In 2008, Kimberly Fague was diagnosed with organ failure.
Plagued by nausea, she lost a third of her body weight. She suffered from confusion and constant fatigue. Her liver and surrounding organs swelled to the point that she developed a hernia.
Her illness also took a financial toll. Too sick to work, Fague was forced to retire from her position at the Federal Bureau of Prisons after 18 years with the agency. And despite having government health insurance, she was forced to file for bankruptcy in 2010, after racking up $15,000 in medical debt.
“The bulk of it was for hospital stays, but there were also out-of-pocket expenses for procedures, outpatient surgeries, medications. It was very difficult,” said the Denver resident.
Two years later, Fague is still struggling to pay off medical bills. Disabled and still a few months away from qualifying for Medicare, Fague says many of her debts are in collections.
“The whole situation is not easy,” Fague said. “The phone calls start at 8 a.m. and they never stop.”
Some policy experts say Fague’s story is far from unique. Harvard University researchers and medical doctors David Himmelstein and Steffie Woolhandler found that medical problems contributed to more than 60 percent of all bankruptcies in 2007.
Another analysis, performed by Northwestern University’s Kellogg School of Management, puts the figure much lower, at 17 percent. The U.S. Department of Justice also examined 5,203 bankruptcy cases filed between 2000 and 2002 and found that of those reporting medical debts, those debts accounted for 13 percent of total unsecured debt.
While the contrasting data shows that it’s difficult to determine exactly how many Americans fall into bankruptcy because of mounting medical expenses, it’s clear that consumers are drowning in medical debt.
A 2007 survey by the Commonwealth Fund, a private foundation that supports independent research on healthcare issues, found that 41 percent of working-age Americans – 72 million people – have medical bill problems or are paying off medical debt. That figure is up from 34 percent in 2005. If the number of elderly adults who are dealing with the same issues are included, the total rises to 79 million.
“We do hear from a number of consumers here who have struggled with that issue,” said Serena Woods, director of strategic engagement for the Colorado Consumer Health Initiative.CCHI does not track statistics on how many bankruptcies in Colorado stem from medical debt. State agencies also don’t have any figures on how large the problem might be on a statewide level.
But the feedback that CCHI received from consumers facing big medical bills led the organization to successfully push for a law this year limiting hospital charges to low-income uninsured patients and requires hospitals to offer a payment plan to eligible patients.
“Uninsured patients don’t have negotiating power like insured people do, so their starting price is often higher,” said Woods.
The Commonwealth Fund reports that problems with medical bills are most prevalent among uninsured adults. Of adults ages 19 to 64 who were uninsured, 60 percent said they had medical problems or accrued medical debt in 2010. That compares to 51 percent in 2005.
While some expect health care reform to improve the situation, Harvard’s Woolhandler says that the coverage mandated under the Affordable Care Act is too skimpy to provide adequate protection in the event of a major illness.
“Many people will go from being completely uninsured to being woefully underinsured and being underinsured still leaves you vulnerable to bankruptcy,” said Woolhandler.
She notes that more than three-quarters of the filers in her study were insured at the start of the bankrupting illness and most were solidly middle class – homeowners with college degrees. Still, out-of-pocket expenses for high co-payments and deductibles put them over the edge.
Fague knows that scenario too well. She faced co-payments of as much as $300 for some medications, and spent $600 alone on gas driving to medical appointments. While the caps proposed in the bill wouldn’t apply to Fague because she has insurance, she testified in favor of the measure, hoping to gain better transparency in the billing process.
“The information about (payment programs) is not there, whether for the destitute or someone who has insurance,” she said.
Woolhandler contends that a single-payer system with full coverage is the best weapon to prevent more medical-related bankruptcies. A single-payer system is one in which a single entity – usually a government or quasi-governmental agency – funds the delivery of health care.
“Only single-payer, nonprofit national health insurance can give families the comprehensive coverage they need to be protected from medical bankruptcy,” said Woolhandler, co-founder of Physicians for a National Health Program, an organization comprised of 18,000 health care providers who support single-payer national health insurance.
Woolhandler points to Canada, where she says medical bankruptcies are rare because the majority of costs associated with treating medical illnesses are covered. Medicare recipients also struggle less with medical debt than their younger counterparts. Just 19 percent of adults over 65 reported any medical bill problems or debt, according to the Commonwealth Fund.
The Medical Bankruptcy Fairness Act of 2009, which stalled out in Congress a few years ago, presented another solution. The act would have provided special protections to debtors whose filings were caused by medical expenses.
For her part, Fague says she just wishes that the hospitals where she received treatment had been more flexible and willing to work with her, based on the costs involved in treating her illness. Despite the bankruptcy filing and tapping retirement savings to pay off medical bills, she still considers herself lucky.
“I am in a better situation than most out there because my insurance covers quite a bit,” Fague said. “Somebody without this good of a plan could be in debt easily three times the amount I am.”