In 2019, the American Journal of Public Health published the results of an analysis about bankruptcies in the United States and concluded that medical bankruptcy is still common despite the Affordable Care Act: “Despite gains in coverage and access to care from the ACA, our findings suggest that it did not change the proportion of bankruptcies with medical causes.”
The analysis was for the years 2013-2016, and as CNBC explains, “researchers found that 66.5 percent of all bankruptcies were tied to medical issues —either because of high costs for care or time out of work. An estimated 530,000 families turn to bankruptcy each year because of medical issues and bills.”
Of course, not everyone with medical debt files for bankruptcy. Millions of others struggle with debt arising from medical issue. According to the Kaiser Family Foundation (KFF), most adults (57%) have experienced owing money due to medical or dental bills at some point in the past 5 years. Among insured adults under age 65, the figure is 61%.”
To add insult to injury, it seems that billing errors are a contributing factor to medical debt: “a majority (53%) of adults with health care debt, and 43% of all adults, say they have received a medical or dental bill they thought contained an error.” These errors fall into three main categories:
- Being billed for something that should have been covered by health insurance
- Being billed for services never received
- Receiving bills for services that have already been paid
In addition to the financial strain of medical debt, being in debt can cause mental strain for many Americans who worry about its impact on their credit score.
Fortunately, they could benefit from a recent rule change. As explained by Forbes, “the way medical debt is reported on consumer credit reports is changing. And those changes may make it easier for people who have dealt with the burden of unexpected medical bills to rebuild their credit.”
Starting July 1, 2022:
- “Medical debt that’s been paid will no longer be included on credit reports from Equifax, Experian and TransUnion—even if it’s been on your report for several years.”
- “The three credit bureaus are increasing the amount of time before medical debt in collections appears on your credit reports” from six months to one year.
- “The three consumer credit reporting agencies will no longer include medical debt in collections under $500 on credit reports.” (This change begins in the first half of 2023.)
Brokers might be interested in learning that consumers do want help correcting medical billing errors. The KFF article states that “seven in ten adults with health care debt say they think a CAP,” or Consumer Assistance Program, “could be helpful to them personally.” CAPs were established in 2010 by the Affordable Care Act and “saved consumers millions of dollars by resolving health coverage disputes” in the early days of the programs. However, “Congress has not provided funding for CAPs since the initial appropriation of $30 million in 2010,” causing many of these programs to close their doors.
While brokers cannot force Congress to provide funding, they can offer an alternative. Health advocacy services have grown in popularity in recent years, and disputing medical claims is one of the most popular services these programs provide. While there is a small monthly fee associated with advocacy services, it’s a cost many consumers would be happy to pay, especially when they learn how many people encounter billing issues and struggle with medical debt. Before promoting a particular advocacy service, though, you will want to ask if assistance is available for “pre-existing” medical bills or only bills incurred after the member signs up for the advocacy service.