Medical Debt



Medical Debt

Tracy Hill, Patricia Neis, Miriam Slaugh and Allison Veeder

Washburn University

NU 508 - Healthcare Policy, Finance and Organization

May 03, 2010

Medical Debt

Medical debt is unpaid medical expenses owed to a health care provider, hospital, pharmacy, laboratory, or medical supply company. With rising health care costs and the economic downturn of the economy, many Americans with insurance are paying higher health insurance premiums and more out of pocket medical expenses. With a 10% unemployment rate, many American families are unable to either afford basic medical insurance or pay medical bills that arise from chronic disease, acute illness, or an accident. Because of this, many Americans are faced with large medical bills, creating medical debt, a multifaceted issue

that affects the uninsured, the underinsured, the insured, health professionals, insurance companies, and the state and federal government.

Brief History

For the last fifty years, the risk of high medical spending and concerns about private insurance ability to provide adequate coverage against the risk has been at the center of the argument for government intervention to promote a universal health insurance coverage (Gruber & Levy, 2009). In the 1960’s, Medicare for the elderly and Medicaid for the poor was established to help with these concerns. Years later, the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) provided displaced workers the ability to retain employer sponsored health insurance plans for 18 months. In 1996, the Health Insurance Portability and Accountability Act (HIPAA) limited the restrictions that can be placed on insurance coverage when workers change jobs. Then, the State Children’s Health Insurance Program (SCHIP) was created to provide subsidized health insurance coverage for low income children. Even with these programs, the United States has seen a substantial increase in aggregate health spending relative to income (Gruber & Levy, 2009). Health care costs have risen and account for 16 percent of our nation’s GDP - an increase from 13.8 percent in 2000 (Zeldin & Rukavina, 2007).

Background

Social Factors

Health insurance is tied to employment, and in the event of a serious medical condition, the individual’s ability to work and earn income may be limited. As a result, the individual may not be eligible to remain on the employer sponsored health plan. This leads to a lapse in health insurance, which subjects the individual to a pre-existing condition clause, further complicating their ability to obtain affordable insurance. Recent research shows that 29 million adults have medical debt with over 47 million Americans in 2007 were uninsured. (Zeldin & Rukavina, 2007).

One in five US citizens are struggling with medical debt, and adults with chronic illnesses regularly skip their medication because they cannot afford it (Journal of the Royal Society, 2006).

With the trend for health insurance policies to have higher deductibles and co-payments for hospital visits, office appointments, and prescription drugs, the financial burden of those who get sick has increased. Many companies have gone to higher deductibles to keep the premiums lower and more affordable, so when an employee with no personal savings to cover the high deductible or out of pocket expense becomes ill, they are likely to accrue medical debt.

Economic Factors

Health insurance premiums increased 73 percent between 2000 and 2005, while wages increased 15 percent and the general inflation rate was 14 percent (Seifert & Rukavina, 2006). Cramer (2010) reported that premium costs for family insurance jumped from 131% between 1999 and 2009, more than three times the rate of salary increase. Even with the increase in premiums, health plans have passed more expenses on to consumers, raising both co-pays and deductibles. The Commonwealth Fund report found that “nearly two-thirds of the US adults under age 65, or 116 million people, had medical bills, problems or debt, went without needed care because of cost, were uninsured for a time, or were underinsured” (Anonymous, 2008). With the economic downturn, gas and food prices have increased, the housing market has collapsed, insurance and health care cost have risen, and incomes have failed to keep up with the rise in prices. This is creating a perfect storm for a vulnerable population already attempting to stay financially solvent.

Many have turned to credit cards to pay medical bills, a trend that causes an increase accumulation of debt with interest rates for credit cards ranging from 12 to 30 percent.

According to Zeldin & Rukavina (2007), twenty-nine percent of indebted low and middle income household reported that medical expenses contribute to their current credit card debt averaging $11,623. The average credit card debt was 79 percent higher among medically indebted low and middle income American between the ages of 18 and 34 with an average of $13,303 credit card debt than non-medically indebted 18 to 34 year olds (Zeldin & Rukavina, 2007).

Ethical Factors

Every American should have the right to life, liberty, and the pursuit of happiness. This includes adequate medical care for all. But until universal health coverage exists, many delay medical treatment due to fears of accumulating debt, a major contributing factor that preventing many from seeking preventative care. Waiting until a medical condition is so severe that they are forced to present to the emergency department, creates a higher level of debt than if they had sought treatment earlier. Medical debt acutely affects access to care, since patients without insurance are forced to utilize emergency departments for primary care services in the absence of safety-net clinics in the community. In a recent survey (n = 100) conducted by Kansas Health Institute, ten percent of the underinsured Kansans reported that they or a family member postponed needed healthcare such as surgery, routine office visits, laboratory work and prescriptions due to the cost (Britt, 2010).

Legal Factors

Nonprofit hospitals are mandated to care for anyone that arrives at their door seeking care, without regard to their ability to pay. For-profit hospitals are also obligated to provide emergency care, but the for-profit hospitals have no legal obligation to provide free care beyond the emergency department. Failure to treat by a hospital group is considered an EMTALA violation. For individuals with the inability to pay, the hospitals may write off the bill as charity care, but the hospital isn’t the only billing provider. Along with a hospital stay or visit, there are physician bills, radiologist bills, pathology bills, and other services that are billed separately. The patient is still tagged with medical debt without the means to pay for these services. Many find that the only way to cope with the debt is to file bankruptcy.

Therefore, medical debt is playing a significant role in consumer bankruptcies. Bankruptcies due to medical bills increased from 46 percent in 2001 to 62 percent in 2007 (Tamkins, 2009). In 2001, there were over 700,000 bankruptcies that listed medical debt as a major contributing factor (Columbo, 2007). And it more than doubled to an estimated 1.5 million Americans declaring bankruptcy in 2009 (Tamkins, 2009).

Rep. Kilory introduced HR 3421, The Medical Debt Relief Act, which will require medical debt that is fully paid off or settled to be removed from the individual’s credit record within 30 days (Cramer, 2010). The goal of this new legislation is prevent credit scores from being compromised by medical debt. This is critical since many companies check credit scores in deciding which employee to hire, and a low credit score brought on by medical debt can worsen an already perilous financial situation

Expanding health care coverage for more individuals and families is the best solution to prevent medical debt. Recent passing of the healthcare bill to expand the Medicaid program, eliminate the pre-existing clause, and allowing children up to age 26 to remain on parent’s policies will decrease medical debt in the future.

Issue Statement

What actions can the government and the healthcare industry take to assist Americans in reducing their medical debt, thus ensuring a healthy population and a strong economy?

Stakeholders

Patients

There are numerous stakeholders involved with medical debt. One could argue that this issue affects all Americans, either directly or indirectly, since at some point almost everyone will be a patient in the healthcare industry. Due to accumulated medical debt, an estimated 28 million adults reported depleting their savings, 21 million incurred large credit card debt, and another 21 million were unable to pay for basic necessities. Interestingly, 61% of those with medical debt were insured at the time care was provided (Collins, Doty, Kriss, & Rustgi, 2008), illustrating that being underinsured is equally, or even more problematic than being uninsured. The underinsured is a growing population as insurance companies increase out-of-pocket costs such as deductibles and co-pays in order to keep premiums lower. If someone is already in debt, they may become hesitant to seek further care which will increase their debt. This leads to a barrier to access, which may result in delay of care, causing easily treated problems to become more complicated and expensive to treat. Americans with medical debt are significantly more likely to not fill a prescription, to forgo a visit to a healthcare provider, or skip recommended tests or follow-ups, than those who do not have medical debt (Doty, Edward, & Holmgren, 2005).

Healthcare providers

Frustration is growing among America’s healthcare providers, since overwhelming paperwork, insurance red tape and slow reimbursement are making it difficult for independent providers to function. Medicare, Medicaid, and private insurers are trying to control costs in this crisis, which means lower reimbursement. Since many patients who received care cannot pay for it, providers are forced to pursue collection of debts by hiring outside agencies which can also be expensive. When patients present to medical offices, they have often delayed care for as long as possible and are much sicker than they would have been if seen earlier. This requires more testing and treatment the provider must offer, but which may or may not be reimbursed.

Hospitals

Hospitals are on the front lines of the medical debt crisis, since when patients delay medical care long enough that their health problem becomes serious, they often have no choice but to go to the nearest emergency department. Due to EMTALA, no emergency department can refuse to stabilize a patient based on their ability to pay. This results in emergency departments providing very expensive care that often is not reimbursed. The patient may also be admitted and require surgery or other specialist care, further increasing charges. Hospitals are also facing a backlash from patients and lawmakers for their aggressive debt collection policies. They have been accused of charging “list prices” (the charge insurance companies will not even pay) to the uninsured, harassing patients they know cannot pay, and not providing enough “charity care” or not disclosing its availability. In one Illinois County, the county commission recommended revocation of the property tax exemption of both their hospitals due to these factors (Unland, 2005).

These are some of the most relevant stakeholders affected by medical debt. Some others include insurance companies, financial institutions, communities, and indirect healthcare providers such as laboratory or radiology professionals. One could even argue that because the United States functions as part of a global economy, all nations are in some part affected by the financial upheaval caused by medical debt here.

Policy Objectives

The goal of medical debt policy is both to help citizens recover from their current medical debt and to prevent the incurrence of future debt by making changes to the health care system. There are various means to achieve this goal, including acknowledging that the current healthcare system is inefficient and inaccessible to many of the population, moving toward a universal healthcare system, and developing policies to assist in reducing medical debt and enacting policies such as the Medical Debt Relief Act to help people get back on their feet after paying off medical debt. Hospitals and other providers need to increase their cash flow by eliminating list pricing and instead apply fair pricing and payment schedules for the uninsured. Far much money is being wasted trying to collect and prosecute patients for enormous debt that that they will never be able to pay, and patients would be much more likely to pay their bill if there was reasonable pricing in the first place. This must be an industry wide initiative so no one hospital attracts all of the uninsured. In addition, the ability to maintain a respectable credit score will encourage patients to pay off their debt as soon as possible, since if it is going to be downgraded either way, they may see no reason to pay creditors.

Policy Options/Alternatives

Policy options and alternatives for resolving the issue of medical debt include the following:

1. Do nothing option. Continue with the current healthcare system that is inefficient and inaccessible to many of the population, deny some form of universal healthcare, and ignore the need to develop policies that assist people in reducing their medical debt.

2. Incremental change option. Differentiate medical debt from consumer debt; Limit the entry of medical providers into financial services by requiring hospitals and other medical providers to apply fair pricing and payment schedules for the uninsured and underinsured; Enact a Borrower’s Security Act.

3. Major change option. In addition to the incremental change option, enact the Medical Debt Relief Act; increase oversight of lines of credit attached to health savings account products; improve screening for eligibility in public or private financial assistance programs and ensure adequacy of insurance coverage by providing universal healthcare.

Analysis of Policy Options/Alternatives

Criteria for Evaluation:

1. Likelihood of eliminating medical debt and implementing universal healthcare, by acknowledging that the healthcare system is inefficient and inaccessible for many.

2. Size and availability of funding options for reducing or eliminating medical debt.

3. Ability of current policies to meet current and future demand for medical debt relief to consumers.

4. Political feasibility of reducing and eliminating medical debt.

Analysis of option 1: Do nothing option.

Criterion 1: Likelihood of eliminating medical debt and implementing universal healthcare, by acknowledging that the healthcare system is inefficient and inaccessible for many.

Pro.

Individuals that fall into the high income brackets often feel that the health care system isn’t broken and are satisfied with the current situation. Other individuals believe in the idea that everyone is on their own and should pay for the services they utilize. By doing nothing, the wealthy will continue to afford their health insurance and medical expenses as well as the luxury items they desire. Individuals that don’t accrue medical debt will continue to be worry free. A similar attitude of “You do the crime, you do the time” prevails: “You incur the cost of medical care; you pay the price for it.” Medical care providers normally expect payment when services are rendered and will most likely continue this practice, regardless of universal healthcare. Commonly held notions that anyone can get health care if they need it, even if they can’t pay for it, and that many patients have the resources but simply refuse to pay for care will prevail.

Con.

Rising costs have led to financial decisions that decrease health insurance coverage in both the public and private sectors. Those with health insurance pay higher premiums while the uninsured population pays higher out-of-pocket fees (Levitt, 2004). The costs of medical illness are staggering, and many simply do not have a financial plan to deal with a major illness. Doing nothing forces consumers to continue using credit cards to pay for medical debt, leading in some cases to bankruptcy. The use of credit cards for medical expenses can be problematic because the resulting debt is lumped in with all other consumer debt, making this debt not only invisible as medical debt, but also subject to rising interest rates and penalty fees (Zeldin & Rukavina, 2007).

Criterion 2: Size and availability of funding options for reducing and eliminating medical debt.

Pro.

The cost of health care and medical procedures in the United States continues to rise dramatically. There are many contributing factors for the high costs of medical care, including advances in technology, new devices, techniques, medications and research. The cost of medical care for the elderly is rising. The large number of complications related to smoking and obesity continue to top the list of medical problems in the United States, which is further complicated because uninsured Americans are more likely to smoke, not eat a balanced diet, and neglect preventative health measures, such as a yearly physical or a cholesterol test (Levitt, 2004). A common refrain is “if they can afford their cigarettes and junk food, why can’t they afford medical care? It’s just a question of priorities.” Medical malpractice lawsuits and cumbersome government regulations continue to rise as well. Unnecessary use of emergency room facilities is at an all time high, and unpaid accounts receivables that are written off by hospitals and other care providers as “bad debt” continue to skyrocket. Higher labor costs and a shortage of nurses, pharmacists, medical technicians, and other medical industry personnel are continuing concerns. These shortages are only expected to grow, thus increasing the cost of medical care. As a result, it is unlikely that health care professionals, including physicians, nurses and pharmacists would be willing to take a cut in pay to subsidize universal healthcare. By doing nothing further to finance universal healthcare or reduce medical debt, the United States will continue the current quality of medical care that is not accessible to everyone. Healthcare will continue to be funded in part by pharmaceutical and medical research companies, individuals paying for health insurance premiums, health insurance companies, and Medicare, Medicaid and State Children’s Health Insurance Programs (SCHIP).

Con.

The high cost of health care in the United States has created a number of alarming economic and social problems. It has contributed to a greater number of underinsured and uninsured individuals living in the United States, forcing them to either ration or completely avoid the care they need. Those with medical debt will continue to use credit cards to pay for medical expenses, which results in outstanding credit card balances and the potential to deplete personal assets.

Criterion 3: Ability of current policies to meet current and future demands for medical debt relief to consumers.

Pro.

It can be argued that rational individuals would rather have the best care available to increase their probability of a healthier, productive life, even if their decision is financially disruptive (Levitt, 2004). The current policy advocates increased cost-sharing by consumers as a way to lessen health care costs with the provision of less expensive essential insurance policies to make insurance more affordable.

Con.

There is a growing disparity between the care a person expects to receive, what is affordable, and the care offered. Health care providers could help reduce medical debt while enhancing their revenues by screening patients for eligibility for public programs such as Medicaid and SCHIP. Providers should also be encouraged to clarify and publicize their institutional financial assistance programs that are intended to expand access to care for those without resources to pay. In addition, many individuals already forgo needed care because of the out of pocket expenses.

Criterion 4: Political feasibility of reducing or eliminating medical debt.

Pro.

Individuals that feel the existing system works just fine may find strong political voices and actively lobby politicians to support their views, pressuring policy makers to preserve the status quo.

Con.

The current healthcare system does not work. While continuing to rely on national, state and local government to pay for and regulate expensive and burdensome policies related to shaping the future of healthcare reform, the need for policies relating to medical debt must not be ignored or overlooked.

Analysis of option 2 – Incremental change option.

Criterion 1: Likelihood of eliminating medical debt and implementing universal healthcare, by acknowledging that the healthcare system is inefficient and inaccessible for many.

Pro.

Those with medical debt experience diminished access to care. Currently, there is no differentiation between medical debt and consumer debt, since medical debt paid by a credit card is lumped in with all consumer debt. As a result, it is not always properly identified as medical debt (Zeldin & Rukavina, 2007). Therefore, medical debt is subject to the same terms, conditions, and fees which apply to consumer credit card debt. Another way to eliminate medical debt is to improve health care providers’ policies related to billing, collection, and screening for eligibility in public or private financial assistance programs. Pryor and Prottas (2006) found that a significant percentage of respondents with medical debt were never informed about the availability of financial assistance programs. This result suggested that hospitals and other health care providers could help reduce medical debt and potentially enhance their revenues by improving patient screening strategies for eligibility for public programs such as Medicaid and Health Wave. In addition, healthcare entities could implement and publicize charity care programs that provide access to care for those without the resources to pay. For those who do not qualify for these programs, providers should offer significant discounts and reasonable payment plans tailored to the individual’s actual ability to pay.

Con.

Individuals may not support a universal health care plan because of increased government oversight. They may feel that decisions to pursue or not pursue medical treatments will be determined by financial cost alone without regard to personal wants.

Criterion 2: Size and availability of current and future funding options for reducing or eliminating medical debt.

Pro.

By maintaining and expanding the capacity of safety-net facilities, affordable care for people with limited means will be provided. Funding these facilities may also be cost-effective. Research in Kansas has shown that the availability of safety-net clinics reduces hospital emergency room visits by the uninsured and increases the use of preventative services, which may result in future savings. The government should continue to maintain and expand public insurance programs such as Medicaid and Health Wave, since enrolling low-income individuals in public insurance programs has the potential to reduce medical debt among this population. It may also create overall savings by giving people access to treatment before their conditions become more expensive to treat (Pryor and Prottas, 2006).

For patients, a guaranteed loan program specifically for medical procedures and treatments with below market interest rates would help alleviate bankruptcies related to medical debt by lowering payments and extending the loan maturities. A guaranteed loan program would also improve the debt charge-off rate for medical providers that carry patient receivables and reduce the risk of their balance sheets. This might hold or reduce the rate at which health care inflation grows. The health care loan program could model the current student loan programs and produce significant economic and societal benefits (Pryor and Prottas, 2006).

Con.

Although major credit scoring organizations such as Fair Isaac and Company (FICO), consider medical debt to be “atypical and non-predictive” of overall credit worthiness (Zeldin & Rukavina, 2007), there is growing recognition in the lending and credit community that medical debt may require special treatment for some individuals and groups. Debt from outstanding medical bills should not be treated like other forms of debt, and some medical providers are beginning to offer financial services to patients, transforming the patient/provider relationship into a debtor/creditor relationship. Medical providers should be discouraged from moving into the financial services area.

Criterion 3: Ability of current policies to meet current and future medical debt relief to consumers.

Pro.

In recognition of the growing problem of increased patient out-of-pocket costs, the credit card industry has recently developed medical credit cards designed specifically for medical expenses (Zeldin & Rukavina, 2007). The market for these credit cards indicates that patients are having difficulty meeting medical expenses, since with the credit card interest rates and penalty fees adding to the expense, patients are paying more (Zeldin & Rukavina). As a result, more regulating of the credit card industry is needed to protect consumers from medical credit card debt. Also, further research is needed to investigate if households devoting high percentages of income to medical expenses use credit cards for other basic necessities to make up for the greater share of income devoted to expenses associated with a major medical event.

Con.

With the downward spiral of the economy and the rise in healthcare costs, employers have decreased their insurance coverage to decrease the cost of premiums that have risen 131% over the last decade. Businesses are struggling in the unstable economy. With decreased profits, cost saving measures had to be employed. It is the responsibility of the individual to budget for these out of pocket expenses.

Criterion 4: Political feasibility of reducing or eliminating medical debt.

Pro.

Considering the nature of medical debt, an individual making a good faith effort to pay their medical bills should not be subject to the downward spiral of high interest rates and penalty fees charged by the credit card industry. Credit card issuers regularly group purchases into categories of service, so implementing a plan to identify health care expenses charged to credit cards should not be overly taxing (Zeldin & Rukavina, 2007). The government must step in and help protect consumers from deceptive credit card terms and exorbitant interest rates and fees. Fueled by steady deregulation of the industry, credit card companies increasingly charge excessive interest rates and fees, making it harder for families to get out of debt and back on the path to solvency. In addition, attention should be focused on the national and state hospital association levels to take steps to increase the net yield to hospitals from the uninsured population through more equitable pricing and better medical debt repayment terms (Unland, 2005).

Con.

Credit card companies are reluctant to separate medical debt from consumer debt for a myriad of reasons. Part of it is a time and labor issue, as they feel that separating the two would be very tedious and potentially confusing. Many times a credit card balance sent to a collection agency does not reflect any medical entities on the bill, but simply lumps all the debt together, which could potentially benefit the credit card companies.

Analysis of Option 3- Enact the Medical Debt Relief Act, enact a Borrower’s Security Act and provide universal healthcare.

Criterion 1: Likelihood of eliminating medical debt and implementing universal healthcare, by acknowledging that the healthcare system is inefficient and inaccessible for many.

Pro.

Policymakers must address the twin problems of health care cost and coverage in a comprehensive manner to protect American families from financial insecurity and the harmful health outcomes that sometimes result from the current system. The ultimate solution will provide universal access to comprehensive benefits.

Con

It is difficult to fully analyze the impact of the medical debt relief act and the impact of universal healthcare at this time. With universal healthcare, the number of patients with access to care will increase, but the feasibility of this plan is in question. The medical specialists fear that their reimbursement will significantly reduce their salaries, and insurance companies will use their power to protect their turf by lobbying and influencing legislators to maintain the status quo.

Criterion 2: Size and availability of funding options for reducing or eliminating medical debt

Pro.

By ensuring health insurance coverage that provides policy holders access to care and protection from financial ruin, medical debt can be avoided and eliminated. By enacting a borrower’s security act, the government can help people who have medical debt negotiate with insurance companies, hospitals, and other health care providers for fee reductions, affordable payment plans, and more equitable treatment. Establishment of standards for adequate coverage, including cost sharing obligations that are proportionate to family income is also encouraged.

Con.

With the increasing cost of healthcare each year and increased healthcare needs the addition of new health benefits for the American people will contribute to higher health care costs. Since the rate of cost increases will be unsustainable over time, major policy changes that raise costs and increase the federal deficit will likely not be accepted by policy makers.

Criterion 3: Ability of current policies to meet current and future medical debt relief to consumers.

Pro.

By implementing a Borrower’s Security Act, the current practices and balance of power in lending institutions would be restored. Credit card companies would be prohibited from raising a borrower’s interest rate based solely on payments to other creditors. Credit care companies would also have to limit any interest rate increase to future activity on the card only and limit the amount by which interest rates can be raised; requiring credit card companies to institute a late-payment grace period; and raising the minimum payment requirement to five percent of a cardholder’s balance to curtail excessive debt loads.

Con.

Health insurance products like health savings accounts (HSAs), high deductible plans, and limited benefit policies, attributed to consumer-driven health care, increase individual risk and challenge the notion of health insurance. Businesses that offer coverage to employees often face double digit premium increases and have little choice but to pass along more of the cost of the coverage, putting the employee at risk of incurring significant medical debt.

Criterion 4: Political feasibility of reducing and eliminating medical debt.

Pro.

Government should consider policies that restrict the reporting of medical debt to credit agencies. Pryor and Prottas (2006), suggest a health care loan program that parallels the student loan program as a viable alternative financing solution. The government program would grant individuals access to capital for medical procedures and preventative services, creating a financial incentive for them to seek care. A federally guaranteed loan program would keep the bad debt off of the health provider's balance sheet. The cost of most procedures and diagnoses are typically large in comparison to the average yearly income of $28,114 (Pryor and Prottas). A loan with a maturity such as a 30-year mortgage, a below market interest rate, and flexible and affordable payment plans that fit budgets would potentially reduce personal bankruptcies. It would help spare homeowners from foreclosure and renters from eviction. Those with illnesses would have a better chance to stay creditworthy and not disrupt their lives.

Con .

Although more funding options mean more federal government spending, and thus an increase in the already astronomical national debt, the current system for handling medical debt simply does not work, so change must occur. Implementing a Borrower’s Security Act and enacting the Medical Relief Act are ways medical debt policies can be successful.

Comparison of Policy Alternatives

COMPARISON OF ALTERNATIVES

| | |Alternatives | |

| |Do Nothing Option |Incremental change option |Major Change option: Revision of |

| | | |Healthcare Reform |

|Criteria | | | |

|Likelihood of eliminating medical debt |- |+ |+ |

|Options for reducing or eliminating medical debt |- |+ |++ |

|Ability of current policies to meet current and |- |- |- |

|future medical debt relief to consumers | | | |

|Political Feasibility of reducing or eliminating |- |- |- |

|medical debt | | | |

| | | | |

|Score for Each Alternative |0 |2 |3 |

SUMMARY AND RECOMMENDED POLICY

Health Care Reform has the attention of all Americans, with medical debt being a loaded topic in the current economic climate. Many Americans are trying to find ways to maintain their lifestyle under poor financial conditions and with the rapid increase in both the cost of health insurance and the decrease in benefits provided, many Americans have an insurmountable amount of medical debt. If the government does nothing, the amount of medical debt will continue to grow by leaps and bounds, affecting more and more Americans daily. Lower and middle class Americans are plagued with medical debt, and credit card debt increases daily due to it, with the average amount of $ 11,623 due to a medical debt. The current system is ineffective in providing basic health care to Americans and preventing medical debt. A change must occur.

The Incremental change option would help differentiate between medical debt and consumer debt; however, it does not provide an option to decrease the amount of medical debt. The reduction of charges allowed by medical providers would help decrease, but not eliminate the overall amount of medical debt. The creation of a plan to help finance medical debt could be useful, but with the ten percent unemployment rate, the need for a universal insurance plan is needed. If the consumer has no income, it will not matter if the interest rate is zero; they will not be able to feasibly pay this debt and are therefore more likely to file bankruptcy.

The major option calls for a drastic overhaul of a failing system. Medical debt has resulted from the high cost of health care in the United States. A drastic change is needed; therefore, the right change must occur. The changes would aid in decreasing the amount of overall medical debt an individual may accumulate. However with the current policies in place eliminating the medical debt will not likely happen. Political feasibility will be difficult to obtain without public and political support, and the likelihood that each State Representative will agree is unlikely. Financial stability primarily affects the lower and middle class population; therefore, the upper class is not as affected by medical debt. Making a change to benefit those who earn less is where attention must be focused.

Health care reform is essential to decrease the amount of medical debt that plagues Americans. With the rising cost of basic medical care, the do nothing option is not reasonable for most Americans. The increment change could help some Americans decrease the amount of medical debt they are acquiring, but not all. The major initiative has great ideas and plans; however, the feasibility and likelihood it will pass within the political arena are limited. The best plan to combat medical debt will address the current cost of healthcare, the availability of affordable insurance, change the policies in place for management of healthcare dollars and restrict the insurance companies from lobbying to continue with the status quo. Medical debt affects most Americans, and we must stand together and find a way to make a change that will positively impact our lives and the lives of generations to come.

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