Public shaming works, a little, to rein in collectors of unpaid medical bills

A despicable element of Big Medicine’s big business has been getting some badly needed scrutiny, with the public glare highlighting how debt incurred due to medical treatment crushes far too many Americans and how reforms are desperately needed. Is public shaming becoming one of the key ways to deal with a horrible problem for Americans?

Kudos, of course, to broadcast satirist John Oliver for his stunt in creating earlier this year an online barebones “company” that claimed to specialize in re-purchasing debt from what he terms “bottom-feeding” collection agencies (see the video). The sums owed, he explains, really shouldn’t be at issue because they are beyond legal time limits for collectors to pursue.

Still, Oliver’s phony company hadn’t been in existence for more than a few weeks when it was approached by an outfit offering for $60,000 or so almost $15 million in debts owed─the names, addresses, phone, and Social Security numbers of many one-time patients who at some point were in arrears to doctors, hospitals, nursing homes, labs, or other medical facilities. The comedian said unscrupulous operators would take these lists and use them to contact and harass debtors.

Instead, he “forgave” it all (working with a nonprofit that specializes in doing so), in his blast not only at low-life debt collectors but also in a comedic jibe at celebrity Oprah Winfrey and her televised audience giveaways. Oliver’s special talent, evident in this take down, is how he takes a complex, difficult subject like debt from medical treatment and makes it clear and understandable─as well as humorous but infuriating. It’s less clear whether his comedic approach will stick a pitchfork in lawmakers and regulators to police better this seedy collection business.

Halting a nonprofit hosptial’s zealous debt collection

Instead, it may take lawsuits in the civil justice system or other media attention to get action, such as what happened when Pro Publica, the Pulitzer Prize-winning investigative site, and National Public Radio teamed up to investigate why Heartland Regional Medical Center, a small Midwestern facility now known as Mosaic Life Care, was suing thousands of its onetime patients over claims of sums owed.

The news organizations said the center was hardly alone among nonprofit hospitals zealously pursuing thousands of patients nationwide over debt. (I’ve written recently about Pro Publica’s excellent reporting on overzealous collection efforts on medical treatment in Nebraska, a state where courts have been flooded with tens of thousands of debt collection-related lawsuits.)

Sen. Charles Grassley, R-Iowa, took up the cause, asking the IRS to look into Mosaic. The situation then changed, such that more than 3,300 people got more than $17 million in debt relief, Pro Publica has reported. As Grassley has noted, it raises deep questions when nonprofit hospitals hound patients over debt. That’s because such hospitals get exempted from paying potentially steep tax bills because they claim to provide charitable care and other services to justify their nonprofit status.

Hospitals’ bad debt in decline

The news reports about the flourishing, Dickensian dealing by collection companies over debtors’ unpaid sums for medical treatment are particularly flabbergasting because many hospitals actually are seeing their ledgers of bad debt decline.

This is because tens of millions more Americans now have insurance under the Affordable Care Act (aka Obamacare) and their coverage is paying more of their medical bills. This drop varies, and depends on factors such as whether a given institution is in a state that expanded Medicaid under Obamacare and how hospitals account for upaid bills.

It’s also crucial to remember that even with insurance, via Obamacare or through employers, Americans still struggle mightily with the debt they run up receiving medical treatment. I’ve written before how such debts build up and become a top cause of bankruptcy, staggering millions of Americans.

The unceasing medical bill hangover

As the Washington Post details, insurance often covers catastrophic amounts but leaves patients still with staggering sums to pay. The debt hangover doesn’t seem to end, particularly since a recent poll showed that two-thirds of Americans can’t afford an emergency where they need to come up with $1,000. Their lives really can be turned upside when they can’t work due to continuing health woes and they face costs not covered by insurance or soaring bills resulting from treatment outside their insurers’ approved provider networks.

Cancer patients, with their drugs spiking in cost but also allowing them to go on with a chronic rather than a fatal condition, confront great hardship as they struggle on both with their health and medical bills, studies show. They may experience greater pain and other symptoms if they labor with debt, too.

I’ve said it before and the terrible debt burden is a reminder: Obamacare wasn’t a panacea for all of health care’s ills. It needs fixing. But the argument for its total repeal fails to address the broad range of problems that Americans need their lawmakers to address, so health care is more accessible, cost efficient, safer, effective, and compassionate.

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