Americans are drowning in medical debt. Here’s how our leaders can help

Today, more than 100 million Americans are living with medical debt totaling nearly $200 billion. A recent study found this debt leads to increased rates of eviction, food insecurity and bad health outcomes, regardless of health insurance status or income. While the debt is widespread, it is also unevenly distributed; patients of color disproportionately bear its burden. This is a story we’ve heard too many times before, and it’s time for our nation’s leaders to take action.

This month, Consumers for Quality Care (CQC) has marked Health Literacy Month by educating consumers about medical debt and what they can do to avoid falling victim to this problem. Congress and the Biden administration can implement commonsense reforms to help prevent Americans from sinking further into medical debt.

Congress sought to tackle a major source of medical debt — surprise medical bills — in 2021. The No Surprises Act protects patients from receiving a bill when they are unknowingly treated by an out-of-network provider at an in-network facility. However, a recent survey found that 20 percent of patients have continued to receive surprise bills since the law went into effect earlier this year. Soung Luy, for example, was stuck with a surprise bill after he got blood work from a lab he was directed to by his in-network doctor’s office. The lab was in the same building but out-of-network.

Congress also took on prescription drug costs in this year’s Inflation Reduction Act. Now it’s time for legislators and regulators to address other cost drivers in the health care ecosystem, such as the lack of transparency in hospital pricing, the lack of standards to ensure nonprofit hospitals deliver on their commitment to patients and communities, and health insurance practices that shift high out-of-pocket costs back to patients.

It’s impossible to plan for bills when you don’t know what the cost of medical visits, treatments or procedures will be, and too often patients are forced to make a choice between not getting care or risking a potentially astronomical medical bill. All Americans should be able to shop smart for the care they need, but just 16 percent of hospitals nationwide were found to be in full compliance with a federal price transparency law. Regulators must hold hospitals accountable for failing to comply.

Many of America’s hospitals are nonprofits, meaning they are organized as charities, and in return for significant tax breaks, they are legally obligated to deliver affordable care in their communities. However, there are no federal standards against which charity care is measured. U.S. hospitals routinely fail to inform patients they could be eligible for charity care and are sending medical bills to low-income patients who qualify for charity care — creating more medical debt for those who can least afford it.

Choosing the wrong insurance plan can also lead to crushing medical debt. The steady rise of plans with high deductibles, coinsurance, and copays that typically have lower premiums means patients seeking care are often left with large bills from the plans’ high out-of-pocket costs. Carla and John Jordan had a high-deductible plan, and after a series of medical crises, they could not afford to meet their deductible and went into bankruptcy.

Short-term limited duration insurance plans (STLDI plans) — also known as “junk plans” — are exempt from many Affordable Care Act (ACA) requirements and can exclude coverage for pre-existing conditions, have dollar value limits on covered services, and are not required to cover preventive services, among other substantial risks for consumers. The Trump administration issued a rule expanding the maximum period for which STLDI plans can be offered from three months to a year, with a possibility of being renewed for up to 36 months, causing junk plans to proliferate. The Biden administration so far has failed to crack down on these barebones, inadequate health plans.

Americans with chronic diseases best treated with prescription medications also should be careful about which insurance plan they select. Copay adjustment — or accumulator adjustment — programs (CAAPs) allow insurers to prevent drug cost-sharing coupons from counting towards patients’ deductibles or caps on total out-of-pocket costs, leaving them with unexpected costs at the pharmacy counter when their coupons run out. Annabelle Gurwitch relied on copay assistance to afford her cancer medication, and when her insurer contracted with a CAAP, her copay assistance no longer applied to her deductible, leaving her to foot a significant bill for her medication. Unfortunately, the Biden administration reversed a federal rule that would have put a stop to this bad insurer practice.

As consumers head into ACA open enrollment on the heels of Health Literacy Month, they must carefully examine their options for coverage so they can make the best possible decision for themselves and their families and mitigate the risk of falling into medical debt. But the burden shouldn’t be shouldered by patients alone. All policymakers — especially federal lawmakers and regulators — must address the root causes of medical debt to ensure every American can access quality, affordable health care.

James P. Manley is a Democratic communicator with more than two decades of experience working in Congress. He served as senior communications adviser and spokesman for former Senate Majority Leader Harry Reid (D-Nev.) and the Senate Democratic Caucus. He is on the board of directors of Consumers for Quality Care. Follow him at @jamespmanley.