79 million struggling with medical bills: What can states do?

It's the "perfect storm" for working families—soaring gas and food prices, declining home values, and skyrocketing health care costs. According to new research from The Commonwealth Fund, 41% of working-age adults, or 72 million people, reported a problem paying their medical bills or had accrued medical debt, up from 34% (58 million) in 2005. An additional 7 million adults 65 and older also reported bill or debt problems.

"On the national level, we've seen rates of foregoing care because of costs rise dramatically from 2001-2007. We've also seen medical bills and debt rise since 2005," says Michelle McEvoy Doty, PhD, one of the study's authors and director of survey research for The Commonwealth Fund.

During this same time period, the number of uninsured and underinsured adults increased, which partly explains why medical bill burdens and access problems are on the rise across states.

Dr. Doty says she expects these numbers will keep increasing, among both the uninsured and underinsured, unless states work on covering more of the uninsured and improving the quality of health insurance coverage.

An important finding is that the underinsured, in some cases, have similar rates of problems as the uninsured. "This indicates that policy makers also need to worry about the content of insurance, not just covering more of the uninsured," says Dr. Doty.

There is no question that health care affordability is an increasing concern, says Jonathan Seib, a clinical instructor of health services at Washington State Senate Health and Long-Term Care Committee in Olympia. "It is not simply a matter of the uninsured, it is extending to the insured. It is not just the breadth and depth of that coverage, but also the security of that coverage. People are a job loss away from the tenuous connection to the coverage that they have," he says.

Part of the medical debt problem is caused by people losing their private health insurance, says Ann Kohler, director of health policy for the National Association of State Medicaid Directors. "Usually, hospitals bill private-pay patients charges, so the rates are higher for them than other payers," she says. "Coupled with interest, many individuals can never cover this debt."

This puts a strain on hospitals, especially public hospitals that must treat patients. "Also, emergency rooms must treat all people who enter. So again, unreimbursed care puts pressure on the hospital's financial structure," says Ms. Kohler. Most states do pay disproportionate share payments through Medicaid for hospital care for the uninsured, but she notes that the payments do not fully cover the costs and vary by state.

Even insured have debt

Even though 355,000 individuals are newly insured under Massachusetts' landmark health reform law, a new report says medical debt continues to be a problem for lower and middle income residents.

About 40% of the people who came to the Access Project, a national health research and advocacy group in Boston, for help with their medical debt over the last two years had insurance but ended up with medical debt due to unaffordable out-of-pocket costs.

In addition, when researchers did some analysis of medical debt based on income, they found that the medical debt problem is "climbing the economic ladder," says Mark Rukavina, executive director of the Access Project.

As for lower-income populations on Medicaid, Mr. Rukavina notes that some data show that people on public coverage have a lower prevalence of medical debt. "Historically, there have been cost-sharing protections in place. But as costs increase and states introduce cost sharing in the form of either deductibles or copayments, the prevalence of medical debt may grow among those populations as well."

If states introduce cost-sharing, for example in the form of coinsurance, "that is something for state Medicaid directors to be cognizant of, especially for lower income populations, those very populations that the programs are intended to serve," says Mr. Rukavina. "What might be considered by some to be modest cost-sharing, could prove burdensome for these populations. Those accessing care might incur medical debt as a result," he says.

A Kaiser Family Foundation report found that people with private insurance with medical debt had care-seeking patterns or behaviors similar to the uninsured, such as delaying treatment or skipping medications. "That study shows that the presence of medical debt itself is a risk factor or possibly a barrier to care," says Mr. Rukavina.

Contact Ms. Doty at (212) 606-3860.or mmd@cmwf.org, Ms. Kohler at (202) 682-0100 or Ann.Kohler@aphsa.org, Mr. Seib at (360) 902-0557 or jonathan.seib@gov.wa.gov, and Mr. Rukavina at (617) 654-9911, ext. 229 or Rukavina@accessproject.org.