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How Big of a Problem Is Surprise Medical Bills?

While Obamacare had led to historic gains in insurance coverage, it is estimated that 56 million Americans are uninsured or underinsured in 2018. 41% of underinsured adults reported deferring medical care due to cost, while 47% had difficulty paying their medical bills and debt.[1]

These figures are highly troubling in the context of the average American family's financial profile. According to the Federal Reserve, 40% of adults would not be able to pay for a $400 unexpected expense at all, and 60% would not be able to pay without borrowing or selling assets.[2] In 2017, "over one-fifth of adults had major, unexpected medical bills to pay, with a median expense of $1200. Among those with medical expenses, 37% have unpaid debt from those bills... Over one-quarter of adults went without some form of medical care due to an inability to pay".[3]

Think about what these numbers mean. 40% of ADULTS would not be able to pay for a $400 unexpected expense. 20% of ADULTS each year had received an unexpected medical bill with a median expense of $1200. That implies that 8% of US adults in any given year would receive an unexpected medical bill and would not be able to pay for it!!!

Unpaid medical bills will eventually be sold to a collection agency, at which point they become medical debt and impact credit scores. Once on the credit report, medical debt can remain for up to 7 years. A low credit score affects multiple aspects of a person's private and public life, including many that don't involve borrowing. Many rental leases and job applications require credit checks. Insurance companies often include credit scores in determining premium prices. The patient will be subject to debt collection and possibly abusive practices.

Due to the dysfunctional U.S. healthcare payment system, the dollar amount of the medical bill sent to the patient is often grossly inflated, and has little correlation with how much the provider expects to receive as fair payment for that service.  

WE BELIEVE MANY SURPRISE MEDICAL BILLS ARE EXCESSIVE AND UNJUST. The damage to the consumer has already begun by the time that medical bills are reported to collection agencies as medical debt. Therefore, we try to negotiate a lower reasonable bill before they become medical debt.

[1] The Commonwealth Fund.  Underinsured Rate Rose From 2014-2018, With Greatest Growth Among People in Employer Health Plans (2019)

[2],[3] The Federal Reserve.  Report on the Economic Well-Being of U.S. Households in 2017 (2018). 

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