What To Do About Medical Debt?

What can be done about the medical debt crisis in the United States? In the United States, medical debt is a major financial burden for many families. In fact, one in five Americans has outstanding medical debt, and the average amount owed is nearly $6,000. Medical debt can have a devastating impact on a family's finances, leading to bankruptcy and negative credit histories. The problem is only getting worse, as the cost of healthcare continues to rise.

On this episode of the CareTalk podcast, John and David explain why medical debt is b.s. and what should be done about it.


Watch the full episode below:



Here are the highlights from the episode:



| What is medical debt?


DAVID :

We're gonna find out. In this topic, I think it's fine. So, it basically, it's a medical expense that isn't covered by insurance which then becomes a past due bill that you don't pay, and it gets written off, sent as a bad debt out for collection and then that becomes a medical debt. So, that's how your little visit to the office became a medical debt.


DAVID :

John, the thing is, you know, eventually just kind of sold off, or it's contracted that the provider holds it and tries to collect from it. And it does get reported to the credit bureau. So, you can say it's ridiculous, but when it appears on your credit report, that's it?


JOHN :

Yeah. But what makes medical debt different than other kinds of debt?


DAVID :

Well, so if you think about a classic example of debt that's sent out for collection, let's say you had a cell phone bill, you didn't pay your bill. Well, probably you signed up for the cell phone bill. Maybe you didn't read it too carefully. Exactly which plan you got and how much it would be, or you didn't wanna have to pay it but you knew it was something you wanted to buy at some time. Now, a medical debt is usually for a product or service that not only didn't you sign up for, you didn't actually want it in the first place. You'd rather not be sick. And it also tends to happen, John, like if you go out and get a new cell phone to give that contrast, hey, you're feeling good. Maybe you got a little raise, a little boost feeling good at the office, but when you go and have a medical bill, it's probably a time when your earnings may be under pressure, someone's sick. You might not be able to work. And the other thing, John, that makes it even more the case is that your cell phone bill, okay, maybe it's $200 a month which is a lot or whatever you pay for it. It's not 200,000 or 20,000, or some number you have no idea of whereas a medical debt could be, that's why I say it's BS John, I'll use that term. It's a nicer term. Because it could be just a totally nonsense number. And also it could be something the insurance company was supposed to pay.


JOHN :

Well, one of the really hard things about medical debt and it's true of healthcare pricing in general is that it's not actually a fixed thing or a predictable thing. And so it's very different than your laundry bill, your grocery bill or your cell phone bill, where, to your point you're picking what you're buying. The price is clear. And once the price is established, it doesn't change. In healthcare, you don't pick a price or a service rather typically, you rarely know what that price is. And it's rarely... Is it one that you couldn't negotiate if you weren't an insurance company versus an individual. It's really confusing. And to your point about being, you know, potentially inflated or just wrong. And that's why there's this weird thing where a lot of people don't pay their medical bills because they just don't even understand it. And, so David, obviously this medical debt thing is a problem for America, but America's leading in one big category. I mean, after all, what country has the most medical debt per capita in the world?




| What country has the most medical debt?



DAVID :

John, you could have left it right at the story of what country has the most medical debt or what country has medical debt, because the concept of medical debt, it's just like Vegemite. You know, it only exists in one place. You know, you grew up and get used to Vegemite, I like it. I grew up with medical debt. I enjoy it, John. I like getting the mail and getting 50 bills from Eurofins which I got the other day, that said that I hadn't paid for some COVID test from two years ago or that they paid my insurance company. I was best to pay them back. John, it's only in America, John, American exceptionalism. So, it's the highest here in the U.S.


JOHN :

Well, and just to put a round number, about 41% of all American adults have medical debt, near around a hundred million people. And 12% of all Americans have medical debt that's greater than $10,000 in a country where a thousand dollars bills surprise bill can turn a lot of Americans household budgets upside down. $10,000 of medical debt for 12% of America according to the Kaiser Family Foundation in 2019 is insanely high. So, in addition to being it unpredictable and difficult to understand, I mean what I get a kick out of is the providers explanation of benefits and bills don't always conform to the language that you can even understand. And then health insurers send these incredibly detailed also confusing letters often that then describe how big a discount they've provided but you still owe money. It's complicated for even those of us in healthcare. And there has to be a better way.


 

ABOUT CARETALK

CareTalk is a weekly podcast that provides an incisive, no B.S. view of the US healthcare system. Join co-hosts John Driscoll (CEO, CareCentrix) and David Williams (President, Health Business Group) as they debate the latest in US healthcare news, business and policy.

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