Costly medical bills can bury families under a mountain of debt
By Elizabeth Ziegler - Journal Writer
Two winters ago, Cheryl Alvarez received a phone call from her son telling her that he had been in a car crash. Now Alvarez lives in a nightmare of debt that she won’t be able to escape for years.
The brain trauma and liver damage suffered by her son, Miguel Luna, eventually healed. But Alvarez, a single mother of five, has $200 taken from every paycheck for medical debt. And even with her wages garnisheed, Alvarez still earns too much to qualify for assistance from the state.
The bills from two area hospitals that treated her son’s injuries forced her to declare bankruptcy and rely upon the charity of friends. “It’s been a struggle. Any time you’re raising five kids on your own with no child support, it’s hard to prepare for things like this,” she said. “It is hard asking for help, but there are so many people who have been so good to us -that’s how you get through medical bankruptcy.”
Miguel dropped out of school at age 17 and took a full-time job to help. Now, at 18, he has a GED along with a family of his own to support. He plans to attend Idaho State University in the fall. “When I look at him with his three little kids, I am so thankful. I am so proud of him,” she said. “He’s fine now … it’s a miracle.”
Alvarez’s story is common among the roughly 4,500 personal bankruptcies resulting from unpaid medical bills in Idaho last year. That’s just over half of the personal bankruptcies filed in 2004 in the state. According to a Harvard Medical School Study released two weeks ago, Idaho’s statistics are in line with national figures. The study found that half of all personal bankruptcies in the United States are caused, at least in part, by unpaid medical bills.
Because Alvarez had medical insurance coverage for her son through her job as a clinical assistant and lactation educator for the health department, her story further parallels the study’s findings. According to the Harvard researchers, three-quarters, or 75.7 percent, of the medically bankrupt actually have insurance at the onset of the bankrupting illness or accident. Sixty-eight percent still had medical insurance when they filed for bankruptcy and 62 percent had continuous coverage, as did Alvarez.
But her medical plan had a high deductible and co-pay and she ended up thousands of dollars in debt. “The people out there who are middle-class and have health insurance believe that it will keep them from financial ruin if they should get sick. The reality is that ain’t so,” said Dr. Bill Woodhouse, a physician for Pocatello Family Medicine and a member of Physicians for a National Health Program.
Health West Director Stephen Weeg said often, unexpected medical expenses propel a family into poverty. “An emergency health issue is always an unplanned expense,” Weeg said. “Especially if you are middle to lower income, most folks end up with their budgets pretty tight, so there’s not a lot of discretionary money available.”
The cost of the illness is complicated by lost wages and the fact that many people live paycheck to paycheck. And when you’re maxed out already, Weeg said medical bills can tip you over the edge into bankruptcy. “For a lot of people, going bankrupt is only a matter of a few thousand dollars,” said Scott Greaves, director of the Bannock County Indigent Office. “If you go into the hospital and spend one night, the bill comes out to be $3,000 to $4,000. One night can put some people over the edge.”
For many who are insured and wind up bankrupt, high co-pays and deductibles in addition to paying the costs that exceed coverage limits often are the culprits.
“You are looking at insurance covering $30,000 of the bill, but then you are still owing thousands of dollars,” Greaves said. “Some insurances are 50 percent co-pay, and a lot of deductibles are up to the $2,000 to $3,000 range. And depending on your financial situation, just the deductible can put you over.”
When people can’t pay medical bills, they often end up in the Bannock County Indigent Office, where Greaves sees 400 to 450 cases a year. In Idaho, a state law makes counties responsible for the medical expenses of people unable to pay medical bills. The county pays the bills, a lien is put on the person’s property and eventually the cost of the bills is repaid to the county.
The indigent wear a lot of different faces, Greaves said. They are the unemployed, the working poor and increasingly, middle-class people. “That is who we see in our office -average, middle-class people who don’t have insurance,” Greaves said.
Because the cost of medical insurance rises incessantly, many healthy, middle-class people are opting out of medical insurance and many employers are priced out of offering comprehensive coverage to employees.
“The number of uninsured people is increasing, and nationally, one of the fastest growing segments of uninsured are those who have an income of over $50,000,” said Georganne Benjamin, spokesperson for Regence BlueShield of Idaho.”When people say uninsured, they think of the poverty-stricken, but they might be a college student who just graduated, who is uninsured short-term until he or she is employed.”
Idaho has one of the highest uninsured rates in the nation. Eighteen to 20 percent of Idahoans have no health insurance, compared to 16 percent nationally. The increase in uninsured people adversely affects the cost of medical insurance, Benjamin said, because in order for insurance companies to keep costs down, they need to have virtually everyone share the costs.
“We are trying to raise the number of people who have insurance, because the last thing we want is more uninsured,” Benjamin said. “The more people we have covered, the better it is for everyone overall.” But for many, paying for insurance seems like a waste of money. Benjamin said increasing numbers of typically younger, healthy people are opting to go without insurance. “They are opting out of the insurance market, because to them, it is not worth paying for the services. They don’t see the value,” Benjamin said. “But in order for the system to work appropriately, everyone needs to pay in preparation for a catastrophic event that may happen later down the road.”
People with chronic diseases know better than to opt out of the system, Greaves said, because insurance saves them thousands of dollars. With the pool of insured people growing increasingly sicker, and more expensive to cover, insurance companies raise their premiums, which causes even more healthy people to drop out. At this time last year, Greaves said medical insurance premiums increased about 45 percent.
To compensate, employers and individuals are stuck with a difficult decision: Either pay higher premiums, or pay the same amount for a skimpier policy. For those people who can’t pay more, the policy they can afford is essentially an umbrella with a hole in it, and they are depending on luck. The situation has representatives from both sides of the political divide re-evaluating medical care in the United States.
Some say a national health care system is the answer, and others say medical savings accounts can salvage the present system. “Rising health care costs are a critical concern for us,” Benjamin said, speaking on behalf of Regence BlueShield. “We have to look at product options for our members that still allows them to have insurance at an affordable price, and so, the newest thing is health savings accounts.”
Health savings accounts work, Benjamin said, because money put into the account that isn’t needed one year, rolls over into the next. Over the years, people would save enough money to provide a safety net in case of a medical emergency.
The savings account would work in conjunction with a health insurance policy, she said, to help pay off the deductible, co-pay or the cost of services above a coverage limit.
But critics of the system claim that would not help the growing number of people who cannot afford medical insurance. “I think that is an excellent idea for people who can afford that and take that risk upon themselves,” Woodhouse said. “But we know already that one in five people cannot afford health insurance.” And, it’s not just liberal/progressives who doubt that medical savings accounts can save the current health care system.
Woodhouse is a self-proclaimed conservative, and represents a number of people in the medical field who advocate for a single-payer national health program. “While many claim that we have the best health care system in the world, I know of nobody who believes we have the best way of paying for health care, as evidenced by the high number of the uninsured and medical bankruptcies,” Woodhouse said. “I feel our health care financing system has failed everyone, including the providers. It’s an extractive industry right now. I’ve very reluctantly come to believe in the single payer national health program. I am a pretty conservative person, but this is one thing in which the free market has failed.”