising money to pay off somebody’s medical debt. And you’ve been known to donate to those. And it’s just like, why don’t you tell them to negotiate instead of giving them $1,000 and say pay off this hospital that probably doesn’t deserve it in the first place?

John Driscoll:

I can recommend, as John Oliver did, that wonderful non-profit medical debt RIP, which was started by two folks in the billing business because they were so appalled by what was happening in the medical debt world. I mean, we actually just retired, through a modest contribution, $100,000 of medical debt in the name of CareTalk. So, I encourage everybody to give to that site, but it is a measure of how crazy things are that for $1 of buying these debts that are currently no one’s making any money off of, you can retire $100 worth of debt. And that $100 worth of debt or 100X return on that $1 really can change people’s lives.

It’s going to take some dramatic government action in order to change this, David. And I think we should start with, let’s not have medical debt affect your credit rating.

David Williams:

Well, John I think we would be remiss if we didn’t discuss the pandemic because it’s everywhere. A lot of these statistics that we’ve been rattling off so uncharacteristically are before the pandemic.

Now, my question is what’s the impact of the pandemic, if any, on the whole medical debt crisis? Has everybody just decided to play nice and medical debt’s not something that we have to worry about? Or is COVID going to have an impact here?

John Driscoll:

No, I think COVID, you’re already seeing it. As I said earlier, you’ve got almost a 10% increase in medical debt. A lot of the impact of that has been delayed by the cash influx, and extra benefits that people have had. But we’re not going to quickly escape a world with an incredibly complicated medical system, where institutions build the imperfect information, people can’t afford those medical bills, and we’re back on that cycle.

And I think that as we go into this period of the delta variant, where hospitals are starting to fill up, ICUs starting to fill up, people are going for testing, I do worry that medical debt’s going to going to spike again as innate, natural part of healthcare costs going up.

David Williams:

John, I hate to say it, but I think you’re right. I think the other thing that may happen, this may combine with so-called long COVID syndrome, where you’ve got people that recover from COVID initially, they go back to work, but it turns out they can’t work to the same level that they did before. They have to take fewer hours, a lower paid job, or they may have to go on disability and they’ll have trouble paying their medical debt.

So John, on that happy note, why don’t we call it quits for yet another episode of CareTalk and try to find something happier to talk about next week?

I’m David Williams, President of Health Business Group.

John Driscoll:

And I’m John Driscoll the CEO of CareCentrix. Remember to negotiate your bill. And remember to subscribe.