Medical Bankruptcy Report Shows Problem Continues Despite Health Law

In a look at just the 800 personal bankruptcies in Lane County in 2014, the biggest source of bankruptcy-level debt stems from unpaid medical bills and the top 10 creditors in the county are medical organizations, half of them owned by the hospital system PeaceHealth.

Act Now for a Healthy Oregon -- the healthcare advocacy arm of the Service Employees International Union, Local 49 -- has painted a damning snapshot of the state of healthcare coverage in Oregon and the continued unaffordability of the health system in its latest report: “In the Red for a Hospital Bed.”

With a focus on just Lane County, which has 356,000 people, SEIU found that residents had racked up $5.6 million in medical debt in 800 personal bankruptcies in the last year. A whopping 72 percent of those filings including medical debt, and the 10 biggest creditors were all medical businesses.

“These people have insurance, and they’re still going bankrupt,” said Felisa Hagins, the political director of SEIU 49.

The 10 biggest creditors in Lane County were all medical creditors -- and five of those were entities run by PeaceHealth, which dominates medical services in the Eugene area. The Affordable Care Act has proven a boon to PeaceHealth, increasing the profits for the system’s four Oregon hospitals from $39.6 million in 2013 to $97.4 million in 2014.

Perhaps most unfair, at least two of the bankruptcies involved PeaceHealth’s own employees, whose employee health plan left them on the hook for thousands of dollars in medical bills to their own employer that they could not pay. Aggressive collection tactics against one employee, certified nursing assistant Hollie Murphy, left her with just $300 after PeaceHealth garnished her pay to cover the cost of surgery at PeaceHealth Sacred Heart Hospital.

The situation in Lane County and at PeaceHealth is unlikely unique nor might it even be the worst in Oregon. Murphy’s misfortunes echo those of Scarlet Allen, a Legacy Emanuel worker in Portland, who was also sent to collections for thousands in hospital debts to her employer.

Hagins said the report focused on Lane County because it provided a good sample size as a  large county, but not so big and hard to analyze as Portland’s Multnomah County, and because of SEIU’s organization at Springfield and Eugene hospitals, the union had heard of problems.

An October 2014 article in The Atlantic noted that medical debts are the number one reason for bankruptcy, and Americans have three times more medical debt than credit card and bank debt combined.

Much of the data cited by The Atlantic was from 2013 -- predating most of the Affordable Care Act’s reforms. The SEIU report is more troubling because the data comes from the year after the federal health insurance reform law took effect.

Medical debts were also high at PeaceHealth’s competitor, the for-profit McKenzie Willamette Hospital, which accounted for nearly as much debt in bankruptcy filings -- $882,000 -- as SacredHeart’s $1,197,000, despite a third the beds of SacredHeart and roughly one-quarter as many in-patient days as the bigger hospital.

PeaceHealth spokeswoman Monique Danzinger noted the outsize market share of PeaceHealth for Lane County in her organization’s response to the report. “We offer multiple financial assistance and financial counseling services for both insured and uninsured patients,” Danzinger said.

“Patients can get anywhere from 10 percent to 100 percent reduction of their patient responsibility. We have actually seen a reduction in our financial assistance applications as more patients become insured under [the health insurance exchange] and the Oregon Health Plan.”

Fagins said PeaceHealth should still be spending more for charity care, and the report dug into PeaceHealth’s non-profit, tax-exempt status as well as its stated “healing mission of Jesus Christ” when SacredHeart nets $94 million but allows people to go into bankruptcy rather than forgive $1.2 million in medical debt.

Hagins called upon legislators to enact more requirements for non-profit hospitals to keep their tax-exempt status, including requirements that hospitals assist anyone with incomes below 400 percent of poverty. She also said the state should reform collection laws to restrict creditors from garnishing such a high percentage of a worker’s wages.

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Reading the study, it does not appear to support the sub-headline that medical debt, for Lane Co., is the either the biggest source of debt nor the major cause of bankruptcies.

For example, it never shows the ratio is of medical to nonmedical debt, and therefore the extent to which medical debt is a cause of filings. It merely indicates that for about 40% of the filings, they had more than $6000 of medical debt. Other debt types and relative amounts are not discussed.

The study itself does NOT appear to  say medical providers are the "10 biggest" creditors....but rather it says that of all medical debt, the "10 biggest" were hospitals, an entirely different issue. Obviously, one would expect "hospitals" to be the biggest 'medical' creditor vs other provider-types.

Nor does it factually detail  the relative impact of deductibles, co-pays, etc.

The report/study is somewhat ambiguous in its writing style/semantics, so its easy to misread. National citations may address these issues...but the  Lane Co facts do not.  Unless I simply misread/overlooked which case i apologize in advance.

rand dawson  Siltcoos Lake