Where Did We Get All this Medical Debt?

Debt is one of the biggest drags on any economy – and medical debts have quickly become one of the biggest problems that households face. What’s going on here, and where did all this debt come from? Let’s take a closer look at the real causes behind medical debt.

How Many People Have Medical Debts?

Tens of millions of people will find themselves burdened with medical debts at some point in their lives. In fact, just about anyone who has major medical expenses (surgery, emergency medical care, and so on) will probably get a bill that’s much higher than they can easily afford to pay, even if they quickly work to establish a payment plan.

Patients aren’t the only ones worried about this problem – rising costs for providing care mean that doctors are just as concerned about their patients’ inability to pay, especially at a time when so many changes (such as the Patient Protection and Affordable Care Act and the upcoming medical coding switch to ICD-10) are forcing them to spend less time with patients and more time managing paperwork.

How Much Is Owed?

Enough to drive over a million people into bankruptcy and sharply lower the cost of living for many more people. In fact, people without insurance could owe their entire annual salary in medical bills – and it’s usually an expense they never saw coming. The added expense is enough to drive a family deep into the red and keep them there for years to come – which is one reason so many people declare bankruptcy and try to start all over.

What’s Causing These Bills?

High medical bills have numerous causes – and in many cases, it’s a combination of these factors that drives people into debt. Here are some of the biggest factors that are influencing the bills:

• Hospital Fees: A hospital is a large, complex facility staffed with well-trained, well-paid employees and filled with expensive, specialized equipment. It takes a lot of money to keep a hospital running – most of these places benefit from at least a few grants and donations, but the huge majority of a hospital’s revenue comes from bills sent to patients and insurance companies.
• Out of Pocket Costs: People buy insurance to help them pay bills they couldn’t afford on their own – but many forms of insurance won’t cover everything, leaving patients on the hook for a significant amount of their care. Out of pocket costs can take many forms, from buying prescription medication a plan doesn’t cover to the use of equipment in a hospital that an insurance company decided wasn’t necessary to use.

Patients can sometimes avoid these charges – they often have a good case when an expensive tool was used on them without their knowledge or permission – but most people find that their wallet is where most payments are coming from. It’s not uncommon for these costs to reach $20,000 or more, making them a leading cause of medical debt.

• Medication: Speaking of medication, many prescription drugs are quite expensive – and if an affordable generic version isn’t available, then patients could find themselves spending hundreds of dollars a month for medicine that they quite literally need to survive.

How Can People Deal With This Debt?

Medical debt is like most other debts in that it can usually be paid off if families can come up with the right strategy. Many choose to delay or eliminate anything they deem non-essential – sure, those aches and pains are annoying, but they’re better than not having food on the table or warmth in the winter. Others simply decide to avoid the debt entirely and never go to their doctor if they think they can handle it on their own. Unfortunately, this is very dangerous – but the prospect of overwhelming debt is enough to frighten people into doing things that are ultimately bad for them.

The good news is that hospitals understand – they want those bills to get paid, and they will negotiate with you if you approach them correctly. Caroline Mayer, writing for Forbes, has some good advice on this subject – and it’s worth talking to a professional even if you aren’t sure that you want to hire them. The most important thing to keep in mind is that the higher your bills are, the more likely it is you’ll be able to eliminate a significant portion of it. Demonstrating responsibility, genuine need, and a willingness to do what you can – especially by paying as much up-front as you can afford – should be able to get you deal with the overwhelming debts that a hospital bill can impose.