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Medical Debt, Lack of Health Insurance Lead to Reduced Access to Healthcare


A new study has found that last year (2010), about 40% of Americans had trouble paying medical bills. This is up from 34% just a few years ago in 2005. Lack of insurance coverage is an obvious obstacle to increased out-of-pocket spending, but Patricia Herman, an economist at the University of Arizona warns that even having health insurance isn’t always protective from being financially devastated by illness or injury.

Medical Debt Increases With Inconsistent Health Insurance Coverage

The study, which appears online and in the August issue of the American Journal of Public Health, used data of 4,200 households in Arizona using the 2008 Arizona Health Survey which included items about whether families were having trouble paying medical bills or if they had delayed care because of the expense. Demographic data, such as income, ethnicity, the presence of chronic health conditions, and health insurance status were also gathered.

Although 83 percent of the survey participants had health insurance, nearly 27% reported having problems paying medical bills. For those who had been uninsured in the past year, but who now had coverage, 43% reported difficulty in paying medical bills. Families reporting medical debit or inconsistent health insurance coverage were five to six times as likely to delay filling prescriptions or getting needed medical care.

Medical debt in patients with health insurance is often due to high out-of-pocket expenses such as coinsurance, deductibles, and dollar limits. Lost wages due to an inability to work often accompanies medical debt, higher credit card debt and increased bankruptcy rates.

Read: More People Struggle with Medical Debt as Recession Deepens

A separate study, for example, showed that patients diagnosed with cancer face significant financial stress due to income loss and out-of-pocket costs associated with their treatment. Dr. Scott Ramsey MD PhD, a health care economist and internist at Fred Hutchinson Cancer Research Center, finds that bankruptcy rates are nearly twice as high among cancer patients one year after diagnosis than in the general population. Five years after diagnosis, bankruptcy rates increased fourfold.

Read: Study Predicts Almost One-Third of Employers Will Drop Health Insurance Benefits

Bankruptcy risk is highest for lung, thyroid, and leukemia/lymphoma cancer patients. In contrast, those over 65 (who are typically on Medicare) have a much lower risk of bankruptcy than younger patients.

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The National Cancer Institute finds that the cost of cancer treatment is high and growing. Another study conducted by Duke University Medical Center and the Dana-Farber Cancer Institute finds that out-of-pocket cancer-related costs averaged $712 a month for surveyed patients and that many of the patients report the expenses as a “significant burden” despite all of the study participants (except one) having insurance.

“In this country, health insurance is most commonly tied to our jobs, so you can lose your insurance status,” said Dr. Herman. “It’s such a double whammy to be hit by that when you’re sick.” She predicts that the Affordable Care Act will provide relief for many people with inconsistent or incomplete insurance coverage, especially households with lower incomes. However, she says, “It will be really important for policy makers to ensure that people will be protected from high out-of-pocket costs as the law is implemented.”

Read: Medical Costs Will Increase in 2011, Companies Add Wellness Programs

Bank of America offers patients the following tips for helping to reduce the amount of medical expenses you incur while taking an active role in your health:

1. Compare costs of several medical providers. The costs of procedures, treatments and medications can vary widely by provider. When your doctor recommends a treatment, ask how much it will cost you, and feel free to shop around or negotiate for a discount. If you're paying some or all of a bill out of your own pocket, you're likely to be charged much more than an insurer or Medicare would pay, so consider asking for the insurer's discount. Other simple strategies for reducing health care costs include carefully scrutinizing your hospital bills for costly errors, avoiding emergency room visits unless you are facing a true emergency and asking your doctor or pharmacist about generic versions of your current medications.

2. Familiarize yourself with your insurance plan. Whenever possible, choose providers that participate in your insurer's network, including all members of your surgical or treatment team. Study carefully what is covered under your plan. If your physician suggests a test or treatment that isn't covered, ask about alternatives that are. If you think you're covered but your insurer rejects your claim and sends you a big bill, you have the right to appeal. Call your insurer to learn about the appeal process and any deadlines for filing your appeal, and make sure your appeal is well researched so you can substantiate your claim.

3. Consider a high-deductible plan. High-deductible plans offer lower premiums in exchange for higher deductibles. Preventive care is usually fully covered, and if you monitor your spending carefully you could save money overall. Many high-deductible plans feature Health Savings Accounts, which can provide considerable tax savings on your health spending: deposits may be tax deductible when contributed and are tax-free when withdrawn for qualified medical expenses. Flexible Spending Accounts also provide tax savings but with traditional plans.

4. Eat right and exercise. According to the Centers for Disease Control and Prevention, more than three-quarters of health care costs in America are due to chronic diseases such as heart disease, diabetes, cancer and arthritis. Fortunately, many chronic conditions can be prevented or minimized by eating right and exercising regularly - and thus reducing your overall health care costs. If your employer sponsors a wellness program, sign up: these plans typically offer discounted gym memberships, weight-loss programs or health coaching.

5. See your doctor regularly. Your doctor can be an important partner in keeping you healthy over the long run. Regular physical exams can help identify problems before they become costly or disabling. Your physician will also notify you about key health screenings, such as mammograms or colonoscopies, which are usually much less expensive than the serious conditions they can prevent.