Why So Many Insured People Have Big Medical Debts

Last Updated Sep 3, 2009 4:38 PM EDT

One in seven adult Californians who are less than 65 years old are paying off medical debts in excess of $2,000. Remarkably, two-thirds of those debtors are insured, according to a study by the UCLA Center for Policy Research.

Among the 2.2 million people who were paying off big medical bills, 17 percent had debts ranging from $2,000 to $4,000; 9.4 percent owed between $4,000 and $8,000, and 8.7 percent owed $8,000 or more.

One reason why insurance may not cover very much is that 7.2 percent of Californians are in high-deductible plans, including 38 percent of those who purchase their own insurance. For purposes of the survey, these plans were defined as having deductibles of $1,000 or more for a single person and $2,000 or more for a family. High copayments were another reason for medical debt.

Many people wound up with whopping medical bills because they hadn't sought care when they needed it. A third of the people with significant medical debt said they had delayed going to see a physician. Only half as many people without debt said they had done that, perhaps because the rest had better insurance.

But the biggest reason why so many insured people in California and across the nation can no longer afford health care is that it simply costs too much. And that is largely because the purpose of much health care, as Maggie Mahar's new DVD documentary "Money Driven Medicine" points out, is not to heal patients but to make money. (If you missed the excerpt of the documentary on "Bill Moyers' Journal" on PBS, you can see it here.) A great example of that philosophy is the current effort by Boston Scientific Corp. to promote the use of cardiac defibrillators in patients with mild heart failure. A four-year study funded by Boston Scientific showed that patients with resynchronizing defibrillators had a slightly lower incidence of heart failure and rehospitalization than those who received an older type of defibrillator, but had about the same risk of death. The company claims that this study proves that its device is cost-effective. But cardiologist Mariell Jessup, who commented on the study in the New England Journal of Medicine, points out that it would take 12 implants of the device, which costs $30,000, to prevent one hospitalization. "Is this money that could be spent more wisely?" Jessup asks.

I'd say Yes, based on the evidence provided and the fact that implanted devices help very few heart patients. But that may not matter if cardiologists decide that most patients with heart failure could benefit from cardiac-resychronization therapy. So far, they're holding the line. But Boston Scientific will keep trying to convince them. After all, its stock price depends on it.

In the end, Congressional healthcare reformers must decide whether they want to take on the medical-industrial complex or not. If they don't, health costs will continue to rise faster than incomes, and access to good care will float out of the reach of most working people, unless they're at death's door.

In the end, Congressional healthcare reformers must decide whether they want to take on the medical-industrial complex or not. If they don't, health costs will continue to rise faster than incomes, and access to good care will float out of the reach of most working people, unless they're at death's door.

  • Ken Terry

    Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform.