Patients and Medical Bills

As high-deductible plans spread, patients are responsible for an increasing proportion of their medical bills.  An analysis released by credit firm TransUnion suggests that they are having trouble with these bills, resulting in bad debt for hospitals and other providers.   (TransUnion Release)   Overall patient responsibility for hospital bills has risen from 10% a few years ago to an average of 30% today.  63% of hospital bills result in a patient liability of $500 or less.    Even at this relatively low level of patient responsibility, in 2016, 68% of patients with a hospital bill of this level did not pay off the full balance of that bill during the year, compared to 53% in 2015 and 49% in 2016.  TransUnion is projecting that this trend will continue, with 90% of patients not paying off their bill during the year by 2020.  10% of bills are between $500 and $1000, and 85% of these were not paid in full in 2016.  14% of charges had a patient liability of over $3000 and 99% were not paid in full.  And while 90% of patients made at least a partial payment in 2015, only 77% did in 2016.

Patients are obviously having difficult managing even what seems like a relatively low level of medical bills, but it is easy for many of us to not realize what a large proportion of the population really lives paycheck to paycheck with no savings or cushion.  And while the analysis doesn’t break it out this way, many of these patients must not have HSAs or HRAs that they could use to cover deductible and other cost-sharing amounts.  The reform law was supposed to and did expand the number of people with insurance but obviously hasn’t reduced medical bill-related pressure on consumers.  And notwithstanding the coverage expansion, hospitals incurred $35.7 billion in bad debt and charity care in 2016.  An effort is being made to help patients understand what they owe at the time of service and to make payment arrangements then, but obviously, many patients simply can’t afford to pay these bills.  And TransUnion is right that this trend will likely get worse.