The Other Credit Crunch

With viability in mind, some hospitals are checking patients' credit scores while they're being treated. They say the credit reports help them determine which patients might qualify for financial assistance, and may even minimize losses. (Last year, nearly 5,000 community hospitals provided uncompensated care costing $34 billion, according to the AHA.) But while the credit checks are legal, they're not always welcome. Many advocates worry they could impact the quality of care—or worse, they say they've heard cases where providers have coerced patients to use available lines of credit they can see from the reports. "Our advice is that [a hospital] should always get [a patient's] permission," says Bentley. "I'd like to say that's happening every place every time, but I can't guarantee that."

Hospital administrators say they've been forced to undertake such steps in part because of the growing cost of caring for so many uninsured Americans—now numbering almost 46 million, according to Census Bureau figures released in August. But it's also the fact that those who do have employer-backed health care—more than half of all Americans—are paying more and getting less. Annual health-insurance premiums for families now average $12,680, according to the Kaiser Family Foundation—more than double the amount in 1999. Of that, families contribute about a quarter out of pocket, not including copays and deductibles.

In April, even before the latest stock meltdown, Kaiser reported that more than a quarter of Americans have faced serious problems paying health insurance or medical bills as a result of recent changes in the economy. To cut costs, some are going to extremes: not filling prescription drugs, cutting pills in half, postponing doctors appointments or skipping them altogether to avoid the extra fees. (According to the results of the Commonwealth Fund's 2007 biennial survey, released in August, 45 percent or respondents said they'd delayed or avoided care for fear of mounting costs.) "People aren't just having trouble paying bills, they're one bill away from economic disaster," says the AARP's Nancy LeaMond, the head of the powerful lobbying group's social impact division and Divided We Fail effort, which helped produce the health-care ads. "The fear of that is just palpable."

In many cases, it's the fear of losing everything that's made putting medical debt on a credit card an increasingly popular last resort. Americans now charge an estimated $45 billion in out-of-pocket medical costs to credit cards, according to McKinsey—a figure that's expected to triple by 2015. With that in mind, companies like Citigroup, GE Money and Capital One—often endorsed by individual physicians' practices and hospitals themselves—are hawking new lines of credit to be used exclusively for medical procedures.

Doctors like the idea of medical credit cards because it allows them to get paid immediately; consumers see them as a quick and easy way to deal with debt. (Many of the cards have no annual fee, and low or no interest if customers pay bills within a certain schedule.) But advocates point out that the cards' low interest rates can jump above 20 percent after an introductory period expires, and if a payment is late, interest rates can sometimes apply retroactively. What's more, advocates say medical staff aren't always doing an adequate job of explaining the card's terms and conditions. And putting bills on a card can lesson a person's leverage to negotiate directly with providers.

In California, the cards caused enough of a stir that state legislators introduced a bill last summer aimed at prohibiting the predatory marketing of high-interest credit for dental care. The bill was vetoed by Gov. Arnold Schwarzenegger, but CareCredit, a GE card, was mentioned in a case where a patient said she was signed up for $8,000 worth of dental work while sedated. "Our biggest concern is that people are making financial decisions at a time when they're feeling scared, vulnerable and concerned," says Mark Rukavina, executive director of the Access Project.

Evanston, Ill., resident Ann Cole doesn't have a credit card, but she's definitely vulnerable. At 57, Cole is five years away from receiving Social Security, eight years from Medicare, and even though she's been diagnosed with multiple sclerosis, her applications for disability have twice been rejected. Her MS makes having a full-time job exhausting, so she's worked out an arrangement with her daughter: she baby sits for her grandkids for 20 hours each week, and her daughter pays her $250.

But between Cole's $750-a-month rent, the $50 monthly student-loan payment, gas costs and rising food prices, "there's nothing extra," she says. "I don't go out, I barely drive and still, at the end of the month, there's barely enough for food. If I need something I normally don't have—like a new Brita or cleaning supplies—it's just outrageous. It's like, 'Oh, my birthday's coming up, maybe I can get shampoo!'"

Cole qualifies for free health care through a local clinic, but she has $5,000 outstanding debt from an emergency hospital visit—the result of a seizure, during a trip to Colorado last year. "When I got sick with MS I declared bankruptcy, and it felt horrible then," Cole says. "Now it's 15 years later and I may have to do it again, and I'm just like, 'Oh my God'."

Unless people like Cole start seeing meaningful reform, a deteriorating economy may force many to choose. Not between medical providers but between their financial health and their physical well-being.

Editor's Note: Since this story was published, Tufts Medical Center has offered to waive all of Maria McNamara's medical fees at the hospital, including that of an upcoming laser treatment she has scheduled for Dec. 19. She hopes that treatment will be the last one she needs to regain her sight.

© 2008