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Medical debt


The twisted method we pay for our health care in this country just doesn’t seem to get people riled up like immigration, guns, abortion, or any of the other hot button issues. But it got the attention of Frank Vandersloot, conservative Idaho Melaleuca CEO in 2020, and he took his idea to the Idaho legislature. Idaho Republican legislators love to rail against regulations, but they took Frank’s ideas to heart and passed laws regulating the collection of medical debt.

This is not a small problem. A study just published last week pointed out that the medical debt held in collection agencies last year totals $140 billion. It is the largest sector of debt that collection agencies own. Their study estimated 17.8% of the population has medical debt in a collection agency. And these were pre-pandemic numbers.

Mr. Vandersloot got his glimpse into this twisted universe when a collection agency attempted to garnish wages of a Melaleuca employee. The unpaid doctor bill (that the employee had never received because of a bad address) was for $294. The collection agency wanted to tack on $5000 in “legal fees.” Melaleuca refused to garnish the wages and fought the collection in court. Then Frank took his regulatory proposal to the Idaho legislature. And the very conservative body passed his proposed law.

So now Idaho requires billing health care providers to submit a bill within 45 days of services. Seems fair. But if you have a high deductible, and most people do, you pay cash for the first bill you get until you meet the deductible. The later billing entities haggle with the insurance company.

Insurances have contracted payment schedules. Medical providers want to dun the folks who are likely to pay, and health insurers have the deep pockets. I’ll bet a $10,000 deductible would hit most folks hard.

Further, the Idaho Patient Act requires hospitals to send a summary bill of all the services received by the patient within 60 days of discharge. Many folks don’t know that the radiologist who read your CAT scan bills separately from the hospital, since she is an independent businessperson. This is even though they work in the hospital, the CAT scanner is in the hospital, and the radiology techs who ran you through the machine are employed by the hospital.

Same with the surgeon who took out your appendix. But not the nurse who started your IV. So, the hospital now must collate these charges in a summary bill for you, under this new law. It seems fair. We need to know what we owe, don’t we? Aren’t regulations wonderful? But somebody will be paying for somebody to do this work.

The IPA also limited what attorneys can charge for their “collection” services. It turns out this is a lucrative business for some folks, collecting medical debt. When asked to comment, the attorneys shrugged and said they would just charge the hospitals more for the service, so their yacht payments would be protected. And our health insurance costs will keep going up.

So, this is the vision for a solution to the medical debt payment morass in this country from a conservative Idaho billionaire, Frank Vandersloot, and the conservative Idaho legislature. And indeed, it will “solve” some problems. Frank said he was motivated because he saw “people being bullied”.

Interestingly, the study that chronicled the huge amount of medical debt owed to collection agencies saw a sharp distinction, state by state. The states that had expanded Medicaid had much less debt than states that hadn’t.

Medicaid pays hospitals and doctors for their services. Doctors and hospitals hate it because it pays them a lot less than private insurance or private individuals. That’s a different regulation. I wonder what Mr. Vandersloot thought of Idaho when we expanded Medicaid coverage in 2018.


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