Shouldering Debt

Medical debt is piling up in this country.

More than 29 million Americans have medical debt, according to a report from the Commonwealth Fund, a foundation focused on healthcare reform. And a poll released last year by the Kaiser Family Foundation suggests one in four people in this country has problems paying those medical bills.

The problem is particularly acute with cancer survivors, in part as high-cost designer drugs and testing can continue for years after diagnosis, while income and insurance coverage may drop.

“The words you have cancer are just the beginning of your nightmare,” says Peggie Sherry, a breast cancer survivor who incurred more than $40,000 in medical debt after six surgeries. “I had a 3-inch-thick file of bills.”

A study released last year by the National Brain Tumor Foundation titled “Nobody Can Afford a Brain Tumor” found that four out of five survivors or their caregivers surveyed said their financial situation had worsened after diagnosis, despite the fact that more than 90 percent of those surveyed had insurance.

“These are people who worked their whole lives, who had insurance and paid into the system, who didn’t realize how expensive it was,” says Harriet Patterson, MPH, director of patient services for the foundation.

Not only is cancer treatment and aftercare challenging the financial life of cancer survivors, but survivors also may be facing lifetime caps on insurance coverage, extra costs to extend a previous employer’s coverage under the federal COBRA law, problems qualifying for disability benefits — and often large drops in income.

“It’s a universal story for survivors of all kinds of cancer,” Patterson says. “They are finding they can’t make it financially.”

Providers are reacting to this mounting medical debt by turning accounts over to collection agencies earlier, asking for payments before services and linking patients with lenders, specifically through credit card offers.

For instance, Tenet Healthcare Corp., one of the largest hospital chains in the country, says it is shifting its focus from the billing office to the admitting department to reduce its uncollected debt.

The company reported more than $500 million in uncollected billing for 2006, according to Stephen M. Mooney, senior vice president of patient financial services for Tenet. While the uninsured were responsible for $400 million of the total owed, those with insurance who still owe a balance are growing rapidly as a group, he told a group of investors last June in Dallas.

Healthcare providers such as Tenet are introducing a new form of credit card, designed only for medical ex­penses, with names like CareCredit and Citi Health Cards.

These cards are being offered everywhere from small clinics to major hospital complexes and are presented to patients somewhere after non-emergency admittance but before treatment begins, says Jose Garcia, senior research and policy associate at Demos, a public policy research and advocacy group based in New York.

Consumer activists are wary of them.

“You think you don’t have any other options,” Garcia says. “These cards start out with zero fees and zero interest rates, but then after the grace period the rates go up to 20 percent.”

Although the sign-up for the card is easy, patients are not going to a hospital or outpatient clinic to make financial decisions, notes Mark Rukavina, executive director of The Access Project, a resource center for communities working to improve healthcare access.

“The details to those cards are in fine print,” Rukavina says. “People are in no frame of mind to make a financial decision at that point. The financing decision bleeds into their medical treatment plan.”

Rukavina advises turning down the cards, noting that patients have more opportunities managing medical debt with their healthcare providers than they do with credit- card companies.

Just as with regular plastic, when medical credit cards become delinquent, they are quickly turned over to collection agencies, Garcia says. In a survey by Demos and The Access Project, 62 percent of those with credit card medical debt had been contacted by bill collectors, he says.

D.B. Cervero, a 54-year-old survivor of anal cancer, is routinely hounded by collection agencies.

She admits that when she began treatment in 2004, the last thing on her mind was its cost.

“Between January and April I wasn’t paying attention to anything,” she says.

Fully insured and employed at an insurance company in Florida, Cervero focused instead on the radiation and chemotherapy performed on her as an outpatient at a local hospital. She made co-payments regularly to her providers while continuing to work during treatments.

Three years later, Cervero, who is still employed, now has $6,000 in medical bills from more than 10 healthcare providers for out-of-pocket costs that were not covered by her health insurance.

Despite the fact that individual amounts were under $500 and that she tried to work with her medical providers, most turned her debt quickly over to collection agencies. Her hospital gave her only 12 months to pay off the debt, which wasn’t enough time on her salary, she says.

A recent attempt to get a home equity loan was turned down because the collection agencies had caused her credit score to fall to the mid-500s, well below approval requirements at the bank where her mortgage is held. “I thought medical bills weren’t supposed to affect your credit score,” she says.

“Now, I know they do.”

One of the credit bureaus advised her to put a letter in front of her credit report explaining the charges. She did that, but was still turned down by her bank, despite not being late on a mortgage payment in 15 years.

She has managed to consolidate some of the debt owed under one collection agency, which she pays $50 a month. Otherwise, she avoids answering the phone and she worries about the future costs of her healthcare.

“Paying medical bills has made it hard for me,” she says.

Medical debt can grow in small ways and large. For Cervero, a large number of small debts are hurting her financially.

For Sherry, medical bills grew to a mountain of medical debt, threatening her home and financial future.

Also fully insured, the 50-year-old Tampa, Fla., resident didn’t find out until the third of six surgeries for breast cancer and basal cell carcinoma that most of her treatment providers were not in the network of her health insurance plan.

“I thought when the hospital was under my plan, everything else would be, too,” says Sherry, who was first diagnosed with cancer in 2002.

Only after starting to receive bills for labs, doctors and testing did she find many of her providers were out of her insurer’s network and she was responsible for 40 percent of those costs, instead of just 20 percent for those in network.

Among those not in network were all the anesthesiologists at her hospital, Sherry says.

“Where was I supposed to go to get knocked out?” she asks. Sherry now knows better, but the experience wound up costing her more than $40,000.

“First, I’m trying to stay alive. Second, I’m trying to heal, and then I get all these bills,” she says.

Sherry says she put what she could on credit cards, but ultimately it was an inheritance that finally settled her debts.

“If I didn’t get an inheritance from my parents, we probably would have lost our home,” she says.

Sherry says she sees similar financial problems among the 2,100 families served through the nonprofit organization she founded called Faces of Courage Foundation (www.facesofcourage.org), which offers weekend camps to women and children who are cancer patients or survivors.

“Many of those people are in a black hole they are never going to get out of,” she says. “It’s everybody’s story who gets into a catastrophic disease.”