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Medical debt dynamics, part 1: cost escalation and sticker shock

For years, unmanageable medical bills have been one of biggest reasons people file for bankruptcy.

Indeed, even with the passage of the Affordable Care Act (ACA), the problem of medical debt continues to loom large for many Americans.

In this two-part post, we will discuss why medical bills are so high and what steps are being taken to establish clearer standards for the collection of medical debt.

Given the scope of the problem of medical debt, it is small wonder that so many Americans choose bankruptcy as a way to resolve it.

How many people struggle with medical debt or are saddled with payments over an extended period of time? The short answer seems to be: tens of millions of people.

The Commonwealth Fund, a foundation that advocates for health care improvement and affordability, conducted surveys showing that in 2012, 75 million working-age Americans had difficulty making medical bill payments or were facing payments that stretched out over time.

That comes out to more than 40 percent of the working-age population.

The problem isn’t only that medical bills are so high. It is also that the health care industry fails to communicate well with patients and their families upfront about the true cost of care.

The federal Affordable Care Act (ACA) was of course supposed to address the problem by making health insurance more widely available. But so far the ACA has not really tackled the problem of cost-control.

Last year, the journalist Steven Brill published an extensive analysis of out-of-control medical bills and hospital collection methods in Time magazine. The piece was aptly called “bitter pill,” because the sticker shock of sky-high medical bills – and the resulting collection pressures – are a bitter reality for so many people.

In part two of this post, we will discuss new, government-sponsored guidelines on collection practices for medical debt.

Source: The Columbus Dispatch, "New medical billing standards will help patients handle debt," Linda A. Johnson, Feb. 16, 2014 Additional source: Forbes, ""Annual U.S. Healthcare Spending Hits $3.8 Trillion," Dan Munro, Feb. 2, 2014

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