Medical debt; why it's different from any other debt

March 26, 2014

Medical debt; why it's different from any other debt

Article provided by Law Offices of Andrew H. Griffin III
Visit us at http://www.andrewgriffinlawoffice.com

Many individuals struggling to pay debt likely understand what they owe. Their credit card balance shows the exact outstanding balance and their minimum monthly payment. Their mortgage statement reveals each monthly mortgage payment and any arrearages.

But what about medical bills? In many cases, individuals who undergo a surgical or any other procedure do not leave the hospital with a concrete statement of how much they owe for the medical care.

This is because hospital bills are often very subjective and specific to each person and entity. Unfortunately, this "medical bill chaos," has caused financial harm to many individuals.

Why are medical bills hard to understand?

Various reasons are to blame for the inconsistent nature of medical bills.

First, individuals with health insurance often find it hard to decipher policy language. There are out-of-pocket costs, deductibles, co-insurance, co-pays, in-network care, and out-of network care that are all confusing to understand. And they become even more difficult to figure out when there are entire families on policies.

Second, health insurance companies often negotiate charges for certain conditions with hospitals. So, individuals often will not know the exact cost of a procedure until they know whether it will be covered under their policy.

Lastly, even if the chargeable amount is finalized, many hospitals often have bizarre billing methods. Some charge separately for the physician bill and the actual hospital bill.

Because of all of this confusion, many people often spend months trying to sort out their medical bills. Unfortunately, many hospitals simply refuse to wait to get paid. While consumers are taking the time to investigate, their bills have likely already landed in the hands of a collection agency.

And when this happens, fees are tacked on and the harassment begins.

Mitigation efforts

According to the Consumer Financial Protection Bureau, half of all delinquency reports to collections agencies come from healthcare entities.

Congress has attempted to take action to lessen the impact medical bills are having on consumers, but to no real avail. Prohibitions against reporting delinquent medical bills to credit bureaus, and considerations to classify medical debt differently than other unsecured debt are two different propositions introduced in Congress. In 2010, the Medical Debt Relief Act was passed in the House, but simply failed to move forward in the Senate.

It remains to be seen whether a bill to help consumers with medical debt will land on the President's desk for signing in the near future. Considering that healthcare costs in the U.S. are still rising, it's likely.