- While medical spending typically increases with age, older people are less likely to have bills that have been taken over by a U.S. collection agency, a new study in Health Affairs shows.
- Researchers used de-identified credit report data on more than 4 million Americans and found that both frequency and size of medical collections peak in the late 20s and decline with age.
- The average size of medical debt dropped by nearly 40% between the ages of 27 and 64 — a factor, in part, of rising incomes and better health plan coverage, the researchers surmise.
Frequency of collections, however, seemed to be less affected by coverage rates. One explanation, the study says, is that medical collections tended to be modest in size, with a majority totaling $600 annually. Because of this, collections could still occur under typical health plans.
“[I]nsurance coverage is more strongly correlated with the occurrence of large medical debt amounts than it is with that of smaller ones, which is consistent with insurance being designed to mitigate very large financial shocks,” the authors write. “However, under traditional cost-sharing arrangements, some patients may still owe amounts that are similar in size to many of the medical debts we observed. This is also aligned with survey research findings that nearly half of respondents report that they are not prepared to pay for an emergency expense of several hundred dollars.”
The findings could have policy implications, the study says. For example, policymakers could further limit allowable levels of cost sharing or increase subsidies to offset increases in the price of insurance.
Medical debt is a huge problem in the U.S., along with balance billing. In a recent survey by The Commonwealth Fund, just two-thirds of adults said they felt very or somewhat confident they could afford healthcare if they came down with a serious illness. That confidence dropped to half for people with incomes below $30,000.
Out-of-pocket healthcare costs increased 11% last year, with average fourth-quarter costs of $1,813, up from $1,630 the previous year, according to a TransUnion Healthcare report. Nearly half of those costs were less than $500 per medical visit, but 12% topped $1,000.
A Kaiser Family Foundation analysis predicted out-of-pocket costs for older Americans will hit 50% of average per capital Social Security income by 2030, up from 41% currently.
Concerns about collections are causing hospitals to focus more on revenue cycle management, and more companies are popping up to serve as middleman between providers and patients who owe.
For example, Geisinger Health System has created installment payment plans stretching up to 36 months, with longer terms requiring cash review and executive approval. The system is also focusing on patient education and outreach. And in a recent study, North Kansas City Hospital teamed up with CarePayment to offer six- to 24-month zero interest payment programs along with enhanced outreach on patient financing. In the first six months, net collections rose 67% jump and bad debt dropped by 27%.
On the vendor side, eClinicalWorks launched a cloud-based platform for acute care EHR and revenue cycle management in February. Most of the big EHR players are investing in RCM. Cerner officials told investors earlier this year that the RCM market offers good growth opportunity.