This article by Goodroot CEO Mike Waterbury ran in the March 14, 2023, edition of The Hartford Courant.
Gov. Ned Lamont recently announced a proposal to cancel all medical debt in Connecticut. If it moves forward, it will help a lot of people under the strain of an unfair financial burden. And if it’s done right, it can help future generations as well.
As the governor points out, one in five Americans carries medical debt, which as a whole totals over $80 billion. Other estimates I’ve seen place those numbers at one in three with a combined total north of $200 billion. Regardless, everyone agrees medical debt is the leading cause of bankruptcy in the U.S.
Unlike credit card or student debt, no one chooses medical debt. In fact, I believe “debt” is a misnomer. “Healthcare profiteering” or “medical oppression” would be more accurate terms for this scourge on our society that disproportionately affects people of color.
Like other local governments, such as the one in Toledo, Ohio, the proposal could have the state partner with a highly respected nonprofit called RIP Medical Debt, or potential other partners, to buy debt for pennies on the dollar. The governor’s office projects that a budget of $20 million would wipe out the roughly $2 billion in medical debt carried by Connecticut residents.
Wiping out medical debt in Connecticut will give an economic boost to thousands of families, especially in marginalized communities. But, as Gov. Lamont acknowledges, to keep the debt from simply growing back stronger we have to eliminate the root cause. Here’s how we do that.
The devil is in the data
There’s a lot of finger-pointing in the healthcare industry. Everyone agrees the cost of care is out of control, but no one takes responsibility for it. Insurers say hospitals and drug manufacturers set their prices too high. Hospitals and drug manufacturers say insurers don’t cover enough.
Meanwhile, the data is siloed. That’s why there’s not a definitive figure on how much medical debt there is in the U.S.
As a former vice president of the largest health insurer in the country, and now a healthcare entrepreneur and investor involved in the creation of nine companies committed to lowering healthcare costs, I have a more well-rounded insider perspective on healthcare than most. Like so many things in this industry, isolating the causes of medical debt is complicated.
If Connecticut becomes the first state to eliminate medical debt for its residents — truly a remarkable achievement — it will also have access to some of the most extensive data on medical debt in existence. That would give the state better visibility into the causes of the issue.
Did patients not apply for financial assistance programs for which they were eligible? Did they misunderstand their benefits and go out of network? Do enough physicians, especially hospital– based physicians like anesthesiologists, participate with health plans? Did the bills have errors? If analyzed effectively, that data could help the legislature make informed policy decisions and help employers and consumers make more cost-effective healthcare choices.
A call to action
“The governor has called on all parties — including insurers, employers, providers and consumers — to step up and be part of the solution,” reads the press release announcing this proposal. But how exactly are they to do that?
Patients and employers overwhelmed with benefit complexity end up making healthcare decisions that unnecessarily drive-up costs. While change can be scary employers, need to step outside of their comfort zone and seek out better benefits and innovative solutions that lower costs for their employees. They do exist.
Patients also have a responsibility to understand their benefits and utilize the tools at their disposal to reduce their costs. For instance, patients often don’t realize the costs of an MRI can vary widely by location from a few hundred dollars to thousands – essentially for the same test.
This simple knowledge can save an employer, patient and insurer big savings. Imagine the amplified savings effect if we all shopped for healthcare in this way? The problem is access to this information is convoluted and complex and often relies on an employer offering navigation solutions in their benefits.
On the provider side, nonprofit hospitals provide income-based financial assistance programs. They need to make sure patients know about these programs and that the process to apply for them is easy and fair.
Finally, insurers — whose sole purpose is to help patients avoid medical costs they can’t afford — need to track levels of medical debt of their customers as a key metric of their company’s success.
I’m proud that our state government is taking the lead on this issue. I’ll be even prouder when our state’s most prominent industry does too