Diagnosis of Debt: Will help come from government?

We’ve heard a lot about how medical debt is at an all-time high and hurting patients and hospitals alike. So what role does the government have – if any – in protecting patients and hospitals from bad debt? It’s not just a question of should the government get involved, but if it’s politically possible.

California State Capitol (Kelley Weiss/CHCF Center for Health Reporting)

To make something better, first everyone has to agree on a diagnosis. And when it comes to health care that’s hard to do. Dave Jones is California’s Insurance Commissioner and the former democratic Assemblymember has made reforming the health care system a top priority. But his current push to regulate health insurance rate hikes shows it hasn’t been easy.

“That’s authority that I’ve been fighting for five years to get,” he said. “We’re back again this year, with Assembly bill 52.”

This latest version just stalled at the Capitol, but Jones is not giving up. He said the insurance industry is seeing record profits while medical debt is escalating.

“There’s no question that there is a direct relationship between the ever-rising health insurance and HMO rates and the amount of medical debt that consumers and families are being forced to bear,” he said.

So is the insurance industry the villain when it comes to medical debt? We’ll hear from them in a minute. But first let’s check in with the hospitals – they’re facing bad debt every day. Anne McLeod is with the California Hospital Association. And she says the insurance industry does have something to do with it, but she believes the bigger culprit is Uncle Sam.

“Probably the broader public doesn’t realize that the government programs significantly underfund the hospitals,” McLeod said.

McLeod is referring to payments for Medi-Cal and Medicare – programs for the poor, the disabled and the elderly. She said the government underfunds California’s Medicare program by $3.8 billion and Medi-Cal by $4.5 billion. That, she said, then increases medical debt for everyone because it drives up health care costs.

Patrick Johnston with the California Association of Health Plans agrees with McLeod that the government is not paying its fair share. He also said that the insurance industry isn’t the problem – it’s the fact that so many people don’t have health coverage, often because they’ve recently lost their jobs. For Johnston more uninsured Americans means more medical debt because it stops the system from working efficiently.

“Insurance is based on the notion that if we all pitch in and pay something as we go then when any one of us has to take out when we have illness or injury there’ll be money to pay for it,” he said.

Johnston said right now people with private health insurance have to subsidize those who have no insurance at all.

So Johnston, McLeod and Jones all have a slightly different take on the causes of medical debt. But when it comes to possible solutions, they all bring up one thing: last year’s Affordable Care Act, or as its critics like to call it, Obamacare.

All of them pinpoint at least one element of the law as positive. For Patrick Johnston it’s the Health Benefit Exchange – people can shop around for affordable coverage, and get help with the premiums.

For Anne McLeod it’s the roughly two million Californians who’ll be eligible for Medi-Cal.

And for Insurance Commissioner Dave Jones it’s a whole list of things, from covering people with pre-existing conditions to eliminating lifetime caps on benefits.  

But if you’ve been following the GOP Primary debates you may wonder if the health care law has a future. All of the Republican candidates are calling for the repeal of Obamacare and this is setting the stage for a continued political battle over how involved the government should be in health care.

That’s true at the federal level and in Sacramento at the state Capitol, according to Shane Goldmacher, a reporter for the LA Times covering California politics. He said health care is one of the hardest areas for lawmakers in California to legislate, partly because so much money is flooding into lawmakers’ campaigns from health interests. 

“The hospitals, the doctors and the dentists are among the biggest and most active political groups in the state in terms or electing and re-electing lawmakers,” Goldmacher said.

But some things have been done.  California passed a landmark law in 2006, called the Hospital Fair Pricing Act. It says hospitals must give discounts to some Californians who are uninsured or underinsured. But according to public records, the state has issued only 29 citations to hospitals for violating the law. Mark Rukavina, with the health advocacy group, The Access Project, says the low numbers aren’t surprising.

“Unfortunately as is the case with many consumer protections, the burden is often on the consumer to know that they have rights and that there are protections in place,” Rukavina said.

Bottom line: While the political debates rages on over health care, it’s up to patients to educate themselves on how to avoid medical debt and what to do if they face it.