The Changing Debtor Landscape

There is one truth that exists in the United States today: Medical debt is the leading cause of bankruptcy.

How can that be? How can seeking the treatments and surgeries that are sometimes necessary to remain in good health bankrupt an individual or family in the United States? We are one of the leading industrialized nations in the world and yet we struggle to take care of the health of our people. We believe that this is a scandalous state of affairs and one that deserves to commandeer national discourse.

Part One of the health care coverage mess is out of control coverage costs:

  • The costs of healthcare borne by the average family of four – payroll deduction and out of pocket costs- now total $9,144. That  is more than the annual cost of groceries.
  • Out of pocket costs for health care for the average family of four now total $3,600. That is more than the annual cost of gas for the family car.
  • Medical debt in the US now exceeds debt issued by banks.

Part Two of this tragic equation are the campaigns urging us to seek health care:

Physicians, television, and even government policy encourage all of us to take care of our health. Every day we are targeted with messages to take care of our hearts, have mammograms for the early detection of breast cancer and choose apple slices over fries at McDonald’s. That is good advice, of course, but where is the system that makes preventative health care affordable? The Grand Canyon pales in comparison to the size of the gap between admonitions to remain healthy and the cost of doing so. Even worse is the disconnect between the healthcare industry’s efforts to keep us healthy and out of hospitals, and the government and insurance industry’s failure to make it affordable.

The Failed US Healthcare Equation: Costs + Campaigns = Rising Medical Debt.

Medical debt collections can take a devastating toll on people, their lives and their livelihood. Millions of medical accounts are sent to collections each year.

The Federal Reserve says that medical bills make up

more than half of the accounts in collection nationwide.

The “Affordable Care Act” (ACA) commonly referred to as “Obama Care” was an effort to provide health insurance to as many people as possible and levelize some of the inequities in the US health care industry. Whether or not it has succeeded is a matter of heated debate. Medical debt is rising and so are medical debt collections. In fact, according to, in the first three months of 2015 more debt collection complaints were published by the Consumer Financial Protection Bureau (CFPB) than in any previous quarter. “The trend of medical debt taking up a larger share of debt collection complaints continued in Q1 2015, with 14.1 percent of all complaints related to health care debt. That was up from 13.6 percent in Q4 2014 and significantly higher than the 9.5 percent reading in Q1 2014.”

USA TODAY analyzed deductibles posted on and found the following:

  • Medical insurance deductibles on the federal exchange average $3,000
  • For the least expensive, bronze-level plans, deductibles average $5,082
  • The lowest out-of-pocket limits on plans were $4,350 for individuals on bronze plans and $8,700 for families, (likely paired with high premiums).

And yet, the Kaiser Family Foundation report on medical debt showed that most Americans have less than $3000 to cover out of pocket medical costs- exactly the amount of most ACA deductibles. To make matters worse the ACA requires a person’s responsibility for health care costs to be capped at $6,350 for individuals and $12,700 for families. If Americans have less than $3000 to cover health care expenses, where on earth are they going to find $12,700? (KFF hyperlink:

The Centers for Disease Control and Prevention 2012 National Health Interview Survey showed that 34% of people in higher-deductible health plans had difficulty paying medical bills compared with 24% of people in lower-deductible health plans. CDC hyperlink:

In January of this year, a representative of the Consumer Financial Protection Bureau (CFPB) testified before congress, saying that medical debt collection now surpasses any other kind of debt collection in the country. Hospitals and healthcare providers are the largest group of customers for collection agencies and represent “the largest amount of recoveries in dollar value.”

A broken, convoluted system failing healthcare providers and patients alike.

Most patients have no idea how long they have to pay a medical bill, or when it will be sent to collections. Most Americans are annoyed, to say the least, when they receive a call from a collections agency rather than their doctor’s office or hospital, demanding that the overdue bill be paid. The standard of when medical bills are sent to collections, of how overdue bills are collected is with repetitive dunning phone calls and statements that may or may not reach the patient. It is such a big problem that the Healthcare Financial Management Association and ACA International  (the Association of Credit and Collection Professionals) have established a task force on the issue. The charge of the Medical Debt Collection Task Force (hyperlink: is to develop “consensus practices to bring clarity, fairness, and consistency to medical account resolution.”

Debt collection with dignity must be the rule.

The ACA has put the country on an unsustainable track of paying unaffordable insurance premiums and deductibles. A labyrinth of crippling medical debt is now part and parcel of the US economy and will remain as such until the healthcare industry is repaired. We are not holding our breath.

We believe that debt can be collected with dignity. We have made it our mission to do so. What is the alternative? The population is aging. The need for healthcare is rising. The cost of health care is skyrocketing and so is the cost of the insurance needed to defray the costs. Are we to ruin every patient’s life in order to collect the medical debt that is going to continue to rise? Are we to ruin patients’ credit and force them into bankruptcy because they choose to eat or put gas in the car instead of paying astronomical medical bills? We believe the only course is to leave patient self-respect intact while working to collect medical debt. The benefits of this approach transcend any particular vested interest.

The challenge is that new policy recommendations increase provider responsibility for resolving patient bills! Now you, the provider, are expected to enroll and educate your uninsured patients. You are expected to screen for financial assistance programs for patients, help them understand their financial responsibility, and be the first point of contact when trying to collect the unpaid bill. Gee, we thought you were in practice to deliver healthcare to your patients, not to run an insurance or collections agency.

Riddle:   What is everywhere and yet nowhere to be found?

Answer:  Affordable health care

So, here we are. We have providers in private practice, and hospitals large and small who must make sure patients have insurance before treatment, then try to collect the remaining money owed from patients who can’t afford to pay. It sounds like a ridiculous riddle from Alice in Wonderland, doesn’t it? Unfortunately it is the very real truth.  In the words of one of the partners at Emerald A/R, Tom Jensen,

“The current administration promised America that the Affordable Care Act would make the health care coverage situation better.  They promised everyone would have health care.  Well, everyone DOES have health care, but not everyone can PAY for the care. We are becoming a nation of health care paupers.

“Todays’ “Debtor” is not yesterday’s debtor. Today it is the working man or woman with a full-time job who can’t make ends meet because of higher taxes and higher healthcare costs.  When faced with the option of paying rent or paying the doctor’s bill, the rent will always come first. If faced with a catastrophic illness, the bottom falls out.

“The squeeze is on. Not only do physicians and hospitals have to find a way to deal with reimbursements cuts and disallowed procedures, now they have to push harder to get the patient paid portion.”

There has to be a better way.

At Emerald A/R we say enough is enough. If government can’t fix the system, then at least we can fix our end of it. We believe it is time to take the collections function out of the doctor’s office and out of the hospital. It’s time to let providers get back to the business of delivering compassionate healthcare. We will extend your office and be compassionate with your patients while educating them about their bills and creating a mutually beneficial payment plan. When we create understanding with your patients, we find that they pay more frequently and more fully. You get to keep the patient, and more of the hard earned dollars you work for.

If you agree, stand with us. Together we can improve patient collections and protect our patient’s dignity. It is the only right thing to do. To find out more (we need a call to action.)