For hospitals, the calculation could be a politically sensitive admission. Large amounts of debt attributed to low-income patients may suggest to some that hospitals have poor financial aid outreach or limited assistance, wrote Keith Hearle, president of Verite Healthcare Consulting, along with two co-authors last year in an industry finance publication.
The estimate also raises questions about the potential cost—emotional and financial—to low-income households struggling with medical debt.
Poor credit can jeopardize the search for a job or apartment and dings to credit scores—even those resolved when consumers pay medical bills or hospitals forgive the debt—can have lasting consequences, says Melissa Jacoby, a law professor at the University of North Carolina Chapel Hill. “That's a hard egg to unscramble.”
Jacoby's research includes analysis of bankruptcy records to better understand how medical debt affects consumers. She says new estimates raise questions about how hospitals sought to collect debt from patients identified as low-income.
Credit reporting captures consumers' credit history “but it's not good at expunging information in a timely manner,” Jacoby says.
Congress moved last year to address credit score damage from medical bills. The House of Representatives last September passed a bill to swiftly erase from consumer credit reports any outstanding medical bills that have been paid off or settled. The bill, which cleared the House on a vote of 336 to 82, stalled in the Senate.
One major hospital trade group has urged policy-makers and regulators to consider the estimate as an unrecognized subsidy to local communities. The American Hospital Association argues unpaid bills include those to needy patients who do not complete financial aid forms but still result in hospital write-offs. “Hospitals absorb these costs as part of their mission to provide care for all in their communities,” the AHA said in letters sent to Congress.
Regulators have not decided on the issue.
Hearle, in an interview, says more hospitals are doing more to weed out patients who need financial aid from unpaid bills and have moved to adjust policies to do so. Hospitals may retrospectively categorize unpaid bills as community benefit, but should be sure financial aid policies allow such actions, Hearle says. Executives should also be sure hospitals notify patients that bills have been waived and take action to remedy collection activity against such patients, he says.