From Bloomberg:
A type of pain that hospitals thought they had relieved has come back with a vengeance: it’s called bad debt.
Hospitals have long struggled to collect bills when patients aren’t covered by insurance -- creating delinquent accounts. The Affordable Care Act was supposed to relieve some of that strain by helping pay for coverage for millions of Americans and expanding Medicaid in some states to cover the poor.
Yet while millions of people have gained coverage since Obamacare became law in 2010, there’s also been an increase in insurance that comes with high deductibles and cost-sharing. Under those plans, the first few thousand dollars of annual medical expenses come out of patients’ wallets. That’s money that hospitals like Childress Regional Medical Center in the Texas Panhandle region are unlikely to collect. ...
Hospitals are feeling the pressure from those patients. Community Health Systems Inc. operates 195 hospitals in 29 states and is the U.S.’s second-biggest for-profit U.S. hospital chain. This month, it revised its fourth-quarter 2015 provision for bad debt up by $169 million -- and said that 40 percent, or about $68 million of that amount, was from patients being unable to pay deductibles and co-payments. Patient bankruptcies also contributed, the company said. A Community Health spokeswoman didn’t respond to requests for comment. ...
While higher out-of-pocket charges can lower what insurance costs up front, it means more costs for patients on the back end. Under individual Obamacare mid-level “silver” plans, the annual deductible was $2,556, and under less expensive, low-level “bronze” plans it was $5,328 in 2015, according to the Kaiser Family Foundation. ...
Patients are unlikely to pay medical bills that are greater than 5 percent of household income, according to the Advisory Board, a consulting firm to hospitals. Median household income in the U.S. is at about $53,000, suggesting that when out-of-pocket charges exceed $2,600 hospitals can forget about collecting....
