Medical debt: Addressing a problem that shouldn’t exist

Oct. 28, 2020 / By Steve Delaronde

High-income countries can offer state-of-the-art medical technology, but treatment can be expensive. The patient’s contribution to the cost of medical treatment can quickly outpace their ability to pay, particularly in the United States. This puts health systems and physicians who have dedicated their careers to helping patients in the unenviable position of causing financial harm. The care delivered by the U.S. health care system is too often followed by an expensive bill that can lead to crushing medical debt.

Prior to the COVID-19 pandemic, 137 million American adults reported experiencing medical financial hardship in the past year. Since the pandemic, the situation has only gotten worse. Nearly 20 million Americans have a total of $45 million in medical debt collections—an average of $2,200 per person. Two-thirds of all bankruptcies are related to medical issues.  Living with debt is bad enough, but dying with debt is a problem, too. In the United States, medical debt doesn’t disappear when someone dies.

In his book, The Price We Pay, Marty Makary, MD, exposed dozens of hospitals in Virginia that were taking their patients to court and garnishing their wages for not paying their medical bills. Over one-third of hospitals in the “commonwealth” of Virginia resorted to this practice according to a research letter published in JAMA. This practice extends beyond Virginia.  Health systems in all states are not doing their part to protect the commonwealth of their citizens that need medical care.

Although consumer protections were added by federal and state governments during the COVID-19 pandemic, hospitals continue to sue their patients in COVID-19 hotspots. COVID-19 has presented such serious challenges to the financial well-being of Americans that have lost their jobs, been hospitalized, or received unexpected bills for COVID-19 treatment, that the National Consumer Law Center has made its consumer guide, Surviving Debt, available for free during the COVID-19 emergency.

The lack of a safety net for patients to deal with medical debt resulted in the founding of a nonprofit organization called RIP Medical Debt in 2014. The mission of RIP Medical Debt became more widely known when it was featured in a 20-minute segment by comedian, John Oliver, who helped 9,000 people by forgiving nearly $15 million of donated medical debt.  The idea caught on. In Ithaca, New York, an 18-year-old high school student raised $15,000 to abolish $1 million in medical debt.

Unpaid medical bills are bought and sold by debt collection agencies multiple times for pennies on the dollar. RIP Medical Debt partners with the credit reporting agency, TransUnion, to identify and then buy the medical debt of individuals who are most in need. The debt is then paid through donations raised by the nonprofit. As a result, medical debt has been wiped out for a couple in Apache Junction, Arizona, as well as first responders and numerous residents of DeKalb County, Georgia, Rehoboth Beach, Delaware, Chicago, Illinois.

The opportunity for generous donors to help a family eliminate their medical debt is a positive step forward. The tragedy is that the need for this type of charity even exists in the United States. Policymakers, hospitals and health care payers need to find a better way to ensure that medical debt doesn’t hurt the very people they are trying to help.

Steve Delaronde is manager of products for Population and Payment Solutions at 3M Health Information Systems.

Listen to our podcast featuring Marty Makary “Health care pricing: Why it’s time to consider big changes.”