Medical debt a crippling problem for many Americans

By Kathleen Stoll

Working folks in West Virginia and across the country face significant financial challenges. The struggle to pay medical bills and the burden of medical debt is among the biggest of those challenges. Like many working West Virginians, I am “underinsured.” That is, I pay premiums for private insurance, but I remain at serious risk of incurring significant medical debt.

I joke that my only goal as “an equestrian” is to not take a fall off my horse. Not only is it embarrassing and possibly painful to hit the ground, but I also can’t afford a trip to the hospital, even though I have private health insurance.

First, I have a high deductible — I must spend $6,900 before my health insurance kicks in.

Second, it isn’t like health care is free and medical bills disappear after I spend down that deductible. I still have out-of-pocket spending on copayments for health services, capped at $6,900 annually. But not every medical bill counts toward this out-of-pocket copay cap. “Balance-billed charges” and charges for uncovered health benefits are not counted toward the out-of-pocket cap. Even with health insurance, my medical bills can add up quickly to $15,000 or $20,000.

Why do I worry about taking a fall? Because I have been having bouts of vertigo. If I agree to a series of tests to explore the possible causes of my vertigo, the resulting medical bills might make my head spin far worse. I am going to pile up $6,900, plus another $6,900 in medical bills, and probably more. So I need to keep my butt in the saddle until I keep some extra money in the bank.

And my insurance plan is not the most expensive premium plan on the state marketplace. Some plans can have higher deductibles and out-of-pocket limits than my plan: a $7,700 deductible and a $8,700 out-of-pocket limit for an individual and $17,400 for a family. That’s really a head-spinning chunk of change.

A new report from the Consumer Financial Protection Bureau found that an astonishing 30% of West Virginians have medical debt in collections. When health providers turn medical debt over to collection agencies, it can mean a low credit rating score, garnished wages and even the seizure of a bank accounts.

In the past five years, more than half of all U.S. adults report they’ve gone into debt because of medical or dental bills, according to a June poll from the Kaiser Family Foundation. An analysis of census data shows that 23 million people (nearly 1 in 10 adults) owe significant medical debt. In total, Americans owe at least $195 billion in medical debt. Approximately 16 million adults in the United States owe over $1,000 in medical debt and 3 million adults owe medical debt of more than $10,000.

Among people with debt, 1 in 5 report that they don’t expect to ever be able to pay it off. Even if not in collections, that debt is likely loaded onto a credit card or another installment-payment plan with high interest. It becomes a rest-of-your-life payment plan that knocks out the rungs of the ladder of upward economic mobility for West Virginians — restricting someone’s ability to secure a loan to buy a house, save for kids’ college tuition, establish a retirement plan or even just make ends meet from month to month.

This quote says it all.

“We have a health care system almost perfectly designed to create debt,” said Dr. Rishi Manchanda, who works with low-income patients and served on the board of the nonprofit RIP Medical Debt.

And while our health system is perfectly designed to create debt, it does not create healthy consumer behavior. Many of us avoid necessary and appropriate care because we are trying to dodge the debt. In the long run, that can mean a health problem can grow more serious and the medical intervention more expensive.

According to the Kaiser Family Foundation poll, about 1 in 7 people with debt said they’ve been denied access to a hospital, doctor or other provider because of unpaid bills. An even greater share — about two-thirds — ave put off care they or a family member needs because of cost.

The recent passage by Congress of the Inflation Reduction Act provides some help. The act extends larger premium subsidies for folks buying insurance on the state marketplace over the next three years. This extra premium assistance can help folks afford a plan with a smaller deductible or lower copays. Even with this extra help, the bottom line is that private health insurance plus health problems equals high medical bills.

Medicaid — on the other hand — is affordable health insurance coverage with more comprehensive benefits, no deductibles and very minimal copays.

OK, so giddy-up and sign me up for Medicaid. But to qualify for Medicaid, I would need to work less or quit working all together. But I like my job. Low Medicaid income eligibility puts me and lots of West Virginians in the dilemma of wanting to work but knowing that work can mean less-affordable health insurance and health care. It isn’t laziness when some West Virginians decide that Medicaid income eligibility creates a line that they won’t cross by working more hours or accepting a promotion. But it doesn’t have to be that way.

I am willing to bet you a hospital stay copay that there are realistic, feasible ways for West Virginia to open the gate to affordable health care for more hardworking (and hard-riding) West Virginians. We don’t have to accept threadbare coverage for our working West Virginia families — coverage that fits like a pony blanket on a draft horse; not really much protection at all.

It is time to begin the discussion about what a new, more affordable, more comprehensive health insurance option for working folks might look like in our state. We can build on private insurance and Medicaid, and take advantage of federal money. There are good ideas from states like Colorado, Kentucky, Minnesota and New York, that can be adapted to fit West Virginia. Let’s not let the fear of medical debt continue to rein in our state’s workers.