Michigan’s Revolution: Easing Medical Debt Burden in Healthcare
TL/DR –
Medical debt is increasing, despite more Americans having insurance since the Affordable Care Act’s passage in 2010. Bronson Healthcare, a nonprofit Michigan health system, is helping alleviate patients’ financial problems by offering financial aid programs and lower-cost Medicare plans. However, experts argue that focus should be on redesigning health insurance plans so that necessary services such as essential drugs and surgeries are entirely covered, thus reducing the need for financial counselors and mitigating patient stress and debt.
Rising Medical Debt and the Role of Hospital Financial Counselors
A cancer patient facing over $700,000 in medical bills was unsure about continuing her treatments. Another patient had to settle for less effective heart failure medicine due to its lower cost. Yet another was looking at years of repayment for a $15,000 debt to Bronson Healthcare, a nonprofit hospital system in Michigan.
Fortunately, Bronson’s financial counselors intervened, helping these patients navigate financial aid programs and optimize their Medicare plans to reduce out-of-pocket costs. They’re part of a national trend where hospitals are expanding resources to alleviate medical debt.
Despite more Americans having insurance since the Affordable Care Act in 2010, medical debt is increasing. Around 14 million people owe over $1,000 in medical debt, and roughly 3 million even with insurance, owe more than $10,000, says the Kaiser Family Foundation. High-deductible plans with substantial out-of-pocket costs are a part of the problem. The Commonwealth Fund 2023 Health Care Affordability Survey reports that 43% of people with employer coverage find it difficult to afford their healthcare.
Nonprofit hospitals receive tax breaks for treating all patients and informing them about free financial assistance for bill payment. The Biden administration has also launched new policies to compensate hospitals for providing free financial and social work assistance to patients. Experts argue that easing unpaid medical debt will save hospitals money in addition to benefitting patients.
However, many hospital systems don’t ask patients if they need help with medical bills or finding programs for costly drugs. “The state of financial advocacy varies drastically across the nation,” says Rifeta Kajdic Hodzic of the Association of Cancer Care Centers. Starting the process sometimes just involves filling out a form or talking to a hospital social worker.
Addressing Medical Debt in Michigan
Michigan’s Henry Ford Health and University of Michigan Health systems are addressing the problem by adding financial counseling resources and publicizing free healthcare. Wayne County is in contract talks with the national nonprofit RIP Medical Debt. The agency buys medical debt from hospitals, doctors, and collection agencies, wiping out on average $1 for every $100 in a person’s medical debts.
Meanwhile, the Bronson system is taking a step further by interacting with most uninsured and underinsured patients in their emergency department or awaiting surgery to assess if they need financial aid. “We approve 50% of all the applications we get,” says David Cavataio, Bronson’s system director of patient accounting.
Changing the Design of Health Insurance Plans
Dr. A. Mark Fendrick suggests a focus on changing health insurance plans to policies that completely cover necessary services like mammograms, while eliminating coverage for less beneficial ones. The U.S. spends $100 million a year on “services that don’t make them healthier,” says Fendrick, director of the UM Center for Value-Based Insurance Design. Eliminating out-of-pocket costs would increase screening rates, save lives, and reduce stress and debt for millions of Americans.
With the slow progress of health insurance reforms, financial navigators will be essential for years to come. Dan Sherman, founder of the NaVectis Group, a financial services navigator, says, “We need financial advocates with expertise navigating the complexity of available health insurance options for patients. It is essential to help people understand how to choose wisely within the health insurance system to reduce out-of-pocket costs.”
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