Collection agencies held $140 billion in unpaid medical debt in 2020, according to a study published July 20 in JAMA.
Researchers examined a nationally representative panel of consumer credit reports between January 2009 and June 2020. Below are four other notable findings from their report.
An estimated 17.8 percent of Americans owed medical debt in June 2020. The average amount owed was $429.
Over the time period studied, the amount of medical debt became progressively more concentrated in states that don’t participate in the Affordable Care Act’s Medicaid expansion program.
Between 2013 and 2020, states that expanded Medicaid in 2014 experienced a decline in the average flow of medical debt that was 34 percentage points greater than the average medical debt flow in states that didn’t expand Medicaid.
In the states that expanded Medicaid, the gap in the average medical debt flow between the lowest and highest ZIP code income levels decreased by $145, while the gap increased by $218 in states that did not expand Medicaid.
In the past year, cost was a bigger factor driving Americans to skip recommended healthcare than fear of contracting COVID-19, according to a report released June 1 by Patientco, a revenue cycle management company focusing on patient payment technology.
Patientco surveyed 3,116 patients and 46 healthcare providers, finding 34 percent of female patients and 30 percent of male patients have avoided care in the past year citing concerns about out-of-pocket costs.
Below are three more notable findings from the report:
Healthcare affordability is not an issue that affects only Americans with low incomes, as 85 percent of patients with household incomes greater than $175,000 are less likely to defer care when flexible payment options are offered.
Across all ages, income levels and education levels, most patients said they struggled to understand their medical bills and what they owed. Nearly two-thirds of patients said they did not understand their explanation of benefits, did not know what they should do with the information in their explanation of benefits, or waited too long to obtain their explanation of benefits.
Forty-five percent of patients said they would need financial assistance for medical bills that exceed $500, and 66 percent of patients said the same for medical bills that exceed $1,000.
The American Rescue Plan stimulus package just sweetened the deal for the twelve holdout states that haven’t yet expanded Medicaid.In exchange for expanding eligibility to the roughly four million adults with incomes up to 133 percent of the federal poverty level, new expansion states will also be eligible for afive percent increase in the federal matching rate for their entire traditional Medicaid population for a two-year period.
The graphic above shows the cumulative fiscal impact for holdout states, should all Medicaid-eligible individuals enroll. Since the traditional Medicaid population is so much larger than the expansion population, the temporary increase more than offsets states’ cost to cover their share of the expansion, resulting in an estimated net fiscal benefit of almost $10B. While the net benefit would vary from state to state, a Kaiser Family Foundation analysis found the two most populous non-expansion states, Texas and Florida, could net up to $1.9B and $1.8B respectively across the two-year period.
Medicaid expansion has had a significant positive financial impact on hospitals, reducing uncompensated care and increasing overall operating margin by an average of 1.7 percent.
A recent analysis by the Center on Budget and Policy Priorities founduncompensated care costs as a share of hospital expenses fell an average of 45 percent in Medicaid expansion statesbetween 2013 and 2017. So far, only two states eligible for the enhanced expansion, Alabama and Wyoming, have signaled interest in taking advantage of the new deal. Convincing the remaining ten to follow suit will require intense and coordinated advocacy efforts from the healthcare and business communities. Making the financial case for expansion should prove straightforward, compared to overcoming long-entrenched political opposition.
Under the Biden Administration, the DOJ says the ACA can stand even though there is no longer a tax penalty for not having health insurance.
The Department of Justice, under the Biden Administration, has told the Supreme Court that it has changed its stance on the Affordable Care Act.
The DOJ previously filed a brief contending that the ACA was unconstitutional because the individual mandate was inseverable from the rest of the law.
Following the change in Administration, the DOJ has reconsidered the government’s position and now takes the position that the ACA can stand, even though there is no longer a mandate for consumers to have health insurance or face a tax penalty, according to a February 10 filing.
WHY THIS MATTERS
Hospitals and health systems support the change in position.
“Without the ACA, millions of Americans will lose protections for pre-existing conditions and the health insurance coverage they have gained through the exchange marketplaces and Medicaid. We should be working to achieve universal coverage and preserve the progress we have made, not take coverage and consumer protections away,” said American Hospital Association CEO and president Rick Pollack.
The Supreme Court is expected to return a decision before the end of the term in June.
THE LARGER TREND
The Supreme Court heard oral arguments on November 10, 2020 regarding whether the elimination of the tax penalty made the remainder of the ACA invalid under the law.
The DOJ sided with the Trump Administration and Republican states that brought the legal challenge, while 20 Democratic attorneys general supported the ACA and asked the court for quick resolution.
Hospital uncompensated care costs were up from $41.3B in 2018 and $38.4B in 2017, revealing an upward trend, according to AHA data.
Hospital uncompensated care costs increased right before the COVID-19 pandemic hit, according to new data from the American Hospital Association (AHA).
AHA data showed that hospitals incurred a new high of $41.61 billing in uncompensated care costs in 2019, the most recent year for which the group had complete data.
Uncompensated care costs in 2019 were up from $41.3 billion in 2018 and $38.4 billion in 2017 and were the second-highest per AHA records. Hospitals reported the most uncompensated care costs in 2013 when they incurred $46.8 billion.
Hospital uncompensated care costs decreased after the all-time high in 2013, but have recently started to tick back up after holding steady at $38.4 in 2016 and 2017.
In just the last 20 years, hospitals of all types have provided more than $660 billion in uncompensated care to patients, AHA reported. And that figure does not fully account for other ways in which provides provide financial assistance to patients of limited means, the group stated.
Each year, AHA aggregates data on uncompensated care, or care provided for which no reimbursement is received by hospitals from patients or payers. The data comes from the group’s Annual Survey of Hospitals, a comprehensive report of hospital financial data.
Uncompensated care is the sum of a hospital’s bad debt and financial assistance it provides, AHA explained.
Bad debt occurs when a hospital does not expect to obtain reimbursement for care provided, such as when patients are unable to pay their financial responsibility and do not qualify for financial assistance or are unwilling to pay their bills.
Hospitals also provide varying levels of financial assistance, AHA added. Financial assistance supports patients who cannot afford to pay and qualify for support from the hospital based on policies it has established based on the facility’s mission, financial condition, and geographic location, among other factors.
Combined, bad debt and financial assistance charges total a hospital’s uncompensated care charges, which is then multiplied by a hospital’s cost-to-charge ratio to determine total uncompensated care costs.
AHA noted that it expressed uncompensated care in costs versus charges because of significant variations in hospital payer mixes. Publishing the information as costs rather than charges enables better comparison across hospitals, the group said.
Nearly half of hospitals (48 percent) have seen bad debt and uncompensated care increase recently as a result of the ongoing COVID-19 pandemic, an analysis from consulting firm Kaufman Hall revealed.
More than 40 percent of hospitals also reported increases in percentage of uninsured or self-pay patients (44 percent) and the percentage of Medicaid patients (41 percent), which both contribute to unfunded or underfunded care at hospitals.
“The challenges brought on by the COVID-19 pandemic have affected nearly every aspect of hospital financial and clinical operations,” Lance Robinson, a managing director at Kaufman Hall, said at the time. “Organizations have responded to the challenge by adjusting their operations and strengthening important community relationships.”
Hospital uncompensated care costs – and bad debt as a result – are likely to increase in 2020 as hospitals come to terms with the impact COVID-19 has had on their financial health.
Already, hospitals have lost an estimated $323 billion in 2020 as a result of the COVID-19 pandemic, according to earlier projections from AHA.
About half of US hospitals also started the year in the red, AHA and Kaufman Hall stated in a recent report. The organizations predicted that hospital margins would sink to -7 percent in the second half of 2020 without comprehensive financial support from the government, but could decrease to a low of -11 percent if COVID-19 continued to periodically surge as it has.
In swing states from Georgia to Arizona, the Affordable Care Act — and concerns over protecting preexisting conditions — loom over key races for Congress and the presidency.
“I can’t even believe it’s in jeopardy,” says Noshin Rafieei, a 36-year-old from Phoenix. “The people that are trying to eliminate the protection for individuals such as myself with preexisting conditions, they must not understand what it’s like.”
In 2016, Rafieei was diagnosed with colon cancer. A year later, her doctor discovered it had spread to her liver.
“I was taking oral chemo, morning and night — just imagine that’s your breakfast, essentially, and your dinner,” Rafieei says.
In February, she underwent a liver transplant.
Rafieei does have health insurance now through her employer, but she fears whether her medical history could disqualify her from getting care in the future.
“I had to pray that my insurance would approve of my transplant just in the nick of time,” she says. “I had that Stage 4 label attached to my name and that has dollar signs. Who wants to invest in someone with Stage 4?”
“That is no way to feel,” she adds.
After doing her research, Rafieei says she intends to vote for Joe Biden, who helped get the ACA passed in this first place.
“Health care for me is just the driving factor,” she says.
Even 10 years after the Affordable Care Act locked in a health care protection that Americans now overwhelmingly support — guarantees that insurers cannot deny coverage or charge more based on preexisting medical conditions — voters once again face contradicting campaign promises over which candidate will preserve the law’s legacy.
A majority of Democrats, independents and Republicans say they want their new president to preserve the ACA’s provision that protects as many as 135 million people from potentially being unable to get health care because of their medical history.
President Trump has pledged to keep this in place, even as his administration heads to the U.S Supreme Court the week after Election Day to argue the entire law should be struck down.
“We’ll always protect people with preexisting,” Trump said in the most recent debate. “I’d like to terminate Obamacare, come up with a brand new, beautiful health care.”
And yet the Trump administration has not unveiled a health care plan or identified any specific components it might include. In 2017, the administration joined with congressional Republicans to dismantle the Affordable Care Act, but none of the GOP-backed replacement plans could summon enough votes. The Republicans’ final attempt, a limited “skinny repeal” of parts of the ACA, failed in the Senate because of resistance within their own party.
In an attempt to reassure wary voters, Trump recently signed an executive order that asserts protections for preexisting conditions will stay in place, but legal experts say this has no teeth.
“It’s basically a pinky promise, but it doesn’t have teeth,” says Swapna Reddy, a clinical assistant professor at Arizona State University’s College of Health Solutions. “What is the enforceability? The order really doesn’t have any effect because it can’t regulate the insurance industry.”
Since the 2017 repeal and replace efforts, the health care law has continued to gain popularity.
Public approval is now at an all-time high, but polling shows many Republicans still don’t view the ACA as synonymous with its most popular provision — protections for preexisting conditions.
Democrats hope to change that.
“If you have a preexisting condition — heart disease, diabetes, breast cancer — they are coming for you,” said Biden’s running mate, California Sen. Kamala Harris, during her recent debate with Vice President Pence.
Voters support maintaining ACA’s legal protections
In key swing states, many voters say protecting preexisting conditions is their top health concern.
Rafieei, the Phoenix woman with colon cancer, still often has problems getting her treatments covered. Her insurance has denied medications that help quell the painful side effects of chemotherapy or complications related to her transplant.
“During those chemo days, I’d think, wow, I’m really sick, and I just got off the phone with my pharmacy and they’re denying me something that could possibly help me,” she says.
Because of her transplant, she will be on medication for the rest of her life, and sometimes she even has nightmares about being away and running out of it.
“I will have these panic attacks like, ‘Where’s my medicine? Oh my god, I have to get back to get my medicine?'”
Election season and talk of eliminating the ACA has not given Rafieei much reassurance, though.
“I cannot stomach politics. I am beyond terrified,” she says.
And yet she plans to head to the polls — in person — despite having a compromised immune system.
“It might be a long day. But you know what? I want to fix whatever I can,” she says.
A few days after she votes, she’ll get a coronavirus test and go in for another round of surgery.
A key health issue in political swing states
Rafieei’s home state of Arizona is emblematic of the political contradictions around the health care law.
The Republican-led state reaped the benefits of the ACA. Arizona’s uninsured rate dropped considerably since 2010, in part because it expanded Medicaid.
But the state’s governor also embraced the Republican effort to repeal and replace the law in 2017, and now Arizona’s attorney general is part of the lawsuit that will be heard by the Supreme Court on Nov. 10 that could topple the entire law.
Depending on how the Supreme Court rules, ASU’s Reddy says any meaningful replacement for preexisting conditions would involve Congress and the next president.
“At the moment, we have absolutely no national replacement plan,” she says.
Meanwhile, some states have passed their own laws to maintain protections for preexisting conditions, in the event the ACA is struck down. But Reddy says those vary considerably from state to state.
For example, Arizona’s law, passed just earlier this year, only prevents insurers from outright denying coverage — consumers with preexisting conditions can be charged more.
“We are in this season of chaos around the Affordable Care Act,” says Reddy. “From a consumer perspective, it’s really hard to decipher all these details.”
As in the congressional midterm election of 2018, Democrats are hammering away at Republican’s track record on preexisting conditions and the ACA.
In Arizona, Mark Kelly, the Democratic candidate running for Senate, has run ads and used every opportunity to remind voters of Republican Sen. Martha McSally’s votes to repeal the law.
In Georgia, Democratic challenger Jon Ossoff has taken a similar approach.
“Can you look down the camera and tell the people of this state why you voted four times to allow insurance companies to deny us health care coverage because we may suffer from diabetes or heart disease or have cancer in remission?” Ossoff said during a debate with his opponent, Republican Sen. David Purdue.
Republicans have often tried to skirt health care as a major issue this election cycle because there isn’t the same political advantage to pushing the repeal and replace argument, says Mark Peterson, a professor of public policy, political science and law at UCLA.
“It’s political suicide, there doesn’t seem to be any real political advantage anymore,” says Peterson.
But the timing of the Supreme Court case — exactly a week after election day — has somewhat obscured the issue for voters.
Republicans have chipped away at the health care law by reducing the individual mandate — the provision requiring consumers to purchase insurance — to zero dollars.
The premise of the Supreme Court case is that the ACA no longer qualifies as a tax because of this change in the penalty.
“It is an extraordinary stretch, even among many conservative legal scholars, to say that the entire law is predicated on the existence of an enforced individual mandate,” says Peterson.
The court could rule in a very limited way that does not disrupt the entire law or protections for preexisting conditions, he says.
Like many issues this election, Peterson says there is a big disconnect between what voters in the two parties believe is at stake with the ACA.
“Not everybody, particularly Republicans, associates the ACA with protecting preexisting conditions,” he says. “But it is pretty striking that overwhelmingly Democrats and Independents do — and a number of Republicans — that’s enough to give a significant national supermajority.”
Since the Affordable Care Act (ACA) was signed into law a little more than a decade ago, it has fundamentally reshaped the American healthcare system. As the graphic below highlights, the far-reaching law expanded insurance coverage, increased consumer protections, led to new payment models, established minimum coverage standards, reformed the Indian Health Service—and even gave us calorie counts on menus, among myriad other things.
The fate of the ACA is once again in the Supreme Court’s hands—and the nine Justices, now including Amy Coney Barrett, are scheduled to hear arguments starting November 10th. Eighteen states with Republican leadership are asking the court to determine whether the individual mandate is constitutional without a financial penalty, and whether the mandate is severable from the rest of the law.
The process of unwinding a law that touches nearly every facet of the US healthcare system would mean a confusing and financially detrimental road ahead for many.Although we believe it’s unlikely that the entire law will be ruled unconstitutional, if it is—and no replacement legislation is passed—the effects could be devastating.
An estimated 21 million people would be at serious risk of losing their health insurance. This risk is magnified for Hispanic and Black Americans, who are also hardest hit by COVID-19. As many as 133M people with pre-existing conditions could face insurance disqualification or significantly higher premiums.
The lost coverage would result in a significant revenue hit for doctors and hospitals. While the impact would vary by state depending on Medicaid expansion terms, an Urban Institute report projects that total uncompensated care would grow an average of 78 percent for hospitals and 68 percent for physician services if the ACA is struck down. Although the Court is not expected to rule on the fate of the law until mid-2021, the direction and pace of future health reform legislation will be set by the ruling, under either a Trump or Biden administration.
An Illinois federal court has dismissed a whistleblower lawsuit alleging University of Chicago Medical Center, Medical Business Office and Trustmark Recovery Services violated the False Claims Act, according to Bloomberg Law.
MBO and Trustmark provided medical billing and debt collection services for UCMC. The whistleblowers, Kenya Sibley, Jasmeka Collins and Jessica Lopez, alleged MBO and Trustmark engaged in a “ghost payroll” scheme that involved regularly falsifying UCMC invoices, listing employes who didn’t work on the hospital’s collections and time charges from people who were not employees.
The whistleblowers, former employees of MBO and Trademark, alleged the companies and UCMC knew about the “ghost payroll” scheme, and that the allegedly falsified invoices caused the hospital to report overstated wages to the federal government, triggering a larger Medicare reimbursement than it was entitled to.
The complaint further alleged that MBO and Trustmark engaged in a “bad debt” scheme. “MBO would regularly write-off Medicare bad debts for amounts a Medicare beneficiary owed without conducting a reasonable collection effort, when Medicare beneficiaries were still paying on the debts, or when Medicare beneficiaries did not actually owe a debt,” the amended complaint states.
After writing off the bad debt, MBO would allegedly send the bad debt to Trustmark or another collection agency for further collection efforts.
On Sept. 14, Judge Harry Leinenweber of the U.S. District Court for the Northern District of Illinois dismissed the amended complaint, saying the whistleblowers failed to adequately allege the defendants engaged in a scheme to inflate bad debts and falsify invoices in University of Chicago’s cost reports.
The allegations of a “ghost payroll” scheme fail because the whistleblowers failed to allege that defendants certified compliance with any regulation, which is required when filing a false claims case, the judge said in the decision. The amended complaint also fails to establish sufficiently UCMC’s knowledge of the alleged scheme.
The judge also ruled that the amended complaint failed to adequately allege a “bad debt” scheme. Allegations related to MBO’s and Trustmark’s bad debt reports to clients cannot satisfy the requirements to show that companies or their clients submitted improper claims for bad debt reimbursements to the government, reads the decision.
After negotiations for another stimulus package hit a dead end in Washington last week, President Donald Trump signed executive orders to extend relief in the meantime. One order, according to the president, would extend the federal eviction moratorium.
The original moratorium, included in the CARES Act, prohibited landlords or housing authorities from filing eviction actions, charging nonpayment fees or penalties or giving notice to vacate. It expired on July 24 and only applied to federally subsidized or federally backed housing.
But housing advocates are pushing back, saying Trump’s executive order to extend an eviction moratorium actually does nothing at all—and keeps struggling Americans at risk of losing their housing.
Details on the Order
Trump’s order doesn’t actually extend the federal eviction moratorium. Instead, it calls on the Department of Health and Human Services and the Centers for Disease Control and Prevention to “consider” whether an additional eviction ban is needed.
“The Secretary of Health and Human Services and the Director of CDC shall consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary to prevent the further spread of COVID-19 from one State or possession into any other State or possession,” reads the order.
Additionally, the executive order does not provide any new money to help struggling renters during the pandemic. Instead, it says the secretary of Treasury and the secretary of Housing and Urban Development—Steven Mnuchin and Ben Carson, respectively—can identify “any and all available federal funds” to provide temporary rental assistance to renters and homeowners who are facing financial hardships caused by COVID-19.
During a White House press briefing on Monday, Kayleigh McEnany said the president did “did what he can within his executive capacity…to prevent resident evictions.”At the time of publishing, officials mentioned in Trump’s executive order have not released guidelines on extending the federal eviction moratorium.
Housing Advocates React to Trump’s Eviction Order
Housing advocates have not reacted positively to Trump’s executive order, suggesting officials extend an eviction moratorium.
“The executive order that he signed this weekend is really nothing more than an empty shell that creates chaos and confusion, and it offers nothing more than false hope to renters who are at risk of eviction because that executive order does literally nothing to prevent or stop evictions,” Diane Yentel, president and CEO of the National Low Income Housing Coalition, said on Sunday during an MSNBC interview.
The House of Representatives included a more thorough plan to prevent evictions in its HEROES Act proposal. The proposal included $175 billion in rent and mortgage assistance and would replace the original federal eviction moratorium with a 12-month moratorium from all rental housing, not just federally subsidized ones. There also would be funds available to provide homeowners with assistance to cover mortgage and utility payments, property taxes or other resources to help keep Americans housed.
Sen. Richard Shelby (R-AL) introduced the Coronavirus Response Additional Supplemental Appropriations Act as part of the GOP’s HEALS Act proposal. Shelby’s bill included significantly less money for housing assistance than the HEROES Act—$3.2 billion—and would be used for tenant-based rental assistance. Shelby’s proposal did not include any language about extending the CARES Act eviction moratorium.
A recent report by a group of housing advocates finds there could be as much as 40 million renters at risk of eviction in the coming months. The U.S. unemployment rate currently sits at 10.2%.
Individuals who are struggling to pay rent might have assistance options available. Some cities and states have implemented their own eviction moratoriums—you can learn more about them by visiting the Eviction Lab at Princeton University. There are also legal aid options, like Just Shelter, that will help tenants who are facing eviction for low-cost or free.
One in every five workers is now collecting unemployment benefits as the country struggles to get the COVID-19 outbreak under control. A recent Families USA study estimates a quarter of the 21.9M workers that were furloughed or laid off between February and May lost their health insurance. And the payer mix will continue to change as the pandemic wears on.
The graphic below highlights a study from consultancy Oliver Wyman, looking at the impact of rising unemployment (at 15, 20 and 30 percent) on insurance coverage. With each five to ten percent rise in unemployment, the commercially insured population decreases by three to five percent. Those who lose employer-sponsored insurance either remain uninsured, buy coverage on the Obamacare marketplaces, or qualify for Medicaid.
Surprisingly, Washington State and California are reporting little to no enrollment growth in Medicaid programs thus far. Experts point to lack of outreach and consumer awareness as key contributors to the slow growth—but Medicaid enrollment will likely begin to rise quickly in coming months as temporary furloughs convert to more permanent layoffs.
The right side of the graphic spotlights the growing number of uninsured individuals in those states with the highest uninsured rates. The previous record for the largest increase in uninsured adults was between 2008 and 2009, when nearly 4M lost coverage.The current pandemic-driven increase has crushed that record by 39 percent.
On average, states are seeing uninsured populations increase by two percent, with some as high as five percent. And the two states with the highest uninsured rates, Florida and Texas, are also dealing with the largest surge in COVID-19 cases and deaths. The ranks of the uninsured will continue to climb as states reimpose shutdowns, government assistance ends, and layoffs grow.