Many face problems paying medical bills despite having health insurance. The primary reasons are excessive out-of-pocket costs and uncovered services. Out-of-pocket expenses are the shared portion of the cost of covered benefits that policyholders are expected to pay for the medical services they receive.
Failure to be able to meet one’s cost-sharing portion of covered benefits can be due to illness(s) requiring extensive utilization of health benefits or selection of the wrong insurance plan. Uncovered services on the other hand are the result of not knowing the exclusions, not complying with the terms of a policy, or obtaining care outside of a network.
According to a study conducted by NerdWallet Health, medical bills are the number one cause of bankruptcies in the United States with almost 2 million people expected to have filed in 2013. Besides bankruptcy, the personal finance website estimated that 56 million adults between the ages of 19 and 64 would struggle with bills related to health care. It predicted that of that number 10 million would be adults with year-round health insurance. A follow-up report by the website reported that the crisis is worsening and that Americans pay three times more in third-party collections for medical debt than for bank and credit card debt combined.
The financial difficulties many with health coverage experience are unavoidable because of chronic illnesses or injuries that are expensive to treat. Some have difficulty paying for the out-of-pocket costs though because they chose insurance plans with deductibles, coinsurance, and/or copayments that were too high, in order to lower their premiums.
The problem caused by obtaining out-of-network care is particularly troublesome and is oftentimes surprising. The reason is not just because deductibles, copayments and coinsurance for out-of-network care are higher – sometimes as much as four times higher. But in addition, out-of-network cost sharing doesn’t count toward the network deductible and vice versa.
The real sticker shock with out-of-network-care though stems from the late realization that the provider discount does not apply to out-of-network providers. Therefore, they don’t have to write off any of their charges no matter how much they might be in excess of the allowed amount.
In most states doctors are not required to have the same charges for all patients. Therefore, it is not uncommon for their customary charges to be higher for patients covered by insurance plans which they don’t have contracts with or patients that don’t have insurance at all. Thus, if a provider is not willing to discount his customary charges for patients not covered by an insurance plan he or she has a contract with those patients can end up owing huge amounts of money far in excess of the maximum annual out-of-pocket expense set by the Affordable Care Act.
Although some doctors will discount their charges to such patients, other providers such as large hospitals that don’t have a personal relationship with the patient are not as likely to be so benevolent. In fact, some years ago, one large hospital published locally that the degree to which it would aggressively pursue outstanding debts for hospital bills depended upon whether not the debtor owned a house valued at $200,000 or more.
Arguments are waged, and rightfully so, that the Affordable Care Act is not a panacea for the problem of medical bankruptcies and will not cause filings to cease. Hopefully though, increased public education about health insurance and the provisions within the ACA will at least stem the tide.