We cannot isolate specific medical debt in the current study. That is, even in the five districts from which we have obtained detailed financial information, we did not separately tabulate medical debt as we did home mortgages and credit card debt. In the 1990s medical debt simply became too hard to identify. For some debtors, medical debt is easily identified as the debtors tried to pay their health care providers over time.
With a US Dollars 20,000 debt to their hospital and a who's who among medical providers of doctors, emergency medical services, clinics, and medical supply companies, the source of their debt was not hard to pinpoint. But for many families, a serious medical problem will not result in bills that can be easily identified as medical in origin. Even the Andersons had a single nonmedical debt for US Dollars 5,000 to a finance company. That US Dollars5,000 may have been used to pay doctors and hospitals, but nothing in the files explains where the money went. We would have to classify the debt as "general" even though every penny might have been used to pay doctors and hospitals, sharply understating actual medical debt.
Many providers now require payment at the time of service, so that many patients put their medical bills on an all-purpose credit card. As a result, a listing for credit card debt today may conceal ambulance costs, physicians' bills, pharmaceuticals, home health care costs, medical appliance and equipment fees, and hospital charges. Nor will a home equity line of credit or a finance company loan on a bankruptcy schedule show a connection to earlier, substantial medical debts. This problem was undoubtedly present to some extent in earlier studies, including our own, leading to an underestimation of the significance of medical debt in bankruptcy filings.
The discovery of medical debt as a cause of bankruptcy has likely proven elusive for other reasons. In addition to the problem of identification, where medical debt is camouflaged within another category, especially the ubiquitous credit cards category, it is possible that medical debt, like the "last credit card," is often omitted from the debt schedules. Some families may be worried that a failure to pay their doctors or clinics may result in the loss of future services. Others may be so grateful for help that they are determined to pay regardless of the dischargeability of their debts. Still others may want to save face, hoping that their health care providers will not learn of their bankruptcy filing.
Medical providers may be acquainted with the debtors - unlike the faceless banks and finance companies who solicit their business - and this may cause families in bankruptcy to fail to list at least some of these providers even though these are the very debts pushing them into financial collapse. Although some debtors may not list their health care providers in their bankruptcy schedules because of their personal relationships with their creditors, other debtors may find health care providers to be their most aggressive creditors.
Medical debt could be a frequent trigger for bankruptcy even when it is not the largest debt. Aggressive collection activity by hospitals and doctors may drive debtors with medical problems into bankruptcy when their counterparts with credit card or other debt might survive outside bankruptcy. If hospitals and doctors are quicker to sue for their money and to seek collection through wage garnishment and otherwise, then medical debts might provide a greater incentive for seeking bankruptcy protection than their relative size on the debtors' schedules would suggest.
Many collection specialists assert that doctors are particularly quick to turn bills over to lawyers or bill collectors. It would be understandable if they did, because doctors appear to lose much more from unpaid bills than do hospitals. It should be understood that these losses are over and above "indigent care," where a doctor or hospital understands from the start that free, charity care is being provided.
A great deal of charity care is being provided, but the debts and losses discussed here are "uncollected bills" for which payment was expected at the time the services were provided. One New England study showed doctors writing off more than US Dollars 23,000 each, in addition to indigent care provided for free. This is a substantial sum for anyone, but the US Dollars23,000 write-off occurred in an area where average physician annual income before write-offs was about US Dollars 70,000. Many of us would get testy about people costing us a third of our yearly income.
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Note: This article was sent to us by: Leah Brighton at 05122010
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