How Even Small Bills Can Lead to Collections and Derailed Finances

Our third and final panel discussion in the Advancing Young Adult Health series focused on medical debt among young people.  The conversation built nicely off of our first panel on coverage and access – and lack thereof due to affordability issues – and our second conversation on mental health, which is as we learned, a key driver of medical debt.  Medical debt impacts both young people with and without health insurance, and avoidance of necessary medical care for fear of high costs can be extremely dangerous during a public health emergency when it is imperative that everyone who may need COVID testing and treatment is able to access it.

The panel discussion was kicked off by a phenomenal young advocate, Tanisha Saunders who shared a very personal and powerful story of resilience. Tanisha is a victim of gun violence, an incident that caused her serious injury, required surgery and a prolonged hospital stay, and put her life in danger. Tanisha thankfully recovered, but while she concentrated on her recovery, the bills started to come. 

As Tanisha states in the above clip, after receiving several medical bills, she wishes in hindsight that she had used a ride sharing service rather than emergency transportation — after a gunshot wound. Ground and air ambulances are expensive services to begin with, but they are also notoriously found to be out of network, meaning the patient will be responsible for the full cost of the ambulance ride. One of the panelists, Deborah Steinberg, also spoke to how surprise bills

As Tanisha states in the above clip, after receiving several medical bills, she wishes in hindsight that she had used a ride sharing service rather than emergency transportation — after a gunshot wound. Ground and air ambulances are expensive services to begin with, but they are also notoriously found to be out of network, meaning the patient will be responsible for the full cost of the ambulance ride. One of the panelists, Deborah Steinberg, also spoke to how surprise bills from ambulance services often occur when police and emergency services are called when a person is experiencing a mental health crisis, harkening back to the previous panel and the need for a “9-8-8” alternative number to “9-1-1.”  

Tanisha also touched on the mass confusion that comes with receiving extensive medical care, and numerous bills and paperwork that followed. The sheer complexity of the EHBs, bills from providers and separate bills from physicians, that can seem like a foreign language to anyone not well-versed in our health care system.

While Tanisha’s case involved bills totalling in the thousands of dollars, the average medical bill among young adults that ends up in collections actually averages $600. The biggest driver of medical debt is being uninsured or underinsured, and many young adults who lack adequate health insurance often cannot afford even small dollar bills. .

Despite conventional wisdom that older adults are more likely to incur medical debt due to higher medical spending, a recent Health Affairs study actually found the inverse to be true — that younger adults were more likely to hold medical debt,  despite lower medical spending. The study found that the share of people with at least one medical bill in collections peaked at age 27, held steady until age 40, and then began declining. The study, like many others before it, also found a correlation between insurance rates and medical debt – again with young people less likely to have health insurance, and more likely to have debt in collections. Young adults are uninsured at a rate of 15 percent, compared to 9 percent of the general population. Furthermore, millions more young people are underinsured, meaning their coverage includes such high cost-sharing that the plan provides little actual financial protection. The trend toward high deductible health plans has left many young people unable to truly access care when they have a deductible as high as $3,000 or $5,000 dollars.

The ban on annual and lifetime limits and new out of pocket maximums have helped cut bankruptcy rates due to medical debt in half since the ACA was passed. These are key consumer protections that have kept many from facing truly crippling medical debt. However, one of the biggest loopholes that requires further regulation is how networks treat mental health care services and providers. Mental health parity is still greatly lacking, despite parity laws that should require plans to cover mental health at equal rates as physical health services.

And thanks to deregulation from the Trump administration, desperately needed consumer protections are getting worse, not better.  It’s not just the high cost-sharing in comprehensive plans, but the explosive growth of non-ACA compliant plans that are a key driver of debt. In 2018, the Trump Administration deregulated short-term limited duration insurance so that these plans could be sold for terms up to 364 days, an expansion up from 3 months. Short-term plans do not have to comply with ACA regulations such as including the 10 essential health benefit categories, including mental health care, and they do not have to comply with the ACA’s financial consumer protections against annual and lifetime limits. And most crucially,  these plans are allowed to discriminate based on pre-existing conditions and medical history.  Short-term plans are heavily marketed to young adults – that’s their ideal demographic. These marketing tactics are often extremely deceptive as well, appearing to be full comprehensive coverage while hiding their exclusions deep in the fine print.

Where do we go from here 

The COVID pandemic will no doubtedly lead to an increase of medical debt without extensive government intervention. The single most important measure the government could take to curb high medical bills and debt collections would be to expand access to comprehensive coverage to as many people as possible. Millions of people are trapped in the Medicaid coverage gap, but if all states expanded their Medicaid programs, hundreds of thousands of young people could have access to necessary care and avoid accumulating debt due to lack of coverage.

Even in states like California however, which has extensive public coverage and has even expanded Medi-Cal to undocumented young people up to age 26, more work needs to be done to ensure that coverage is truly accessible and affordable.

We’ve also seen promising signs of bipartisan support and collaboration in the response to COVID. Telehealth has been greatly expanded, easing access issues, and allowing young people to more easily seek mental health services.

However, Congress needs to do more immediately to protect patients from medical debt, especially as the pandemic rages on. In the long term, much bolder action will be necessary to ensure that all young people have health coverage that they can actually afford, that they can use without fear of an onslaught of future medical bills. One way to do that would be through instituting a public option in the individual market to complete with private plans. 

No matter how we get there, it is clear that the current system just isn’t working for young people. Everyone deserves the security and peace of mind of knowing that if they get sick they can get the care they need, without considering an Uber over an ambulance, or waiting until a condition worsens to a breaking point before seeking treatment. The public health crisis created by the COVID pandemic will radicalize young people to fight for a system that ensures that everyone, regardless of income, immigration status, or employment is covered. Young Invincibles looks forward to fighting for that reality.