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Despite insurance, some Americans still struggle with medical debt

Posted on May 9, 2016

National version on Marketplace / Original story on Northwest Public Radio

At the Yakima County courthouse in Washington, presiding District Court Judge Kevin Roy walks past a rattling dot-matrix printer and long rows of color-coded folders to a shelf of files awaiting his signature.

“If I was to pull this file,” Roy says, taking one from the shelf. “Yep, Memorial Physicians, PLLC. That’s not just by luck.”

Not luck, because most of these files are for medical debt. The Affordable Care Act has expanded coverage to more than 10 million Americans who were previously without health insurance and provided subsidies to millions more. But it hasn’t changed much for those who have fallen behind in paying for healthcare.

Roy spends a big chunk of his workday signing judgments against people who owe money to hospitals and medical providers. “It’s like the tide coming in every week,” he says.

Medical debt affects one of every four Americans and accounts for more than half of all bankruptcies.

At age 60, Scott Cliett says he’s in debt for the first time in his life. Chronic pancreatitis has forced him to stop working, and regularly sends him to the emergency room for a week at a time. He now has free health coverage through the Affordable Care Act, but he’s still struggling to pay off old debt. Missing a single $25 installment landed Cliett in court.

“The Judge did allow me to speak, but the fact that I admitted I do owe them money pretty much cut everything else off,” Cliett says, reflecting on his day in court. “‘You know, I’m sympathetic to your plight, but I have to follow the letter of the law. You owe them money, so therefore I’m granting the judgment.’”

Most of Cliett’s bills were forgiven through the hospital’s charity care program. But he’s barely made a dent in the remainder, like a $4,000 ambulance ride.

“Let’s see, $4,000 divided by twenty five dollars,” he says. “My grandkids will probably still be working on it when I’m gone.”

Overall, gaps in coverage like Cliett’s are the exception to the rule. The vast majority of people with medical debt have insurance the whole time those costs are piling up. But the bills insurance doesn’t cover can be devastating on their own.

That’s one reason Dr. Steffie Woolhandler, who teaches health policy at City University of New York, says health insurance is often a “defective product.”

“People buy it in good faith to try and get medical care and make sure their bills are paid, and then when they get an expensive or prolonged illness, the health insurance doesn’t work,” she says.

Woolhandler says Obamacare has definitely helped. She says even with Obamacare, many policies still have high out-of-pocket costs.

Karen Pollitz, who co-authored a recent study on medical debt for the Kaiser Family Foundation, says, “We see a lot of plans, still, that have 2, 3, 4, 5,000, $6,000 deductibles. That’s still way more than most Americans have on hand.”