Got health insurance? Even so, be prepared to whip out your wallet if you go to the doctor, clinic, hospital or pharmacy. An army of collection experts advises hospitals and doctors on how to coax patients to pay bills right away. Sometimes patients cannot even make doctors appointments until they register - often a euphemism for paying in advance. These techniques may help cash-strapped providers stay afloat. But the payment arrangements cast a long shadow on patients' financial well-being.
I recently completed a national study to explore how people cope with medical bills before they file for personal bankruptcy. The research tells a grim story, even for those with insurance. For example, families that specifically said medical bills bankrupted them mortgaged their homes to pay medical bills at nearly four times the rate of other filers. These same families also were about a third more likely to use credit cards for medical bills.
These findings are a potent reminder during debates about health care reform that having insurance does not prevent the sick from financial injury. A large medical bill turned into a mortgage puts the family home at risk, especially if the illness affects future income. If the bill goes unpaid, the patient may face foreclosure like so many other American families today, causing more social dislocation and further harm to neighborhood property values and the national economy.
Those who oppose health care reform sometimes argue that medical bills are no big deal to families that file for bankruptcy. Again and again, they cite a brief government study from a few years ago reporting that most bankruptcy filers have modest medical debt. Unfortunately, that study did not look at medical bills charged to credit cards and rolled into home mortgages. Families were counted as having zero medical bills if they charged them to credit cards or paid them off with money from a second mortgage. In other words, the regularly cited study omits two of the main ways that people try to cope with medical bills.
Furthermore, on the basis of that brief government study, Sens. Grassley and Sessions used harsh terms - myth, misrepresentation and fiction - to refer to academic papers finding that medical problems contribute to more than half of all bankruptcy filings. Originally, the senators said so in bankruptcy reform debates, and today others do the same to undercut the case for health care finance reform. My findings suggest that harsh terms are better directed to the argument that the circumstances of the many families who struggle to repay their mortgages and credit card bills are irrelevant to health care finance.
Melissa Jacoby is a law professor at the University of North Carolina at Chapel Hill and, with Mirya Holman of Duke Law School, authored the paper "Managing Medical Bills on the Brink of Bankruptcy," forthcoming in the Yale Journal of Health Policy Law and Ethics.
