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Chattanooga: Medical bills put more families in the red

By: Emily Bregel
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Michelle Doty

The seizures started unexpectedly in 2006, the first one at home and the next at work, causing Mickey Brannon to fall heavily over the bricks he was laying and break his nose.

Soon the 45-year-old Cleveland resident — eventually diagnosed with epilepsy — was having two to three episodes a month, his body seizing as “his hands draw up like he’s having a stoke,” said his wife, Tina.

Without any health insurance, two trips to the SkyRidge Medical Center’s emergency room in 2006 left Mr. Brannon with more than $5,000 in medical bills he can’t pay.

“We’ve lost everything,” said Mrs. Brannon, 46, who has TennCare coverage herself and lives on $600 a month from her Social Security disability, due to a bone condition. “He was a brickmason and made good money, and he’s lost his truck, he’s lost his business — he’s lost everything and you know, if it wasn’t for my little (disability) check, we’d have lost the house.”

Rising health care costs, an erosion of insurance benefits and stagnant incomes are making it harder for more people to pay their medical expenses. As a result, hospitals and physicians are dealing with rising bad debt, a recent study states.

An August report from the Commonwealth Fund found that 28 percent of the adult population under age 65 — including those who have insurance — said they were paying off medical debt in 2007, up from 21 percent in 2005.

The Commonwealth Fund is a New York-based private foundation the funds independent research on health care issues.

One-quarter of those people had $4,000 or more in debt and 12 percent owed $8,000 or more, according to the report, which drew on four years of survey data.

Even among those with insurance, benefits are increasingly inadequate, the report states. In 2007, more than one-quarter of adults with higher incomes — 200 percent of the poverty level or more, or about $41,000 for a family of four in 2007 — were underinsured, up from 17 percent in 2003.

The study showed that both low- and moderate-income families are experiencing “a mounting crisis:” More people are spending all of their savings on medical debt, forgoing needed medical care and scrimping on necessities such as food, heat or rent because of medical bills.

The uninsured, such as Mr. Brannon, are hit particularly hard by a medical crisis, local bankruptcy attorneys and credit counselors say.

“Self-employed people almost never had insurance. Those are the ones that get really caught,” said William Schwall, a bankruptcy attorney in Chattanooga.

He said he frequently handles bankruptcy cases in which a person has lost a job and with it insurance coverage, followed by a medical crisis.

“Not that I’m in favor of universal insurance, but something’s got to be done about that to give people some option to get some coverage,” he said.

The report defines “underinsured” as people whose out-of-pocket medical expenses or deductibles were high relative to their incomes.

“If the quality of health insurance is such that it doesn’t protect people ... from high medical bills, then what we start to see is the underinsured are starting to look a lot like those folks who actually don’t have insurance,” said Michelle Doty, Ph.D., co-author of the Commonwealth study and director of survey research.

Policymakers have paid more attention to the catastrophic effect of high medical bills, particularly since a 2005 study found that medical problems contribute to half of all bankruptcies, said a state official.

The study contributed to the advent of the Cover Tennessee program, said Brian Haile, deputy director for the benefits administration division for Cover Tennessee. The program is meant to expand insurance coverage to the uninsured who don’t qualify for state programs such as TennCare and those who can’t get affordable commercial insurance, he said.

“In a real sort of direct way, Cover Tennessee is a response to these trends,” he said.

Locally, programs such as Project Access and Volunteers in Medicine provide free care to uninsured, low-income Hamilton County residents who can’t access care any other way.

PROVIDER IMPACT

Local hospitals also struggle as patient debt rises, hospital officials say.

Bad debt absorbed by Tennessee hospitals has grown dramatically over the years, said Craig Becker, president of the Tennessee Hospital Association.

Tennessee hospitals’ uncompensated care — including bad debt and care provided for free or at a discount to people who cannot pay — grew from more than $422.8 million in 2003, to $784.5 million in 2007.

“It can’t go on like this,” he said. “To keep the bottom line and, in some cases, keep the doors open, it’s a pretty desperate (situation), especially for our safety-net hospitals.”

As pinched patients and employers seek more-affordable health insurance premiums, they are buying cheaper policies that give less coverage, such as plans with deductibles as high as $5,000 or $10,000 in out-of-pocket expenses that must be paid before coverage kicks in, said Steve Johnson, Erlanger hospital’s vice president for payer relations.

Most patients can’t pay those deductibles if a medical crisis happens, he said.

“Oftentimes, the medical debt goes unpaid and we’re not covering the cost of providing care,” he said.

Having to turn over a patient’s debt to a collection agency guarantees even more of a loss for a provider since the agency takes a portion of any debt that is eventually repaid, said Carol Newton, chief financial officer for Memorial Hospital.

“It is a concern that, without some kind of solution where all people are covered in a reasonable plan they can afford, that it’s going to continue to be a burden for (patients), and it’s definitely a burden for hospitals,” she said.

REASONS and solutions

Rising health care costs are worsened by a flagging economy, the Commonwealth Fund’s report states.

As wages have stayed flat — and minimum wage has dropped $3 an hour in real terms since the 1960s — health care costs have risen on average 7 percent per year, the report said.

The Consumer Credit Counseling Service in Chattanooga has about 1,400 people enrolled in its debt management program, and about half of them are dealing with medical debt, said Tracy Johnson, education specialist with the service.

“So many of our budgets right now are strained to the breaking point because of gas and (rising) prices. ... Most people don’t budget anything out for emergencies” such as a hospital admission, she said.

The foundation’s report calls for a national solution that would give health coverage to all Americans, but more immediate help might be found in state-level efforts to expand coverage such as Cover Tennessee, Dr. Doty said.

“I think you need leadership at the national level, but certainly we’ve seen that states are attempting to try to cover everybody, but also create a health care system that is efficient and high performing,” she said.

Providers here said rising enrollment in Cover Tennessee programs is helping, but they said that the program can’t solve the fundamental problems that are leading to mounting debt for patients and providers.

“While everything helps, it’s not going to prevent people from being bankrupt and certainly not going to help the hospitals to cover their losses,” Mr. Becker said.

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