In the state with the highest medical debt, it’s the middle class who carries the burden

Americans are no strangers to medical debt, and the burden is most severe in Mississippi, where nearly 40 percent of adults under age 65 owe hospitals or doctors, according to the Urban Institute. But the men and women carrying that debt are not always poor – they’re increasingly middle class.

And their inability, or refusal, to pay their bills is straining hospital budgets and threatening the availability of care.

“You’d be surprised when you look through our bad debt rolls,” said Alvin Hoover, CEO of King’s Daughters Medical Center in Brookhaven, Miss. “Some drive a 2002 pickup truck, and some drive a 2016 pickup truck. Those are the ones that get under your skin — where you went to buy a 2016 truck when you still owe the hospital $4,000.”

Mississippi, where the median household income hovers near $40,000, has one of nation’s highest rates of uninsured and underinsured adults. As a result, the state has one of the highest percentage of adults who avoid doctors due to potential costs, said Therese Hanna, executive director at the Center for Mississippi Health Policy.

At the same time, medical debt remains the leading cause of bankruptcies, according to Roy Mitchell, executive director of the Mississippi Health Advocacy Program.

Thomas Ash, a bankruptcy lawyer based in Jackson, said more than half his clients carry medical debt. He often sees this kind of debt accumulate because residents have purchased catastrophic insurance plans but have failed to set aside savings to cover high deductibles or expenses not covered by the policy.

“If they couldn’t pay the deductible,” said Mississippi Hospital Association CEO and President Tim Moore, “there’s a high probability they’re not going to pay the hospital.”

Collection agencies are most likely to go after past-due medical bills first, according to a recent study from the Consumer Financial Protection Bureau. Over the past five years, James Henley Jr., a bankruptcy trustee in Jackson, said he has seen a sharp increase in the number of middle-class residents with bankruptcy claims after “extending their lines of credit, maxing out credit cards, [robbing] Peter to pay Paul.”

Henley said the people he works with have to make hard choices, and that new car may not signify that they’re thumbing their nose at their debt.

“You have medical debt, a mortgage, and utilities — and those costs are rising,” Henley said. “Your 2005 pickup truck is getting old. Your maintenance costs are going up. You can pay those, or you can buy a new car to ensure you show up to work.”

It wasn’t that long ago that Cheryl Trosclair and her husband brought home a combined annual income of over $100,000. Then a few years ago, Trosclair found herself unable to work in the wake of fibromyalgia, kidney disease, and clogged arteries. After that, her husband was laid off from his supervising job on an offshore oil rig. They lost medical coverage. Dealing with chronic health issues, she racked up thousands of dollars in medical debt.

They eventually moved to tiny Silver Creek, Miss., where her husband’s family lives, to figure out their next step. They’re living off proceeds from property they once owned in Louisiana. Meanwhile, Trosclair is awaiting word about her disability claim. For now, she has a high-deductible plan purchased through the state’s insurance exchange. In short, times have stayed tough.

“I just go to the doctor in cases of an emergency,” Trosclair said. “I don’t like to owe anybody.”

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A few months ago, Trosclair’s right knee gave out, and she fell, face-first, into a fire at her friend’s house. She spent four hours trying to avoid a hospital visit. When the pain from burns to her face grew intolerable, she went to King’s Daughters’s emergency department.

Trosclair said she received excellent care. But it cost $1,500.

After much uncertainty, King’s Daughters wrote off the bill as charity care. Since then, Trosclair has experienced pain from her rheumatoid arthritis and a separate episode of chest pains. Her husband asked if she wanted to go to the doctor. But she worries about increasing her medical debt beyond the thousands of dollars she still owes from back in Louisiana.

“Let’s just wait,” she told her husband.

Hoover has plenty of patients like Trosclair at King’s Daughters. He also has people who haven’t paid five-figure bills despite making more than $70,000 a year. Ultimately, he knows hospitals suffer when millions of dollars in bills go unpaid — no matter if that’s the result of bad luck or bad financial decisions.

Delta Regional Medical Center, a 325-bed hospital in Greenville, struggled to stay in the black in 2016. CEO Scott Christensen said the hospital was left in a tenuous position when it posted only a net profit of $1.5 million even though it collected $125 million last year. The tight margin, he said, was largely due to $31 million that went uncollected. Half of that amount is from bills that middle-class patients have yet to pay.

Read more: Hospitals could bear the financial brunt of the American Health Care Act

“I don’t want to judge their life choices, but in an age of expediency, there’s no savings for a serious health care bill a year from now,” said Christensen.

Christensen said he considers hospitals to be the bedrock of Mississippi’s communities. So when people don’t pay, he said, entire communities suffer. Henley pointed to recent layoffs at the University of Mississippi Medical Center, a hospital that has struggled to collect bad debt, as one such example. A UMMC spokesperson declined to make hospital officials available for this story.

Over the past five years, Hoover has instructed King’s Daughters staffers to collect payments up front from patients who come in for non-emergency treatment. They have also tried to divert patients away from the emergency room unless they absolutely need critical care. And they’ve tried to negotiate payment plans with patients for a fraction of their outstanding debt.

The strategy has worked to a degree — the hospital cut its bad debt nearly in half, from $22.5 million in fiscal year 2012 to $12.6 million in fiscal year 2016, adding close to $10 million to its profit margin.

Elsewhere in Mississippi, there are plenty of opinions from experts and advocates on how to reduce past-due medical debt: expand Medicaid, create jobs, let providers become insurers. But right now, with no clear solution, hospitals are likely to remain mired in debt, just like their patients.

“We’re just trying to survive,” Christensen said.