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The Debt Resisters’ Operations Manual

Chapter Three

Medical Debt: America’s Sick Creation

If you’re having trouble paying medical bills, you are certainly not alone. About 62% of all personal bankruptcies in the United States are linked to medical bills, and three-quarters of those bankrupted had health insurance when they got sick. That’s about one medical bankruptcy every ninety seconds. This is not surprising when we consider that seventy-two million people in the United States have trouble paying medical bills.

Individuals accrue medical debt when they are charged for, but don’t or can’t yet pay for, out-of-pocket expenses charged by the hospital, clinic, or doctor (provider). As soon as you pull out the plastic and put it on your credit card—something strongly advised against when trying to manage medical bills—it becomes personal or consumer debt.

There are many ways you can incur medical debt. According to the American Journal of Medicine, “among medical debtors, hospital bills were the largest medical expense for 48%, drug costs for 19%, doctors’ bills for 15%, and insurance premiums for 4%.” A grim reality in the United States is that when it comes to health care, you are often faced with taking on debt or losing your life. Every year, forty-five thousand people die preventable deaths because of lack of health insurance.

Almost everyone is affected by medical debt. The for-profit health care industry is designed to benefit a few at the expense of the rest. Debtors and non-debtors alike are forced to pay out-of-pocket for everything from basic care to life-saving operations. As patients, most of us understand instinctually that someone is making out like a bandit when we get sick. This becomes clear the minute you walk into a doctor’s office or a hospital where you open your wallet to make an upfront payment, sometimes called a copay, before even seeing a doctor. The costs can start piling up from there, even if you have insurance.

If you have a serious illness or accident, it’s unlikely that your insurance will cover all—or even most of—the care you need. What insurance doesn’t pay, you’re responsible for. Predictably, medical debt discriminates along familiar lines. Low-income people, who are disproportionately people of color, are the most likely to incur medical debt. Astonishingly, more than half of working-age Blacks (52%) report problems paying medical bills, in contrast with 34% of Latino/as and 28% of Whites.

People in other wealthy countries have no concept of medical debt. That’s because they have a system of universal health care that spreads risk across the population. U.S. health care does exactly the opposite; the financial burden is placed on the most vulnerable individuals, while the cost of care increases and coverage becomes skimpier. Health insurance is supposed to guarantee that you get the care you need without going bankrupt, but in the United States, it may very well do neither.

The World Health Organization places the United States health care system first in spending (per capita) and thirty-seventh in quality of care. Spending was estimated at over $8,500 per person (or 17.9% of the GDP) in 2010. At the same time, the United States ranked last among high-income countries on amenable mortality—that is, deaths that could have been prevented with access to effective health care. The reason is that private, for-profit insurance companies dominate the U.S. health care system. One out of every three health care dollars is spent on advertising, underwriting costs, and lavish payouts to executives and shareholders, but not care. To give you an indication of the profit-seeking mentality at the root of this problem, the “loss” in the common insurance industry term “medical loss ratio” refers to the money that is spent on care instead of profits. In the eyes of insurers, providing care becomes an unfortunate cost of doing business.

Unfortunately, Obama’s signature health care policy, the Affordable Care Act, is inadequate when it comes to eliminating medical debt. The Affordable Care Act (ACA) is a huge expansion in the role of private health insurance and for-profit care. It will rapidly transfer public money to private hands, leaving patients in the dust. The law was largely written by Liz Fowler, vice president of policy at the nation’s largest and most profitable health insurance company, WellPoint.

The ACA will deliver over twenty million new customers and $447 billion in taxpayer subsidies directly to the private health insurance companies, but leave at least twenty-three million uninsured, and millions more underinsured with inadequate health insurance coverage.

The cornerstone of the ACA is the individual mandate. This regressive policy requires that if you are not eligible for a public program—Medicare, Medicaid, Veteran Benefits (VA)—you will then be forced to buy private health insurance, or remain uninsured and pay a fine. Lower-income people will have to pay a much higher percentage of their income than the affluent for their coverage, and older people under the age of sixty-five will have to pay more than younger people.

As noted above, having insurance is no guarantee that you won’t go bankrupt should you have a serious illness or accident. In Massachusetts, which implemented the individual mandate model in 2006, two-thirds of all bankruptcies are linked to medical debt. Most people had insurance at the time of illness.

Hospital bills

When you receive a medical bill:

  • Keep every bill.
  • Separate doctors’ bills from the hospital’s bills. Not every service provided during your hospital stay will be included in the hospital’s bill.
  • The origin of the bill is a significant factor in determining whether you’re entitled to a discount.
  • Different account numbers on the bills may help indicate the different providers.
  • Ask the hospital’s billing office for an itemized bill. This bill will separately list all hospital charges. You have a right to know what you’re being charged for.
  • If you have trouble understanding which services you’re being charged for and by whom, call the telephone number listed on the bill to help clarify.
  • If you’re insured, review your insurance policy to better understand the expenses for which you are responsible versus those covered by the plan.
  • In addition to making sure you receive coverage that you’re eligible for, avoid putting medical bills on your credit card. Doing so converts your medical expenses to consumer debt, which puts you in an even worse place. Having credit card debt instead of medical debt likely means greater fees and penalties, and greater difficulty securing a job or mortgage.

You can challenge your hospital bills for many reasons:

  • If you believe the bill was not calculated correctly.
  • If you believe you’re being charged twice for a single service.
  • If you believe your insurance—either public or private—should have covered some or all of the charges for which you are being billed.

Private insurance bills

If you get insurance through your employer, or buy it on the individual market, be careful about referrals! Sometimes patients admitted to an in-network hospital by their in-network provider incur huge bills as a result of out-of-network referrals during their hospital stay. This is because commercial insurance plans do not require their in-network doctors to refer patients to other in-network doctors.

If you have a plan with limited out-of-network coverage, or with none at all, tell your doctor not to refer you to out-of-network doctors. Ask each specialist who treats you in the hospital whether they accept your health plan. Anesthesia bills can be very costly; request an in-network anesthesiologist who accepts your plan and ask to have this request written in your chart.

Doctors’ bills

  • Call your doctor right away if you think your bill is wrong.
  • Find out what the bill is for. You may be responsible for copays or deductibles, depending on your plan.
  • Make sure that the doctor has all of your insurance information. If you have coverage from multiple sources—private insurance, Medicare, or Medicaid—make sure that the doctor knows about all insurance plans and has sent claims to all. Some insurance sources require payment to be made in a certain order, so if the doctor fails to submit a claim to all sources, your claim may be denied. For example, Medicaid pays last. As a result, Medicaid will deny payment if the claim was not first submitted to your other insurers such as Medicare or commercial plans for payment.
  • If you receive care from an out-of-network doctor, you may have to pay up front and submit the claim yourself. Clarify this with your doctor. For help submitting a claim, call the insurer.
  • Most insurance plans have time limits for submitting claims. Make sure not to miss these deadlines.

Persuading doctors to reduce their bills

  • Tell your doctors if you’re having a hard time paying a bill. You can ask for a discount and offer to send recent financial information such as proof of income, recent bank statements, and proof of major expenses.
  • If you received financial aid for your hospital bill, ask the private doctor if they would be willing to reduce the bill on that basis.
  • Ask your doctor for an installment plan instead of sending the bill to a collection agency. If the doctor agrees to an installment plan, ask for it in writing. However, if you can no longer afford the payment plan, the account may be sent to a collection agency.

Challenging medical bills in collections

The best way to challenge a medical bill in collections is to request that the collector provide you with a fee breakdown—which is almost impossible to provide without violating the patient-information privacy rights set out in HIPAA (Health Insurance Portability and Accountability Act of 1996). If the collector does provide you with prohibited details of the care you received, you now have legal grounds to dispute the debt. See Appendix C for a sample letter for this purpose.

Going to the emergency room

If you have to go to the hospital, you cannot be turned away from the emergency room. All you can do is get the care you need and figure out how to pay for it later. If you receive a bill that you cannot afford, go as soon as you can to the hospital’s financial aid or billing center. Some hospitals can lower your payments based on your level of income. Be persistent.

Stories of lying about identity to avoid emergency room bills have been reported to us confidentially. You could consider changing your identifying information so they cannot track you down to bill you, but use extreme caution to avoid getting caught.

Free care

See “Health and Care” in Chapter Eleven for resources on how to find free/low-cost care.

How to choose a hospital

There are different types of hospitals with different types of programs in all fifty states. Many states offer “urgent care” or “free clinics,” which provide very basic services, but you may still need insurance to access even these services. Private and public hospitals also have different programs. Public hospitals receive more state and federal funding and should be able to help you find ways to lower your medical bills. If you know this information in advance, you can request which hospital to be taken to if you end up in an ambulance. The National Association of Free and Charitable Clinics allows you to find free clinics near you.

Denied treatment?

Protest to get the care you need. We’ve heard reports from people who received favorable responses from health insurance companies after complaining on Twitter and Facebook. If you are denied health care, you can organize public demonstrations to demand that you’re given the care you need. Once controversy is created, corporations may reverse their decision to withhold care. In 2007, seventeen-year-old Nataline Sarkisyan was approved for a liver transplant that had a 65% chance of saving her life. At first, Cigna denied coverage for this expensive operation, resulting in valuable time lost. The community and family rallied together at the hospital and protested Cigna until the transplant was approved. It was too late for Nataline. She passed away shortly after Cigna reversed its decision. The tragic loss of Nataline highlights the cruelty of the system but also the power we have when we organize collectively to challenge corporations. The important thing to remember is that corporations want to avoid bad press and you should not be shy about making a lot of noise in public and online if you are denied care or receive a bill that you can’t pay.

The only real solution is to change the system from its current for-profit model to a nonprofit model that is publicly controlled, which has proved sustainable elsewhere in the world. Of the thirty-three wealthiest countries, the United States is the only one without universal health care. Half of the other thirty-two nations have single-payer health care—that is, the state provides insurance and pays for all expenses except copays and coinsurance. This could be achieved in the United States by extending Medicare to all.

Some states are experimenting with single-payer systems. Vermont is working on implementing a publicly funded universal health care system. This could prove to be a model for the nation in reversing the trend toward greed and profit that dominates our health care.

Join the fight for single-payer universal health care and help build the movement to end medical debt!

The above are all important ways to achieve the goal of ending for-profit health care and medical debt. But even single payer is not the ultimate solution. State-financed care is a stop on the road to what we really need. It would give us, above all, a chance to take a step back from the relentless bills and the anxiety that come from not knowing if we’ll be able to afford to care for ourselves and our loved ones. It would give us a chance to ask if there are really only two choices: private or public, corporate or federal. It would give us, at long last, the freedom to ask larger questions about the meaning of health and how we can work together to re-embed care in our communities.

We have a difficult road ahead. But there is no doubt that the private insurance industry is wholly inadequate to the task. Our lives are in jeopardy because medical care in the United States is a profit-making enterprise that enriches the few at the expense of the rest of us. Reform won’t do in the long run. Politicians do not have the will to take the necessary steps. As Dr. Steffie Woolhandler, of PNHP, makes clear:

It’s not your fault if you’re in debt and it’s particularly not your fault if you’re in debt because of a medical problem. This is unfair. No other developed nation forces people to go into debt because they get sick.

The situation we face is not our fault, but it’s our job to take a stand together. The only real solution is a bottom-up, grassroots movement that puts people before profits.