Medical debt in America continues to grow, led by emergency room visits and surprise bills

U.S. health care costs have grown considerably in the 21st century, leading to unprecedented levels of medical debt for Americans households and a wave of crowdfunding for medical bills.

A recent LendingTree survey of 1,550 people found that a majority of Americans (60%) have been in medical debt, with costs averaging between $5,000 to $9,999. Emergency room visits (39%), visits with doctors and specialists (28%), childbirth and related care (22%), and dental care (20%) were the leading causes.

Erika Giovanetti, a personal loans and debt expert at LendingTree, said the amount that many Americans seem to owe in medical debt was “the most shocking finding.”

The survey findings are particularly striking when compared to health care prices outside of the U.S.

“Everything’s just expensive in the States,” Niall Brennan, CEO of the Health Care Cost Institute, told Yahoo Finance. “The bed that you’re in, the ambulance that brought you there, the IV in your arm.”

For example, a normal childbirth in Australia is only 55% the cost of one in the U.S. In the Netherlands, it’s just 33% of the overall cost. And yet, the U.S. has one of the highest global maternal mortality rates.

Brennan called these figures “mind-blowing” and partially attributed it to out-of-network billing.

When women give birth, “they have anesthesia of some type,” he said. “Frequently, the anesthesiologist is also out of network, which can lead to horror stories about people leaving the hospital and getting $15,000 bills a couple of weeks later. It’s the high underlying cost of all health care services in the U.S., things like out-of-network billing and then sometimes the impact of things like high deductible health care plans too.” (On average, women with employer-sponsored health care pay $4,314 out-of-pocket for natural delivery and $5,161 for a C-section.)

Giovanetti noted that the debt is particularly onerous if the medical debt is on a credit card or medical loan because then interest has to be accounted for as well.

2020 only intensified the trend.

“The COVID-19 pandemic is weighing down the American health care system,” Giovanetti said. “The life-saving medical care that’s being administered by front-line workers like nurses and doctors comes at a high cost, and often that price tag is passed on to the patient. I wouldn’t be surprised to see medical debt continue to rise as a result of the coronavirus pandemic.”

'The average consumer would have no idea about until they get a bill'

Emergency room visits can be especially costly.

“When you go to an emergency room, you’re basically going to a hospital with all the different cost centers that implies,” Brennan explained. “You’ve read the horror stories about people maybe panicking or overreacting a bit and taking their kid to the ER, the ER doc puts a band-aid on the kid, and they get a $2,000 bill.”

An August 2018 report from the Peterson-Kaiser Family Foundation Health System Tracker found that about 18% of ER visits "result in at least one out-of-network charge," though the circumstances vary by state.

“There’s something called a facility fee, and that’s literally the price of admission to an emergency room,” Brennan said. “Whether you’re having a heart attack or hit by a car or shouldn't be there in the first place, everybody will pay the facility fee.”

The actual amount depends on things like your insurance status and whether or not you’ve hit your deductible.

“Another reason why emergency rooms are so prevalent from a medical debt perspective," Brennan noted, "is that in addition to the facility fee, many emergency room doctors have chosen to remain out of network with hospitals — which of course is something the average consumer would have no idea about until they get a bill."

And why is that so prevalent?

“There is a profound difference of opinion between certain physicians and the insurance companies they contract with, the appropriate amount of reimbursement for specific services,” Brennan explained. “There’s been a ton of conversation about this in recent years.”

Help is on the way: The No Surprises Act, which was signed into law in December 2020 and goes into effect in 2022, requires health insurance providers to cover surprise bills at in-network rates and bans balance billing and out-of-network providers from charging patients for excess fees.

“The reality is that certain doctors, certain specialties, particularly ER docs, anesthesiologists, have really taken advantage of this practice to charge ridiculous amounts of money that ends up being the patient’s responsibility because there’s no arrangement with the doctor and the insurance company,” Brennan said.

Americans' only option: Negotiate

Importantly for Americans, the survey found that 75% of people with medical debt had tried to negotiate their bills and a majority of them were successful.

LendingTree recommended several approaches to try: request a summary of benefits and coverage from your insurance, get an itemized copy of your hospital bill, see if you qualify for payment assistance programs, offer to pay upfront for a discount, and enroll in a payment plan through the health care provider.

“We’re probably one of the only countries in the world that places the burden on patients,” Brennan said. “You talk to your friends in other countries and say, ‘I just had a very successful negotiation with my hospital over a service.’ They’d look at you like you have three heads.”

Both Brennan and LendingTree’s Giovanetti agreed that these findings stress the fact that the U.S. health care system values money before anything else.

“It’s not a good look,” Brennan said. "Unfortunately, I don’t see it improving. It would need very radical cultural shifts in American health care. While people say a lot of nice-sounding words, like value-based care and patient empowerment, et cetera, the reality is that the system has always and will continue to place profits over people.”

Adriana Belmonte is a reporter and editor covering politics and health care policy for Yahoo Finance. You can follow her on Twitter @adrianambells and reach her at adriana@yahoofinance.com.

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