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Medical Debt Is “Quite American Problem” Caused By “Very Broken” System, Says Expert

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the cost of health care in the United States has worsened in recent years as Americans continue to take unprecedented levels of medical debt.

The problem has become so serious that a New York-based 501 charity RIP Medical Health is using donations to buy out people’s medical debt. The organization recently announced a purchase of $ 278 million in medical debt owed by approximately 82,000 patients in the Tennessee and Virginia areas.

“Medical debt is the no. 1 cause of bankruptcy in the United States, which is obviously a uniquely American problem, ”said Allison Sesso, executive director of RIP Medical Debt, on Yahoo Finance Live (video above). “So we are trying to relieve people of this economic burden. We have donors who are enthusiastic across the country to do more of this debt relief. We are very proud of that number – 278 million – but we have a lot more debt relief ahead of us. “

The recent purchase of RIP Medical Debt involved purchasing people’s medical bills directly from Ballad Health’s hospital system, which has before been criticized for using lawsuits to collect medical debts. Sesso noted that most of the patients affected by RIP Medical Debt’s latest decision are considered low income.

“In fact, you don’t have to spend that much money to buy a lot of debt for people whose hospitals know they can’t pay these bills,” she explained. “This is exactly how it works. It’s a great return on investment. But also and most importantly, it is a huge indicator that our health care financing system is seriously failing.

Dan Maccoux, his wife Cathy Maccoux and their daughter Olivia Maccoux review medicla debt papers on January 16, 2020 in Brooklyn Park, Minnesota. (Photo by KEREM YUCEL / AFP via Getty Images)

About 21 million Americans with $ 46 billion in medical debt as of April 2021 face collections – meaning a third-party debt collector is trying to get the money owed – according to data from Credit Karma previously provided to Yahoo Finance.

“What we do is we are able to buy debt for pennies on the dollar because of the way the debt market unfortunately works,” Sesso said of RIP’s model. Medical Debt. “It’s a way for them to know that people can’t pay. The value of these debts, if they were to be sold to a for-profit debt buyer, is very low. $ 1 can buy $ 100 of debt that someone owes.

We let people have insurance plans they can’t afford ‘

United States spend a lot more per capita money on health care – $ 10,586 – while the next three countries of Germany, the Netherlands and Australia are far behind.

“What I think is we really need to look at our health system as a whole and think about the funding part of it,” Sesso said. “Are people really insured as they should be? Why are we allowing people to have health insurance plans that they cannot afford, which means that the deductibles are clearly more than their income and what are their means? “

Almost everything costs more in the United States (Graphic: Health Care Cost Institute)

Almost everything costs more in the United States (Graphic: Health Care Cost Institute)

According to Kaiser Family Foundation, the average individual deductible in 2019 was $ 1,931, while the average family deductible was $ 3,655. (Another major problem is surprise billing.)

Americans are paying the price: Quality health care is unaffordable for about 46 million Americans, says recent Gallup poll, and a loan tree investigation of 1,550 people in March found that a majority of Americans (60%) had medical debt at costs ranging on average between $ 5,000 and $ 9,999.

LendingTree found that emergency room visits (39%), visits to doctors and specialists (28%), childbirth and related care (22%), and dental treatment (20%) were the leading causes.

Emergency room visits are the number one cause of medical debt.  (Graphic: LendingTree)

Emergency room visits are the number one cause of medical debt. (Graphic: LendingTree)

Sesso compared the overall medical debt situation to that of the subprime crisis in 2008.

“We’re letting people have insurance plans that they can’t afford and that don’t match their income level,” she said. “So I think we need to take a close look at this and build on the ACA to make sure that the people entering the hospital are really covered and that people at all levels have coverage to begin with.”

Adriana Belmonte is a journalist and health policy and policy editor for Yahoo Finance. You can follow her on Twitter @adrianambells. If you would like to share your history of handling medical bills and other healthcare costs, you can reach her at adriana@yahoofinance.com.

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