Economics

A Full-Scale Assault on Medical Debt, Part 3

By BOB HERTZ

The only way to fully eliminate medical debt would be a comprehensive single payer plan, which allowed no fees at the point of service.

However, such a plan would require setting all prices for all doctors, hospitals, labs, and drug companies. All providers would have to be satisfied – in advance — with what the government is going to pay them on each procedure.

Countries like Germany accomplish this through collective bargaining. Japan, France, Taiwan, Israel and Scandinavia also have national fee schedules. However, I do not think you could get all the providers in Toledo to agree on one schedule, much less every provider group in America. 

Single payer would also require new income and payroll taxes of at least ten per cent more than we pay now, if we want first-dollar coverage.

Most single payer countries have a 10-20% sales tax as well. The Europeans are not shy about taxing the middle class for health care.

Based on consumer surveys, there are between seven and ten million households with over $10,000 in medical debt. However, there are about 20 million households who earn over $200,000 a year and would have to pay higher taxes to solve this problem.

It took a historic financial crisis, plus a fair amount of Democratic self-delusion, just to get Obamacare passed. One Congress after another has refused to impose relatively tiny cuts in Medicare reimbursements.

Therefore ………. the best we can do for now is to

a. cancel the unconscionable debts

b. provide more federal funding for emergency care

c. create supplemental insurance that will pay the deductibles

HERE IS A SUMMARY OF OUR ‘FULL-SCALE ASSAULT’:

Debt Trigger Actions we would take
Emergency Room Visits If the patient is insured, claims are paid without deductibles; if uninsured, the Medicare fee schedule applies
Ambulance Rides No cost to patient, or a very nominal fee; federal funding for providers
Surprise Out of Network Bills These bills will be legally null and void
Balance bills after insurance has paid These bills are null and void, unless fully disclosed and approved prior to care
Denial of Insurance claims Patient is not liable (just as in Medicare). The patient is held harmless in the event of a billing or coverage dispute
Old debts held by collection agencies Fully cancelled after five years
Expensive Drugs Eventually, price controls. For now, drug prices will continue as a major cause of medical debt
Cannot afford insurance deductible Create ‘Cost Sharing Reduction plans’ available to anyone, not just ACA exchange recipients
Cannot afford health insurance Expand Medicaid, increase ACA subsidies
Disabled and unable to work Give  the disabled quicker access to Medicare or Medicaid
Smaller debts (under $1,000) They are often owed to optometrists, podiatrists, family physicians, et al., who cannot afford to write them off. More doctors will arrange payment plans, and some will demand to be paid upfront.

APPENDIX

Here is what can happen when a state does nothing about medical debt….

Kansas is a living laboratory for far-right experimentation with extreme economic cruelty: a state where Medicare expansions has been thwarted, where xenophobia has penetrated the state bureaucracy, where a grifty, incompetent lawyer has apologized for slavery.

People are growing ever-sicker: poverty is strongly correlated with poor health outcomes—especially in America, where being poor means you can’t afford preventative care, and even more especially in Kansas, where limits on Medicaid expansion exclude even very poor people from access to subsidized care.

Enter hospital debt collectors.

Propublica’s Lizzie Presser reports from Coffeyville, Kansas, home to Coffeyville Regional Medical Center, the only hospital for 40 miles, now that its rivals have all shut down. In Coffeyville, magistrate judges are appointed, and need no special training to hold the office. Judge David Casement—a cattle rancher who never studied law—presides over medical debt cases, which he hears quarterly at ‘debtor’s exam’ days. At these proceedings, debt collectors—who do have law degrees, and whom the judge relies heavily on for legal advice—are allowed to quiz sick people, or the parents or spouses of critically ill or dying people, about their assets and income and to ask the judge to order them to divert what little they have to Coffeyville Regional Medical Center, minus the debt-collector’s healthy cut. But sick, poor people can’t always afford to travel to the courthouse. Ssometimes, it’s because they have to go see a specialist (or take their kid or spouse to see one); sometimes it’s because they had to sell their car to make a previous debt payment.

When this happens, debt collectors like Michael Hassenplug from Account Recovery Specialists Inc (ARSI) can ask the judge to issue a warrant for the debtor, who is taken to the local jail and hit with $500 in bail. Many can’t pay it, and stay in jail (Hassenplug insists that they’re not in jail for their debts, but rather for their failure to appear), while others who manage to borrow the $500 often find that it is then surrendered to the hospital and its arm-breakers. Meanwhile, the debts mount: in addition to punitive, usurious interest, the hospital and its debt-collectors reserve the right to lard on fees, fines and penalties.

Bob Hertz is a retired insurance broker. He learned about health care from Uwe Reinhardt, Joseph White, Dr. Robert Evans, and George Halvorson a fellow Minnesotan.

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