Medical bills drive people into debt

An estimated 77 million Americans — some 37% of U.S. adults — have difficulty paying medical bills, have accrued medical debt, or both, according to a new analysis of the 2003 Commonwealth Fund Biennial Health Insurance Survey.

Working-age adults incur significantly higher rates of medical bill and debt problems than do adults 65 and older, with rates highest among the uninsured, said Commonwealth Fund senior analyst Michelle Doty and colleagues in a Fund Issue Brief. Even working-age adults who are continually insured have problems paying their medical bills and have medical debt. The analysts said unpaid medical bills and medical debt can limit access to health care, with two-thirds of people with a medical bill or debt problem going without needed care because of cost, nearly three times the rate of those without financial problems.

Ms. Doty said the 77 million with some type of health care financial problem in 2003 included an estimated 61 million people with problems paying their medical bills and an estimated 29 million adults with current or accrued medical debt. Some 12.4 million reported having problems paying bills and accrued debt.

Because medical bill problems affect those who are insured as well as the uninsured, Ms. Doty said policy-makers need to look more closely at the quality of insurance coverage and benefit design.

The Commonwealth Fund survey captured the information by asking several questions not asked in its previous surveys of this type: 1) did respondents have difficulty in paying, or were they unable to pay, medical bills; 2) had they been contacted by a collection agency about owing money for medical bills; and 3) did they have to change their way of life significantly to pay for medical bills.

Some 20% of adults surveyed (an estimated 43 million people) reported problems paying their medical bills, and a similar number said they were contacted by a collection agency about owing money for medical services. One in seven adults said they had to change their way of life significantly to pay for their medical bills.

Adults ages 65 and older, even if they had relatively low incomes, were much better protected from medical bill problems than working-age adults, according to the survey. While nearly one-third of working-age respondents reported any medical bill problems, just 14% of elderly respondents reported such problems. Also, a significantly higher proportion of low-income working-age adults (48%) reported medical bill problems in the past 12 months than did low-income seniors (20%).

Those with high rates

Ms. Doty said rates of medical bill problems also are high for women, African American adults, and adults with health problems. While seniors with health problems have medical bill problems at a rate three times greater than that for healthier seniors (16% vs. 5%), they are better protected than their younger counterparts.

The survey also looked at the extent to which individuals were grappling with recently incurred and long-term medical debt. Respondents who currently have medical bill problems were asked whether they had incurred large credit card debt or had taken a loan against their home to pay off medical bills in the past year. In addition, individuals without current bill problems were asked whether they had any medical debt in the past three years that they could not pay right away and were paying off over time.

In total, 14% of adults reported recently incurred or past debt problems, representing an estimated 29 million people nationally. Working-age adults were more likely to have medical debt (16%) than adults age 65 and older (4%). Some 7% of adults (about 15 million) reported that their current year medical problems forced them to run up large credit card debt or take out a loan against their home. A similar number had currently or in the past three years amassed medical bills or medical debt that they could not pay right away and were paying off over time.

Not surprisingly, according to Ms. Doty, people ages 19 to 64 who lacked health insurance coverage during the year had significantly higher rates of medical bill problems and debt than did those with continuous health insurance coverage — rates of medical bill problems for the uninsured were twice those for the insured.

"Any lapse in health insurance is a significant predictor of medical bill problems and medical debt, even after adjusting for health, income, age, gender, and race/ethnicity," the researchers wrote. "And even when they have insurance, American families still shoulder medical bill burdens and incur medical debt, likely the result of having inadequate insurance."

Bankruptcy study findings true

Thus, 57% of adults who had current year bill difficulties and 70% of those reporting debt said they were insured at the time their problems began. The researchers said these findings confirm results of a recent bankruptcy study that found many patients were insured when debt was incurred. This latest study found that medical bill problems and medical debt are strongly linked to less comprehensive insurance benefits. Insured adults, whether younger or older than age 65, who lack prescription drug coverage, for example, are significantly more likely to have medical bill and debt problems than those without drug coverage. High deductibles and premiums also are linked to medical bill problems and debt.

Half of adults who have yearly deductibles of $500 or more also have medical bill burdens and debt, while less than one-third of adults with deductibles below $500 face these kinds of difficulties. Similarly, two-thirds of working-age adults paying 10% or more of their household income on insurance premiums reported medical bill problems or debts. Such difficulties occurred less than half as often among adults who did not pay as much for their premiums.

The study found that medical bill burdens and medical debt not only reduced the financial security of American families, but also compromise their access to health care. Some 63% of adults with any medical bill or debt problems went without needed care in the past 12 months because of cost, compared with 19% of adults without such problems. Rates of not visiting a doctor when sick or skipping recommended medical tests, treatment, or follow-up were disparate as well, according to the study. Some 43% of working adults with bill or debt problems did not fill a prescription because of cost, compared with just 9% of adults without such problems.

"This study shows that continually insured adults who have any gaps in their coverage, such as high deductibles or no prescription drug benefits, have greater bill problems and accrued debt than their counterparts with more comprehensive insurance coverage," the authors told policy-makers. "More important, in terms of the overall and long-term effects on health, unpaid medical bills and medical debt have consequences for subsequent health-seeking behavior, especially among those made vulnerable by low income or health problems. As other studies have noted, the link between medical bills, debt, and access problems may reflect a more hostile reception of patients with outstanding bills, or fears among patients that their medical bills and debt will prevent them from receiving subsequent care."

Issues for policy-makers

The study authors said policy-makers have to address what we as a nation do about the fact that many American families can't afford to pay their medical bills and, as a result, experience financial problems, ration health care, or simply forgo needed care. While policy-makers should be concerned about the uninsured, who are at greatest risk, the study indicates that the plight of the underinsured also must be addressed. According to the study report, health plans that expose patients to high medical costs whether through the absence of key benefits, high cost-sharing, or denial of claims, contribute to families' bills and debt problems.

[More information is available on-line at www.cmwf.org. Contact lead author Michelle Doty at (212) 606-3860 or e-mail: mmd@cmwf.org.]