Even as the number of Americans without health insurance is at a record low, Chicago hospitals are wrestling with a metastasizing problem: bad debt.
These days, rather than struggling to collect payment from uninsured people, hospitals are being stiffed by insured, often middle-class patients who can't—or won't—pay skyrocketing out-of-pocket costs.
Advocate Health Care, Illinois' largest hospital network, saw its uncollectible accounts increase more than 22% in 2016, to $269.5 million, or about 5% of its overall revenue. The spike is related to an increase in deductibles and overall patient financial responsibility under today's insurance plans, David Szandzik, vice president of revenue cycle for Downers Grove-based Advocate, says by email.
Swedish Covenant Hospital, one of the largest and oldest community hospitals in Chicago, watched its bad debt skyrocket by 71%, to $11.2 million, in 2015, the most recent year for which numbers are available. At Lurie Children's Hospital, bad debt increased 22%, to $11.5 million, in 2015.
If a Republican Obamacare replacement bill had passed, unpaid bills would have continued to rise, Szandzik said, citing the nonpartisan Congressional Budget Office's estimate that the scuttled proposal would have increased the number of uninsured Americans by 24 million by 2026. "We are concerned the number of uninsured patients and both uncompensated care and bad debt (would) rise significantly," he writes.
(Uncompensated care is the term hospitals use to describe both bad debt, which they define as any bill not paid in full, and charity care, which is provided to uninsured low-income consumers and doesn't even get billed. Since the Affordable Care Act's implementation, Szandzik says charity care has gone down as more Illinois residents gained insurance, while bad debt is going up, due largely to high-deductible plans.)