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.
Just as other industries are rolling back some consumer-friendly changes made early in the pandemic — think empty middle seats on airplanes — so, too, are health insurers.
Many voluntarily waived all deductibles, copayments and other costs for insured patients who fell ill with covid-19 and needed hospital care, doctor visits, medications or other treatment.
Setting aside those fees was a good move from a public relations standpoint. The industry got credit for helping customers during tough times. And it had political and financial benefits for insurers, too.
But nothing lasts forever.
Starting at the end of last year — and continuing into the spring — a growing number of insurers are quietly ending those fee waivers for covid treatment on some or all policies.
“When it comes to treatment, more and more consumers will find that the normal course of deductibles, copayments and coinsurance will apply,” said Sabrina Corlette, research professor and co-director of the Center on Health Insurance Reforms at Georgetown University.
Even so, “the good news is that vaccinations and most covid tests should still be free,” added Corlette.
That’s because federal law requires insurers to waive costs for covid testing and vaccination.
Guidance issued early in President Joe Biden’s term reinforced that Trump administration rule about waiving cost sharing for testing and said it applies even in situations in which an asymptomatic person wants a test before, say, visiting a relative.
But treatment is different.
Insurers voluntarily waived those costs, so they can decide when to reinstate them.
Indeed, the initial step not to charge treatment fees may have preempted any effort by the federal government to mandate it, said Cynthia Cox, a vice president at KFF and director for its program on the Affordable Care Act.
In a study released in November, researchers found about 88% of people covered by insurance plans — those bought by individuals and some group plans offered by employers — had policies that waived such payments at some point during the pandemic, said Cox, a co-author. But many of those waivers were expected to expire by the end of the year or early this year.
Anthem, for example, stopped them at the end of January. UnitedHealth, another of the nation’s largest insurers, began rolling back waivers in the fall, finishing up by the end of March. Deductible-free inpatient treatment for covid through Aetna expired Feb. 28.
A few insurers continue to forgo patient cost sharing in some types of policies. Humana, for example, has left the cost-sharing waiver in place for Medicare Advantage members, but dropped it Jan. 1 for those in job-based group plans.
Not all are making the changes.
For example, Premera Blue Cross in Washington and Sharp Health Plan in California have extended treatment cost waivers through June. Kaiser Permanente said it is keeping its program in place for members diagnosed with covid and has not set an end date. Meanwhile, UPMC in Pittsburgh planned to continue to waive all copayments and deductibles for in-network treatment through April 20.
What It All Means
Waivers may result in little savings for people with mild cases of covid that are treated at home. But the savings for patients who fall seriously ill and wind up in the hospital could be substantial.
Emergency room visits and hospitalization are expensive, and many insured patients must pay a portion of those costs through annual deductibles before full coverage kicks in.
Deductibles have been on the rise for years. Single-coverage deductibles for people who work for large employers average $1,418, while those for employees of small firms average $2,295, according to a survey of employers by KFF. (KHN is an editorially independent program of KFF.)
Annual deductibles for Affordable Care Act plans are generally higher, depending on the plan type.
Both kinds of coverage also include copayments, which are flat-dollar amounts, and often coinsurance, which is a percentage of the cost of office visits, hospital stays and prescription drugs.
Ending the waivers for treatment “is a big deal if you get sick,” said Robert Laszewski, an insurance industry consultant in Maryland. “And then you find out you have to pay $5,000 out-of-pocket that your cousin didn’t two months ago.”
Costs and Benefits
Still, those patient fees represent only a slice of the overall cost of caring for a hospitalized patient with covid.
While it helped patients’ cash flow, insurers saw other kinds of benefits.
For one thing, insurers recognized early on that patients — facing stay-at-home orders and other restrictions — were avoiding medical care in droves, driving down what insurers had to fork out for care.
“I think they were realizing they would be reporting extraordinarily good profits because they could see utilization dropping like a rock,” said Laszewski. “Doctors, hospitals, restaurants and everyone else were in big trouble. So, it was good politics to waive copays and deductibles.”
Besides generating goodwill, insurers may benefit in another way.
Under the ACA, insurers are required to spend at least 80% of their premium revenue on direct health care, rather than on marketing and administration. (Large group plans must spend 85%.)
By waiving those fees, insurers’ own spending went up a bit, potentially helping offset some share of what are expected to be hefty rebates this summer. That’s because insurers whose spending on direct medical care falls short of the ACA’s threshold must issue rebates by Aug. 1 to the individuals or employers who purchased the plans.
A record $2.5 billion was rebated for policies in effect in 2019, with the average rebate per person coming in at about $219.
Knowing their spending was falling during the pandemic helped fuel decisions to waive patient copayments for treatment, since insurers knew “they would have to give this money back in one form or another because of the rebates,” Cox said.
It’s a mixed bag for consumers.
“If they completely offset the rebates through waiving cost sharing, then it strictly benefits only those with covid who needed significant treatment,” noted Cox. “But, if they issue rebates, there’s more broad distribution.”
Even with that, insurers can expect to send a lot back in rebates this fall.
In a report out this week, KFF estimated that insurers may owe $2.1 billion in rebates for last year’s policies, the second-highest amount issued under the ACA. Under the law, rebate amounts are based on three years of financial data and profits. Final numbers aren’t expected until later in the year.
The rebates “are likely driven in part by suppressed health care utilization during the COVID-19 pandemic,” the report says.
Still, economist Joe Antos at the American Enterprise Institute says waiving the copays and deductibles may boost goodwill in the public eye more than rebates. “It’s a community benefit they could get some credit for,” said Antos, whereas many policyholders who get a small rebate check may just cash it and “it doesn’t have an impact on how they think about anything.”
Given regulatory barriers and structural differences in practice, private equity firms have been slow to acquire and roll up physician practices and other care assets in other countries in the same way they’ve done here in the US. But according a fascinating piece in the Financial Times,investors have targeted a different healthcare segment, one ripe for the “efficiencies” that roll-ups can bring—small veterinary practices in the UK and Ireland.
British investment firm IVC bought up hundreds of small vet practices across the UK, only to be acquired itself by Swedish firm Evidensia, which is now the largest owner of veterinary care sites, with more than 1,500 across Europe. Vets describe the deals as too good to refuse: one who sold his practice to IVC said “he ‘almost fell off his chair’ on hearing how much it was offering. The vet, who requested anonymity, says IVC mistook his shock for hesitation—and increased its offer.” (Physician executives in the US, take note.) IVC claims that its model provides more flexible options, especially for female veterinarians seeking more work-life balance than offered by the typical “cottage” veterinary practice.
But consumers have complained of decreased access to care as some local clinics have been shuttered as a result of roll-ups. Meanwhile prices, particularly for pet medications like painkillers or feline insulin, have risen as much as 40 percent—and vets aren’t given leeway to offer the discounts they previously extended to low-income customers. And with IVC attaining significant market share in some communities (for instance, owning 17 of 32 vet practices in Birmingham), questions have arisen about diminished competition and even price fixing.
The playbook for private equity is consistent across human and animal healthcare: increase leverage, raise prices for care, and slash practice costs, all with little obvious value for consumers. It remains to be seen whether and how consumers will push back—either on behalf of their beloved pets, or for the sake of their own health.
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.”