It’s everywhere we look these days. And it remains all too common, despite the fact that the ACA achieved modest reductions in medical debt and played a role in reducing personal bankruptcy filings. So why, given that the Affordable Care Act has not eradicated medical debt even in states that have fully implemented the law, is Texas vs. United States, also known as the health care repeal lawsuit, bad news for consumers’ finances? Here are four key ways medical debt could increase in the wake of an ACA repeal.
1. People formerly eligible for Medicaid would be unable to afford medical care, with potential implications for their overall financial health. While overall medical debt numbers are still too high, some studies have found that people who became eligible for Medicaid after the ACA saw a reduction in their overall debt burden, not just medical debt, and an improvement in their financial health. For example, at least one study showed that “adults who gained coverage through the Medicaid expansion have been found to have better credit, qualifying them for lower-interest mortgage, auto and credit card loans — leading to estimated savings that average $280 per adult gaining coverage per year on interest payments, and an estimated $520 million across the expansion population.” (See CBPP’s analysis of the impact of Medicaid waivers that curb coverage gains, citing this report).
2. Affordability standards for private insurance would be weakened, likely increasing the numbers of underinsured and uninsured. The fundamental arguments for expanding insurance coverage that were relevant during passage of the ACA still hold: without adequate coverage, people are more likely to incur health care costs they can’t afford. Also true? Without affordable health coverage, the same result is likely to occur. We’re still seeing lower numbers of uninsured people post-ACA, but an increase in those who are underinsured. Without key ACA protections in place, we can expect to see higher rates of underinsurance – or more people opting out of coverage all together.
3. People with chronic health issues and other pre-existing conditions could once again face unaffordable annual and lifetime caps for critical treatment that impact their ability to access care and live financially stable lives. Even with the existing protections against lifetime and annual caps, households where one or more members has a chronic health condition are more likely to acquire medical debt. Likewise, people living with disabilities and chronic diseases are already more likely to report problems affording key medical devices that impact their health and credit history. Imagine how these statistics would worsen if protections for the 130 million with pre-existing conditions were lifted. Can we risk that?
4. Existing federal requirements that non-profit hospitals have fair, transparent financial assistance and collections policies would disappear. A repeal of the ACA would repeal all of it – including provisions that have been “safe” from other, more surgical incursions. One of the less well-known provisions requires hospitals with federal tax-exempt status – still the majority of hospitals in the United States – to have and notify patients about financial assistance, and put fair billing procedures in place to help low- and moderate-income people avoid bills. Recent investigations have shown that this system isn’t working as it should, and that nearly half of the bad debt non-profit hospitals report to the IRS can be attributed to people whose incomes qualify them for financial help under the hospital’s existing policy. While porous, these protections are important. A repeal of the ACA would strip the protections that do exist, removing one tool in the consumer toolbox for fighting medical debt.
We don’t need fewer protections against medical debt. What we need, instead, is to grapple with the fact that despite the ACA’s reforms, the “bad old days” of medical debt collection – replete with the specter of jail time, loss of homes and family stability, and severe economic upset – are already here in places like Coffeyville, Kansas; Memphis, Tennessee; and Virginia. The public outcry these stories and others have generated is welcomed. But it shouldn’t take an act of investigative journalism to prompt providers to revamp their policies and bring people much needed relief.
We need federal lawmakers to spend more time filling in the gaps and monitoring compliance with existing provisions. We need more health care providers to evaluate the impact of their billing and collections policies and third-party contracts on the lives of the people they serve. We need state and county policymakers to extend protections for medical debt beyond nonprofit hospital providers, and broaden the scope of medical devices and services we take into account when thinking about affordability. The ACA walked the country partway down that road. We need to finish the job, so that jail time, family dissolution or bankruptcy over a medical bill is a thing of the past. A repeal of the ACA through Texas vs. the United States isn’t just bad health care policy. It’s bad economic policy, too.