BANKRUPTING MEDICAL COSTS SYMPTOM OF AILING SYSTEM

By Diane M. Grassi


On March 5, 2006, CBS television news magazine, 60 Minutes, featured a report titled, “Hospitals: Is the Price Right?” The piece concentrated on the soaring costs of hospital care, specifically for uninsured Americans and the exponentially higher charges they are billed, which can be up to four times more than the same services directly billed to health insurance companies. The information was valid and fairly detailed regarding such costs, largely based upon information provided by patient advocate and community activist, K.B. Forbes, known for his Spanish language radio talk show out of Los Angeles, CA and also known as former press secretary for Conservative, Pat Buchanan. Forbes is the Executive Director of the Council for United Latinos, his small organization in East Los Angeles, where he has been taking on major hospitals across the United States regarding their unfair billing practices since 2000.

But 60 Minutes’ coverage of the topic seems all the more remarkable, as it was presented as being a recent phenomenon. These crises amongst middle class families are not news and have been present for years. It is an issue, however, which continues to get worse and worse as U.S. healthcare costs have continued to rise approximately 15% each year since the late 1990’s. In addition, is the lack of uniformity between insurance providers and types of coverage offered, which remains a constant problem. More importantly, the lack of a comprehensive presentation by 60 Minutes on the contributing factors for how these families and thousands of others like them are made vulnerable by the present healthcare systems in place, was not accomplished by CBS, but remains important to understand.

Without devoting more time and explanation, 60 Minutes did those under-educated on the topic a disservice. No employed adult, retiree, or disabled American is immune from recognizing the impact of spiraling and out of control costs for hospital care, outpatient care and pharmaceutical expenses. Even if an employer is still picking up most of the charges, more and more employers are requiring employees to pay higher deductibles and larger co-pays. According to the Kaiser Family Foundation and the Health Research Educational Trust, premiums for employed individuals in 2005 averaged $10,880.00 annually for family coverage or $907.00 per month and $4,024.00 or $335.00 per month for individual coverage.

However, why costs are so high is a composite of several factors. However, many CEO’s and policy makers at the state and federal levels continue to remain silent in constructively addressing such. Massive layoffs in both the manufacturing and white-collar work forces in lieu of cheaper and benefit-free labor offshore, powerful lobbyists in both the healthcare and pharmaceutical industries having their way with the U.S. Congress, and the non-stop flow of illegal aliens through U.S. borders and ports of entry, collectively have eroded a once healthy healthcare system.

The U.S. is the only industrialized nation in the world which has based the majority of its healthcare coverage on employer provided plans. The U.S. middle class, as it grew in the post-war 1940’s, was able to rely at that time and until the end of the 20th century, on healthcare costs being absorbed by its employers. It was a way for industry to retain good workers while making a commitment to preventative healthcare, thus ensuring a healthier workforce. However, in what seems a relatively short time, the destabilization of healthcare affordability has seen the most damage manifested within the last five years.

Missing from the 60 Minutes presentation, for example, is that the referenced 5,000 hospitals across the U.S. have had to bear the brunt of 50% of unpaid costs for emergency room medical care. While some illegal aliens are on Medicaid, those who are indigent are entitled to free care under the Emergency Medical Treatment and Active Labor Act (EMTALA) of 1985. Hospitals are thus obligated to treat the uninsured without an obligation of reimbursement from the state or the federal government. Estimates of free emergency care to illegal aliens is between 25% and 40% of said indigent care. And while federal legislation was signed into law in May of 2005 allowing states to apply for grants for some federal reimbursement, it does not begin to approach, for example, the $500 million the state of California alone spent on non-reimbursed costs in 2005. It is only eligible for a maximum of a total $70 million reimbursement.

But EMTALA was perceived as a safety net for the indigent and infirm, long before the U.S. had an open border policy and long before hospitals would ever conceive of offsetting their shortfalls upon the backs of working and middle class Americans who have fallen on bad times, through no fault of their own. 60 Minutes also failed to expand upon why middle class Americans can find themselves near bankruptcy. Yes, the piece was about the fact that a working man was asked to pay a $250,000.00 bill for the same services which would total only $50,000.00 had it been billed through an insurance provider. But that is only part of the story.

There are major corporations laying off workers and giving them the choice of either severance pay or healthcare benefits, but not both. There are more and more corporations which employ a combination of independent contractors, temporary hires and outsourced personnel in order to avoid providing healthcare benefits. There are those laid off individuals­ who lose their medical insurance once they are laid off and because they have pre-existing conditions, defined as anything from a broken arm to diabetes depending on the insurer, can no longer get insurance. There are spouses of laid off personnel who have insurance but are not accepted into their spouses plan for the same reason. And there are those individuals with medical insurance who can have deductibles as high as $2,000 with coverage for only 50-80% of the total bill.

Even without the hospital costs quadrupled, paying off thousands of dollars of a large balance due can be insurmountable, even for a family with an average income of $50,000.00. The little publicized fact is that families declaring bankruptcy as the result of medical debt, at some point were insured. But it only takes an unexpected illness or catastrophic accident to set back those working families, sending them into financial crisis. As illness results in loss of income or disability, thus leading to loss of coverage, the bills can spiral out of control from there. And in the event of a job loss, at non-profit hospitals which do offer “charity care,” it is rarely offered to patients with assets such as a home. The hospitals merely turn over the bills to collection agencies which can and do put liens on patients’ property.

Yes, we have been hearing since Bill Clinton ran for president the first time around that 45 million Americans do not have health insurance. But given the quickening of the global economy, an average of 3 million illegal aliens crossing the border each year, and medical care costs escalating by double digits annually, accompanied by less and less accommodating insurance plans, it would be hard to believe that that figure has remained stagnant since 1992. It suggests that 45 million is the total without a tally of illegal aliens receiving free medical care. That way, it does not require an acknowledgement by the federal government that the illegal population is a contributing factor to the problem.

While the federal government welcomes a global economy, lawmakers still do not welcome the chore of dealing with a fractured healthcare system which in the not too distant future threatens to provide only for the poorest and those in the top income brackets. But preventative health may soon become a thing of the past for the middle class, forcing many between the middle class and working class to fall through the cracks. The lesson here is that there needs to be an honest discussion not only about healthcare costs, but accessibility to healthcare for those who are willing to maintain their health. For without it, there will be no tax base in which to keep America’s hospitals and healthcare providers afloat. And in order to have an honest discussion both the media and government must acknowledge how subsidies are being spent and finally admit that there are too many deserving Americans who are being left behind.