1.7 million affected by bankruptcies from unpaid medical bills

The implementation of the Affordable Care Act might not significantly offset the number of patients who struggle paying for medical care. (See correction)

This finding was part of a report by NerdWallet Health, a division of a price-comparison website NerdWallet. The report said unpaid medical bills are the biggest cause of U.S. bankruptcies, affecting 1.7 million people this year. Three in five bankruptcies are due to medical bills, according to NerdWallet.

The report predicted that about 20% of adults — 56 million under 65 — will have problems with health care bills this year. NerdWallet based its report on data from the U.S. Census, the Centers for Disease Control and Prevention, a Commonwealth Fund report and academic studies.

NerdWallet's conclusion that the ACA might not make a big dent in that number comes from the fact that about 10 million adults with year-round health insurance coverage are expected to have medical bills that they can't pay off in 2013. Many of the 14 million newly insured patients expected in 2014 as part of the ACA could struggle, because health plans continue to raise premiums and deductibles. For example, the American Medical Association's National Health Insurance Report Card, released in June, found that 23.6% of the amount of pay for doctors, as set by insurers, was paid out of pocket by patients.

Many hope the ACA will have an impact on patients' medical bills due to its push for preventive services, such as screenings for diabetes, cholesterol and colorectal cancer that don't require a patient co-payment, said Christina LaMontagne, vice president of health at NerdWallet. But it may not be able to address the huge numbers of people with medical debt, she said.

High-deductible plans can have an out-of-pocket maximum of $5,000 to $10,000 per year, which for an average family of four living on about $50,000 per year can be difficult to absorb financially, LaMontagne said. Patients are forced to choose between competing interests of their health and other day-to-day expenses. “Insurance is no silver bullet,” she added.

A longstanding problem

Physician organizations have said they are aware of the problems their patients face when it comes to cost, and that medical debt makes it harder to treat patients and keep them in good health.

“This has been a problem for a long time,” said Bruce Bagley, MD, interim president and CEO of TransforMED, a wholly owned subsidiary of the American Academy of Family Physicians that provides consultation to physicians implementing the patient-centered medical home model in their practices. “It makes [patients] avoid the medical system. They might not fill a prescription, or [they might] split their pill dosage. The biggest problem is avoidance of [medical] consultation when it's appropriate.”

Generally, patients with major illnesses are the ones who generate the kind of debt that leads to bankruptcy, Dr. Bagley said.

In a study in the May issue of Health Affairs, researchers at the University of Washington looked at personal bankruptcies filed in federal court in Seattle between 1995 and 2009. They found that cancer patients were 2.65 times more likely to go bankrupt than those without a cancer diagnosis.

Younger patients had two to five times higher rates of bankruptcy than cancer patients 65 or older. The study matched 197,840 cancer patients against a control of a similar total, with 4,408 filing for bankruptcy protection after their cancer diagnosis against only 2,291 of adults without cancer.

Researchers also noted that cancer patients spend at least $1 billion a year out of pocket of the $20 billion spent on cancer care on the nonelderly.

The California Health Interview Survey, the nation's largest state health survey, puts the average medical debt load at less than $4,000.

LaMontagne is among many who have recommended that physicians talk about costs with patients. Research presented at the 2012 annual meeting of the American Society of Clinical Oncology said most patients surveyed thought talking to their physicians about medical costs was important, but only a small percentage actually had the conversation, because they were worried about how it would affect their care. But when patients did broach the subject, the cost of care was generally lower.