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06-09-2016, 03:28 PM
(This post was last modified: 06-09-2016, 03:29 PM by stpioc.)
Reform Are Seeing Less Debt Sent to Collection Agencies
As long as their state embraced the Medicaid expansion.
Luke Kawa
June 7, 2016 — 11:18 AM ART
Early evidence suggests that the Affordable Care Act is working — at least in one important respect, according to researchers at the Federal Reserve Bank of New York.
Analysts Nicole Dussault, Maxim Pinkovskiy, and Basit Zafar state that the primary purpose of this law "is not to protect our health per se, but to protect our finances." And they've found a big difference between indebtedness trends in states that embraced the Medicaid expansion versus the ones that did not.
The analysts reason that the average amount of debt sent to collections agencies would tend to rise in the event that people without insurance required costly medical attention. Yet, U.S. counties that had a particularly high uninsured rate prior to the implementation of the Affordable Care Act have seen the per capita collection balance fall if their state embraced the Medicaid expansion. If not, the collection balance continued to climb:
![[Image: 488x-1.png]](https://assets.bwbx.io/images/users/iqjWHBFdfxIU/ilAl9iZrSDHA/v0/488x-1.png)
Source: Bloomberg
This quintile of counties with the highest rates of uninsured saw the largest improvement in this metric following the Medicaid expansion. "The paths of these counties diverge after the first quarter of 2015," the analysts write.
The authors caution that this exercise only offers a partial analysis of the law's effects, as it focuses solely on possible benefits stemming from health care reform and does not take into account any of the costs.
"While the full effects of the Affordable Care Act on financial health are yet to be seen, and while the effects of the ACA — positive or negative — are not restricted to financial health, we offer suggestive early evidence that the Medicaid expansion is fulfilling the goal of health insurance: providing 'peace of mind' by protecting against financial hardship," they conclude.
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Some scary stuff in here..
Quote:In total, 56 million people struggle to pay health care related costs each year. That's more than one out of four people who were in families that were burdened by medical bills. Most of these were paying the bills as they could, over time. However, 16.5% were in families that had problems paying those bills in the past year. Another 8.9% just couldn’t pay them at all. To pay the bills, fifteen million used up their life savings.
Ten million skimped on groceries or defaulted on rent to pay medical bills. Twenty-five million cut back on taking their prescription medications. That leads to further health problems down the road.
High health costs force 11 million people to rack up high-interest credit card debt to pay for health care. As a result, medical costs cause 62% of the two million personal bankruptcies declared each year. That is more than those going bankrupt for unpaid credit card debt or mortgage defaults.
These families were not the poor, who are usually well-covered by Medicaid. Instead, two-thirds were homeowners and three-fifths were college graduates. They were middle-class Americans who got hit with massive, and unexpected, out-of-pocket medical expenses. Those with private insurance saw an average of $17,749 per family. Those who lost insurance during the process faced $22,658 in bills. Those without insurance obviously were hit with the most, at $26,971 per family.
A frightening 90 percent of those who had homes had to take out a second mortgage. Nearly 30 percent maxed out their credit cards, while 8 percent were forced into bankruptcy because the illness cost them their jobs.
Even more disturbing was that 78% of them HAD health insurance that failed to cover all their bills.
Most of them (60%) were let down by private insurance, not Medicare or Medicaid. Ten million of them will incur medical costs they can't pay off each year, thanks to high-deductible plans. (Source: CNBC, Medical Bills Biggest Cause of Bankruptcy, June 19, 2013)
How did those with insurance wind up with so many bills? After high deductibles, co-insurance payments, and annual/lifetime limits, the insurance ran out. Other companies denied claims or just canceled the insurance.
The most expensive diseases were diabetes, at $26,971 per family, and neurological disorders like multiple sclerosis, which cost $34,167 on average. The biggest expense was hospitalization, which caused half of the bankruptcies. For more see Rising Healthcare Costs.
Healthcare Costs: Facts About Its Impact
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From the New York Times
Obamacare Seems to Be Reducing People’s Medical Debt
Margot Sanger-Katz @sangerkatz APRIL 20, 2016
Even if you lack health insurance, you’ll probably be able to get treatment at a hospital in the event of a catastrophe — if you’re struck by a car, say. But having insurance can mean the difference between financial security and financial ruin.
A new study is showing that, by giving health insurance to low-income people, Obamacare seems to have cut down on their debt substantially. It estimates that medical debt held by people newly covered by Medicaid since 2014 has been reduced by about $600 to $1,000 each year.
The study, published Monday as a working paper by the National Bureau of Economic Research, builds on earlier evidence from Oregon and Massachusetts that offering health insurance to low-income Americans can help them avoid debt and financial shocks.
I’ve written before about the big benchmarks I’m watching to evaluate the success of the health law. Its impact on people’s financial security is an important one.
Robert Kaestner, one of the authors of the new study, said he and his co-authors think the financial impacts of Medicaid could have cascading effects for the program’s beneficiaries. Previous research has linked hospitalizations among the uninsured to higher risk of bankruptcy, unpaid bills and a lowered credit score.
“Financial distress has many subsequent consequences,” said Mr. Kaestner, a professor of health economics at the University of Illinois. “If people are skipping bills and going into debt, then it can have other repercussions — for example you lose your car, you fall behind on rent.”
This year, we heard from thousands of readers about how medical bills can alter finances and daily life.
“I just turned 26, and I can’t even get a new contract with AT&T without a $750 security deposit, let alone finance a new (used) vehicle,” wrote Richard Barnes, a reader who was uninsured when he was struck with appendicitis three years ago. “When I was moving in May 2015, I had extreme trouble finding somebody who would rent to me.”
A survey that The Upshot conducted with the Kaiser Family Foundation found that about one in five Americans still struggle to pay a medical bill, even after the Affordable Care Act. But several studies show that the number has declined as insurance coverage has expanded.
The new study homed in on the impacts for the lowest-income Americans. The researchers examined credit reports on a sample of Americans across the country. They compared debt incurred by people in two very different sets of states: those that expanded Medicaid to provide free insurance to all individuals earning under about $16,000 and those that either chose not to cover that popuation or had expanded their programs earlier.
By focusing on the 25 percent of ZIP codes with the highest percentage of low-income, uninsured people before 2014, the researchers were able to compare debt incurred by people in the unchanged states with the debt of residents of states that offered new insurance options.
Over two years, they didn’t find major changes in every measure of financial distress. But Medicaid expansion did move the needle on the number of bills sent to collections and the amount of debt sent to collections. That’s important because that’s the pattern of debt-stressed people after an expensive health crisis, Mr. Kaestner said.
The researchers’ estimate of $600 to $1,000 involved some back-of-the-envelope math, but the money is substantial in the context of a population earning less than $16,000 a year. Medical debt also isn’t spread out evenly across the population; about 20 percent of low-income Medicaid beneficiaries end up hospitalized in a given year. That means that a smaller group of people was protected against huge bills.
The study had some limitations. It could look only at people who had a credit report; government research has found that about 30 percent of people with very low income aren’t tracked by the credit agencies.
The research also couldn’t tell whether any particular individual got Medicaid. Instead, it tracked everyone in the places where researchers anticipated the biggest changes in Medicaid enrollment. But the differences were clear enough that the researchers are confident that they represent a real change in the financial circumstances of people who signed up for new Medicaid plans.
The authors pointed out that the lower debt burden for the newly insured indirectly helps other people. The credit reports also track debt and unpaid bills outside of health care. The insurance coverage means more bills are paid to doctors and hospitals — but also to banks, utility companies and landlords.
Those financial ripples often receive less attention than the health law’s more obvious effects on people’s access to health care. But they are also an important effect of the law.
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Quote:The Affordable Care Act was among the likely factors that assisted with a big decrease — nearly 50% — in personal bankruptcy filings in the last six years, according to a Consumer Reports analysis. Other factors, including new bankruptcy laws, a rebounding economy and tighter credit requirements, also likely helped with the reduction, with filings dropping from 1.54 million in 2010 to 770,846 last year.
![[Image: MW-FL692_person_20170503082903_NS.jpg?uu...1cc448aede]](http://ei.marketwatch.com//Multimedia/2017/05/03/Photos/NS/MW-FL692_person_20170503082903_NS.jpg?uuid=17efccd0-2ffc-11e7-a381-001cc448aede)
Medical bills, which are famously costly and unpredictable, have been historically estimated as the leading cause of bankruptcy filings. Other reasons include a lost job, reduced income and divorce, Gaudreau said. A 2009 Harvard study estimated medical issues were responsible for 62% of bankruptcies, while a 2013 NerdWallet analysis based on the Harvard study came to a more conservative conclusion, or 57%. (Another study, done at Northeastern University, found a far lower rate, or 18% to 25%.) The problem with looking at medical bankruptcy specifically is the same as deducing the cause of personal bankruptcy more generally: there isn’t always one reason. The NerdWallet analysis, for example, didn’t include indirect reasons for medical bankruptcy like lost work.
Obamacare helped make a 50% dent in personal bankruptcies - MarketWatch
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Quote:I was in total shock, strapped to a gurney in the back of an ambulance. I had been repeatedly abducted, beaten, and sexually assaulted by a transient man over a period of a year. Completely defenseless and traumatized, I was later groped by a series of predatory homeless men. Defeated, my extreme circumstanceselicited an extreme response: I began lying naked on a patch of grass near a busy street in Salt Lake City. Bystanders called 911. Police and ambulances arrived, and before they touched me the paramedics politely asked me if they could take my vital signs.
However, no one ever warned me about the financial duress that I would face when I emerged from my nervous breakdown on the streets. That burden translated into nearly $4,000 for three ambulance rides between April 2016 and March 2017. These debts wrought havoc on my credit and hampered my recovery from homelessness. The interest on my uncollected debts damaged my credit score. As a result, stores like Best Buy rejected my attempts to buy a laptop on credit, which would have let me pursue my vocation as a journalist once again. This pulled me further into the catch-22 of credit in America: How can you improve it without already having good credit?
After all, credit is used to gauge everything from job eligibility to rental applications. An estimated 43 million people have unpaid medical debt on their credit reports, and 52 percent of all debt on credit reports relates to medical expenses, according to a 2014 study by the Consumer Financial Protection Bureau. My story is unusual only because I managed to extricate myself from homelessness, as well as the financial shackles that constrained me during those two long years. MEDICAL DEBT IS A leading cause of bankruptcy and an increasingly common cause of homelessness. A 2017 survey by Addictions.com found that the top reason for homelessness in South Florida was medical debt.
Taken for a Ride: How Ambulance Debt Afflicts the Extreme Poor
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