100 Million Americans Are Burdened by Medical Debt. Let’s Do Something About It!

Health care costs do not have to be so high. My buddy Brian got his hip replaced for $12,000 and only paid $100 out-of-pocket. But we need to stop allowing what we spend to be squandered.

Kaiser Health News and NPR have performed a tremendous act of public service by documenting the widespread harm caused by medical debt in our country. Their investigation, published last week, estimates 100 million Americans are saddled by medical debt.

The big question is: What are we gonna do about it?

We already knew that the burden of medical debt was egregious. The Urban Institute calculated several years ago that about 1 in 5 Americans had medical debt in collections. That means debt collectors have been hounding tens of millions of Americans simply because they got sick and couldn’t pay the bills.

But the Diagnosis: Debt project took the analysis beyond medical debt that’s in collections. It added other medical debt that’s hard to see – on credit cards and in payment plans and other loans. The project included a nationwide poll of a representative sample of 2,375 American adults. It found that 41 percent of Americans are burdened by some form of debt related to medical care.

Those 100 million souls need to dogpile the next expert who claims that we have the “best health care system in the world.” Wealthy people may believe that’s the case because they can pay their medical bills. Health care insiders who profit from the status quo are also incentivized to look past the unbearable cost of health care. The truth is that our health care system is doing tremendous harm to the American people.

The specific findings from the Diagnosis: Debt poll are gut wrenching:

• 1 in 8 respondents with medical debt owed $10,000 or more.

• About 4 in 10 respondents said they could not pay off a $500 bill or would have to pay it over time.

• About 1 in 5 respondents didn’t think they would ever be able to pay off their medical debt.

• Almost half the respondents who had medical debt had to make difficult sacrifices to pay it, like cutting back on food, going back to work, or skipping medical care.

• 12 percent of the respondents who had medical debt said they had been denied care by hospitals or doctors or dentists because of their medical debt.  

Here’s the dirty secret about the high health care costs that are causing so much medical debt: They are often not justified. The cost of care is being driven up by hidden markups, greedy middlemen, price gouging, shameless salaries, bloated administration, billing inefficiency and unnecessary treatment. I spent more than a year at ProPublica investigating these types of wasted health care spending, which are costing us between $760 and $935 billion a year, according to a 2019 JAMA study. We’re wasting about 25 percent of what we spend on health care, the study found.

Meanwhile, the total medical debt burden to Americans came to an estimated $195 billion in 2019, according to a Kaiser Family Foundation analysis cited in the KHN report.

In other words, if the health care system stopped wasting our money for a single year, we might be able to pay off the medical debt of every American four times over.

The problem is not the actual cost of health care. The problem is health care profiteers who are pilfering our health plans and pocketbooks and driving us into debt. That squandered spending represents revenue and profit for the health care power players.

It doesn’t have to be this way. My best friend Brian’s hip replacement, pictured above, shows that the cost of care could be much lower. Brian had his hip surgery a couple of months ago for $12,000 – including all device, doctor, and hospital costs – at one of the best hospitals in the country. Even more astounding – his out-of-pocket costs came to a mere $100. How is that possible?

Here’s the punch line: Brian didn’t have his hip replaced in the United States. His operation took place at Samsung Medical Center in South Korea, where he teaches at an international school.

In comparison, the median hospital price nationally for a hip replacement in the United States is $28,268, according to data provided by HealthCostLabs.com – and that is only the hospital portion of the bill. A working American would likely pay out-of-pocket costs in the thousands.

Meanwhile, Korea spends about $3,500 per person on health care, compared to more than $12,000 per person in the United States. Brian and I were messaging each other about how Korea and its residents could spend so much less for high quality health care.

“Someone’s not stealing all the extra money here,” he wrote.

Health care costs in the United States are projected to continue to rise through at least 2030. But the solution to this problem is not more spending. We are already overpaying and are not getting our money’s worth. We are being driven into debt! The solution is for employers and working Americans to push back against the unjustified cost of health care.

We are not helpless. I wrote “Never Pay the First Bill: And Other Ways to Fight the Health Care System and Win” and started Allen Health Academy to educate and empower working Americans and employers so they can get a fair deal on health care. Let’s get people equipped to get the care they need for a fair price – not one that’s going to send them into debt.

The best thing about publishing the book is seeing consumers save big money when they put its tips and tactics into practice. Check out the book’s Amazon reviews, like the one from Don Jones above, for some cool testimonials.

I’ve written more of their Victory Stories in previous editions of this newsletter:

• Leslie Donovan sued in small claims court to get her overpriced medical bill waived.

• Leah Sargeant saved $1,442 by contesting inaccurate medical bills.

• Adam Berkowitz helped a young mom save $47,900 when her insurance company denied the cancer care she needed.

I love these stories because they show that many consumers can stand up for themselves. They just need to be equipped. Employers have even more power, as I’ve also written in my book. Employers who change their benefit design to cut out the health care system’s rip-offs are saving 30 percent and more on their benefits - while waiving copays and deductibles and improving the coverage. Sound impossible? Read the employer section of my book!

I applaud the journalists who continue to shine a light on this problem. But let’s not forget that the solutions are already being deployed across the country. They just need to be brought to the masses. Let’s not simply bemoan the mounting medical debt and pain of unjustified health care costs as they destroys more American families. We’ve already been doing that for decades. Let’s take action. My book is a good place to start. And my Never Pay Pathway health literacy videos, which are based on the book, are going to make the material even more engaging and easier to scale. They are completed and will be launched soon!

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Hospitals penalized for violating Price Transparency Rule. This. Is. Big.

The federal government’s Hospital Price Transparency Final Rule requires hospitals to post their cash prices and their negotiated rates with Medicare and other insurance companies for the services they provide. But a February report by PatientRightsAdvocate.com showed that only 15 percent of 1,000 randomly selected hospitals were complying with the rule.

Well, I’m predicting an increase in compliance. The Centers for Medicare and Medicaid Services issued its first penalties earlier this month to two hospitals who have not been complying. Northside Atlanta Hospital was penalized $883,180 and Northside Hospital Cherokee was fined $214,320. Those penalties should get some hospital executives and board members talking.

I think the monetary penalties and subsequent negative publicity will spur hospitals into compliance. This is great for consumers and employer sponsored health plans, because the price transparency shows how many of them have been overpaying for the services they receive. Seeing the prices allows us to contest them when they are unreasonable and negotiate better deals.

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