A study published in 2021 indicates that total U.S. medical debt in collections is higher than previously estimated — and that this debt is closely related to how much prescription fill rates drop. As patients become unable to pay their medical bills, they balk at adding any new expenses to their debt totals. This hesitation often manifests as patients failing to fill prescriptions or to attend appointments to receive prescribed treatments.
Pharmacies, pharma companies, payers and providers can work together to ensure patients receive prescribed treatments. Doing so can improve medical outcomes for patients with rare diseases.
The State of U.S. Medical Debt
The study, published in JAMA by Raymond Kluender, Neale Mahoney, Francis Wong and fellow researchers, estimates that:
- 17.8 percent of U.S. residents had medical debt in collections prior to the COVID-19 pandemic.
- The average debt amount in collections for any one individual was $429.
- Medical debt was more common in states that did not expand Medicaid under the Affordable Care Act. Patients in these states had 34 percent higher total medical debt, on average, than patients in Medicaid-expansion states.
- The estimated total amount of medical debt currently held by U.S. collection agencies is $140 billion, up from an estimated $81 billion in 2016.
The study looked only at medical debt that is currently in collections. It did not examine outstanding bills that have not yet been sent to collections. Nor did the study look at the growing number of lawsuits brought by hospitals against patients who haven’t paid their bills.
Kluender et al. found that the occurrence and amount of medical debt rises as patients’ net worth falls. Poorer patients are more likely to have medical debts in collections than richer patients.
Even among middle-class patients, rates of medical debt and hospital lawsuits over bills are increasing. Many of those named in hospital lawsuits over unpaid bills aren’t destitute, says Craig Antico, cofounder and CEO of ForgiveCo. “They’re middle-class, they have relatively good credit ratings, they’re not transient. But they have these big deductibles, and they can’t afford their bills.”
Other studies indicate the total medical debt in the U.S. may be even higher. Matthew Rae and fellow researchers estimated a total debt number near $195 billion in 2022, for example. Although most U.S. residents have some form of health coverage, approximately 46 million in 2021 say they could not afford needed medical care, writes Dan Witters at Gallup.
Many factors lead to rising medical debt, including rising costs, stagnant wages and an increasingly gig-based economy that offers fewer opportunities to access employer-sponsored healthcare coverage.
Even those who have employer-sponsored coverage available have seen costs shift from the plan to the patient in the past two decades. In 2006, about 50 percent of employer-sponsored health plans carried a deductible, according to a 2019 study by the Kaiser Family Foundation. By 2019, however, 82 percent of employer-sponsored health plans had a deductible. The average deductible amount also tripled during this time, rising from $584 to $1,655.
Plans offered on Affordable Care Act exchanges can be even pricier out of pocket. Some of these plans cap out of pocket costs at $8,200 for an individual or $16,400 for a family.
Even patients who have health insurance find that their insurance coverage doesn’t put prescription medications within their reach. Faced with the choice between paying for a single medication or paying for the coverage that addresses all their healthcare needs, patients typically opt for the insurance — even when that insurance isn’t enough to connect them to their needed medications.
Rising Debt Leads to Fewer Fills, Worse Patient Outcomes
As patients’ medical debts rise, patients begin to make different choices about medical treatment. One of those choices is the decision not to fill prescriptions for prescribed treatments.
A study examining prescription abandonment rates in 2017 found that 69 percent of patients abandoned a prescription if their out of pocket cost was more than $250, writes Holly Campbell in Phrma. On average, 10.7 percent of patients abandon prescriptions if their out of pocket cost is less than $30. Over half fail to fill a prescription if their cost-sharing obligation is $125 or higher.
In an earlier study from the IMS Institute for Healthcare Informatics, Murray Aitken and Silvia Valkova found that the majority of patients who abandon a prescription do not fill any other prescriptions within three months, either. These findings suggest that patients who fail to fill a prescription are not returning to their doctor for a cheaper treatment option — they’re simply foregoing treatment altogether.
Rising costs for specialty medications are exacerbating this problem. In an article published by the AARP Public Policy Research Institute, Leigh Purvis and Stephen Schondelmeyer note that between 2019 and 2020, specialty prescription drug prices rose 4.8 percent — nearly four times higher than overall inflation rates. The average annual cost of therapy for a single specialty prescription in 2020 was $84,442 — far more than the median U.S. household income of $65,712.
Rising specialty medication costs can be particularly daunting for patients when combined with the rising costs of health insurance. Not only does coverage become more expensive to secure, but coverage pays for less of the total cost of specialty treatment as deductibles demand more out-of-pocket payments from households.
“For many people using private insurance, innovative medicines are dangling just out of reach,” write Gina Kolata and Francesca Paris in The New York Times. Patients begin to wonder what exactly their health insurance pays for — especially when that insurance doesn’t make it possible for patients to afford their medications.
How to Connect Patients to Treatment in an Era of High Debt
Alternative options for affording specialty medications remain inconsistent across the nation. Many programs are treatment-specific, condition-specific or manufacturer-specific. Many require means testing or other evidence before offering support. Faced with a baffling patchwork of potential options but no proven way forward, patients who abandon prescriptions are unlikely to seek funding to reverse the situation.
Connecting patients to Medicaid or Medicare resources is a must. A study published in 2018 by Michael Batty, Christa Gibbs and Benedic Ippolito found that while total medical spending increases as patients age, the amount of medical debt in collections drops as patients get older. Access to Medicare and Medicaid helps explain why older patients have less medical debt, even though they have more medical costs.
In a study of Oregon’s Medicaid lottery system, researchers Katherine Baicker and Amy Finkelstein found that patients who had Medicaid coverage “significantly lowered medical debt and virtually eliminated the likelihood of having a catastrophic medical expenditure.” Patients also attended more outpatient appointments, were more likely to be hospitalized when needed, filled more prescription medications, and received necessary emergency department care more often.
Use of patient hubs can also identify other reasons patients don’t fill necessary prescriptions. In a 2022 study, Sahil D. Doshi and fellow researchers found that 13 percent of surveyed patients did not fill prescriptions for oral cancer medications. Among these patients, only 13 percent reported that cost caused them to abandon their prescriptions. “Patient and clinician decision-making” was cited as the main reason prescriptions were not filled. Hub access facilitates communication, helping care teams to target the root of the problem.
Medical debt remains a pressing issue for U.S. patients, especially those who do not qualify for Medicaid or Medicare coverage. By improving communication through Hub use, pharma companies, pharmacies, payers and providers can work together to improve patient outcomes by connecting patients to funding and other sources necessary to ensure patients receive the treatments they are prescribed.
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