Welcome to the Nexus of Ethics, Psychology, Morality, Philosophy and Health Care

Welcome to the nexus of ethics, psychology, morality, technology, health care, and philosophy

Tuesday, February 13, 2024

Majority of debtors to US hospitals now people with health insurance

Jessica Glenza
The Guardian
Originally posted 11 Jan 24

People with health insurance may now represent the majority of debtors American hospitals struggle to collect from, according to medical billing analysts.

This marks a sea change from just a few years ago, when people with health insurance represented only about one in 10 bills hospitals considered “bad debt”, analysts said.

“We always used to consider bad debt, especially bad debt write-offs from a hospital perspective, those [patients] that have the ability to pay but don’t,” said Colleen Hall, senior vice-president for Kodiak Solutions, a billing, accounting and consulting firm that works closely with hospitals and performed the analysis.

“Now, it’s not as if these patients across the board are even able to pay, because [out-of-pocket costs are] such an astronomical amount related to what their general income might be.”

Although “bad debt” can be a controversial metric in its own right, those who work in the hospital billing industry say it shows how complex health insurance products with large out-of-pocket costs have proliferated.

“What we noticed was a breaking point right around the 2018-2019 timeframe,” said Matt Szaflarski, director of revenue cycle intelligence at Kodiak Solutions. The trend has since stabilized, but remains at more than half of all “bad debt”.

In 2018, just 11.1% of hospitals’ bad debt came from insured “self-pay” accounts, or from patients whose insurance required out-of-pocket payments, according to Kodiak. By 2022, the proportion who did (or could) not pay their bills soared to 57.6% of all hospitals’ bad debt.

The US Healthcare system needs to be fixed:

Not all health insurance plans are created equal. Many plans have narrow networks and limited coverage, leaving patients responsible for costs associated with out-of-network providers or specialized care. This can be particularly detrimental for people with chronic conditions or those requiring emergency care.

Medical debt can have a devastating impact on individuals and families. It can lead to financial hardship, delayed or foregone care, damage to credit scores, and even bankruptcy. This can have long-term consequences for physical and mental health, employment opportunities, and overall well-being.

Fixing the US healthcare system is a complex challenge, but it is essential to ensure that everyone has access to affordable, quality healthcare without fear of financial ruin.