How Medical Bills Bankrupt Hundreds of Thousands of People Every Year
The hall light flicked on at 2 AM. My dad was silhouetted in the doorway, arms out and leaning hard against the frame. “Sorry to wake you. You’ve gotta take me to the emergency room.”
That jolted the grogginess out of me. For the last couple of days, he had been complaining about kidney stones. They weren’t passing, and I knew he’d been in pain. My dad is whatever is the opposite of a hypochondriac, and had never taken a sick day in my memory. A fit man, he rarely sits still, does his own yard work and landscaping to relax, and has jogged or biked every morning that I’ve been alive. The last time he’d been to a hospital was nearly ten years ago, when he literally fell off the roof as he was cleaning it. He landed on pavement. So if he needed to go to the emergency room now, that was the threat level.
By then, he hadn’t peed in days, and that night the pain had gotten so bad that he couldn’t wait until morning, or even drive himself. The doctors told us later that when we got to the hospital neither of his kidneys were working. To this day, we don’t know what came first, the stones or the serious kidney infection that got my dad hospitalized, but one likely caused the other. The emergency room visit turned into a 13-day stay in the intensive care unit. At one point, completely unable to pee, he swelled up like a snowman before finally being put on dialysis. He jokes now that it’s the only time he’s weighed 200 pounds. The doctors told me that if he were only slightly less healthy, just an occasional cigarette or a marginally less active lifestyle, he wouldn’t have survived.
But surviving the ICU was just the first part. At a rate of nearly $10,000 a day, my father’s hospital bill came to just over $120,000. To make matters worse, he had cancelled his health insurance just a few months before he got sick—times were tight, he was looking for expenses to cut, and he’d never been hospitalized before. It seemed like a safe stop-gap, so he axed it. That’s how he wound up among the more than 1.5 million other people that same year: he declared bankruptcy.
This was in 2010, just two years after the Great Recession began and five years after the Bankruptcy Abuse Prevention and Consumer Protection Act made it harder for ordinary Americans to declare bankruptcy. 2010 was a five-year high point for people going bankrupt, with 1.5 million people filing. The numbers plummeted by nearly 50 percent in seven years, with only 760,000 people filing for bankruptcy by 2017. Fewer people declaring bankruptcy should be a sign that people have less debt. They wouldn’t need to declare bankruptcy if that were the case, right? But the opposite is true—consumer debt is actually at an historic high. So fewer filings likely has more to do with roadblocks and means testing than it does with people being generally better off.
The actual number of bankruptcies caused by medical debt every year is the subject of a surprisingly hot debate. Vermont senator Bernie Sanders cited a 2018 article in the American Journal of Public Health that found that medical costs factored into 530,000 bankruptcies a year. That accounts for a solid 66 percent of all bankruptcies annually. Washington Post fact-checker Salvador Rizzo gave Sanders’ citation three out of four Pinocchios, claiming, wrongly, that the study hadn’t been peer-reviewed. But the crux of Rizzo’s criticism is that the AJPH study cast too broad a net rather than just counting debt “caused by hospitalization,” which is the criteria of a New England Journal of Medicine study.
Only counting medical debt that comes from a hospital stay missed a huge part of the picture though. The costs of health care are much more enmeshed in people’s lives than just the immediate issue of a hospital stay—even if you’re able to afford the bills, you aren’t out of the woods yet. The Bureau of Labor Statistics found that in January 2018, a single month, 4.2 million people missed work due to illness, meaning lost wages and, potentially, lost jobs. Typically, after a hospital stay, people are likely to see a dip in income and earnings—as big a drop as $9,000 annually. They’re also less likely to get loans or credit, and the bad credit from unpaid bills can even drive up future insurance costs. The burden extends to other family members too: helping my dad both in and out of the hospital meant I missed hours at work, making me one of the 23 percent of workers who report having to take leave to care for sick family at some point in their lives, according to the Pew Research Center.
Americans are paying more for health care now than ever before, and more than people do in any other advanced country. In 2014, the Consumer Financial Protection Bureau found that as many as 43 million Americans carried medical debt on their credit cards—and medical bills make up half of all overdue credit card debt. The cost has nothing to do with quality of care or complexity of procedure, either: an MRI scan in the U.S. may cost as much as $1,100, while in Switzerland that same scan can cost $500 and in Australia it’s $215. Americans owe an estimated $88 billion in medical debt as of 2018 (more than the entire budget for the Department of Education) and one out of every three GoFundMe campaigns is for medical bills.
High costs also have a hideous impact on people’s health. I spoke with Cokie Giles, who has been a nurse in Maine for 40 years, working from delivery to trauma. “Now, many people put off having anything done or anything checked, so preventative care is not being done,” she told me over the phone. But the cost of care is also affecting hospital priorities. When Giles started out, a significant portion of her job was helping patients prepare for surgery and observing them afterward to make sure there were no complications. Now, she says hospitals are less willing to admit patients overnight because they require more time and resources. “The big rush now is to hurry up and meet a lot of these same day surgeries that are just outpatient.” She adds, “Then they go home, and our home health people that do follow-up checks are [also] very understaffed. So we're losing on all on all fronts.”
Statistics back up Giles’s experience: A Pew Research study from 2018 found that 83 percent of U.S. adults considering medical care think the cost of treatment make quality care unaffordable.
Free market crusaders say that people like my dad should shop around first and find the most affordable option before they commit to specific health care at a specific place. My dad has worked as an accountant for decades now. But financial savviness isn’t a guaranteed protection in a system as erratic and expensive as American health care. That’s a fantasy that doesn’t bear out in the real world. It’s hard to vet the costs ahead of time for emergency room trips that turn into two week-long ICU stays, for example. And many people, even with planning and even with insurance, find themselves swamped with unexpected costs.
Some activists are stepping in to try to make the system more scrutable. Sheridan Aspinwall lives and works in Boston as a clinical research nurse at the Dana-Farber Cancer Institute. She also helps run a Debt Clinic with the local Democratic Socialists of America chapter and the community organization City Life/Vida Urbana. Through the clinic, she and other volunteers help people sort out their medical bills to figure out why they’re paying certain costs, and how much they should actually be paying.
“That includes taking a look at people's medical bills, insurance paperwork, explanation of the procedures and tests, duplicate charges or overcharges, and sign them up for programs that might help them pay back some bills.”
In Aspinwall’s experience, people struggle to make sense of the overwhelming volume of information available. “There are 1,000,001 insurance plan for a 1,000,001 types of individuals: veterans, poor folks, older folks, children, women, employees with certain organizations,” she says. As a result, people don’t know what information is relevant or how to sift through it to know what they should be paying for whatever health care they receive.
“I can go to the Farber Cancer Institute website and look up the list of prices for every single service they cover, but that means absolutely nothing. No one walks in and is like, ‘Okay, here's an amount of cash, let's figure out what that lets me pay for.’ Medicaid, Medicare, every single system, every single plan has a different price, and that price is experienced in different ways through premiums, deductibles, drug co-pays. So it's not that it's not transparent—it's just not straightforward.”
When my dad contacted the hospital to tell them he wouldn’t be paying his six-figure bill, and would in fact be declaring bankruptcy, the billing department’s response was blunt: “What about $60,000 instead?”
Bankruptcy exists to help people escape catastrophic debt they can’t repay, but hospitals will try to recoup whatever they can if it looks like they can’t get back the full amount. This is the result of the financialization of health care. The entire industry is now based around private entities buying and selling medical debt. For example, say a hospital has $100 million in debt, and they don’t believe they’ll actually get that money back. They’ll instead sell it to a buyer who analyzes the portfolio of debt and figures out how much they could manage to collect themselves. The buyer pays a relative pittance, let’s say 15 percent. So $15 million goes to the hospital—which now has $15 million more than it did before—and then the new debt owner continues trying to get the debtors to pay up.
The goal is to collect more than they paid for the portfolio, but if three or five years pass, or eventually sell it to someone else. Often, the people trying to pay off their debt have no idea that they’re now paying anyone besides their hospital, or that the value of their debt has been reduced. All they know is that they have to keep paying.
That’s where another activist, Craig Antico, comes in. He had worked in the financial industry for 30 years by the time Occupy Wall Street kicked off. A finance background doesn’t make him seem like he’d be down with Occupy, but Antico was attracted to the Occupiers demands for student and medical debt forgiveness. “They pick medical debt as the area they were going to attack first. I was running a collection agency at the time. So I had all the technology and the data, and the systems needed to, you know, process all this debt.”
Antico and a colleague set out to raise $50,000 to put toward debt forgiveness. They managed to raise $700,000, and with it they were able to buy up between $30 and $40 million worth of debt. “This helped 20,000 people get out of debt that they can't pay,” he told me. “I just said, ‘We can’t stop.’” They wound up forming RIP Medical Debt, a nonprofit that celebrated its fifth anniversary this summer, when it forgave $10 million in debt for 10,000 people in Appalachia.
“People will pay it if they can. But when they can’t, it gets stuck on the credit report and affects them in ways that they're not even realizing. It can make the cost of insurance go up, or even cause them to not get an apartment,” Antico says. “And we can provide them a way out.”
Not all patients are that fortunate. Hospitals in states like Virginia and New Mexico have started aggressively pursuing patients with unpaid bills, seizing their paychecks, putting liens on their homes, and suing them by the thousands. With that kind of pressure, bankruptcy can sometimes be the only way out.
My dad was lucky. He got to work rebuilding his credit shortly after his bankruptcy, and he came through the whole process unscathed. Which, in theory, is how bankruptcy is supposed to work. But the constantly ballooning costs of healthcare are just driving more people forfeit everything they have in the hopes that they can escape suffocating debt and get their lives back together after. But while it still incenses me that his only option to stay alive was to take on more than $120,000 in debt, my dad is much more sanguine about it. “It’s just money,” he likes to say. ”Why worry about what you haven’t got?”
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For every viral story of fundraising for healthcare, there are thousands of medical campaigns that don't get funded.
Originally Appeared on GQ
