Unpaid hospital debt in Minnesota surged 25 percent in 2017, another sign that even patients with health insurance are struggling to pay high deductibles and co-payments for medical care.
The increase is the biggest jump since the Affordable Care Act (ACA) took effect in 2013, according to a report released Wednesday by the Minnesota Hospital Association.
"Deductibles continue to go up, and our experience so far is that people can't catch up," said Lawrence Massa, chief executive of the trade group, which prepared the report using financial information from 129 nonprofit hospitals.
Hospitals recorded a 9 percent increase in a second category — charity care, which is free or discounted care provided to uninsured or low-income patients. Charity care initially decreased after the ACA took effect, as more people acquired insurance. But 116,000 Minnesotans lost insurance coverage between 2015 and 2017.
Altogether, hospitals wrote off $467 million in bad debt and provided $224 million in charity care in 2017, for the highest total in at least five years. "All of our members are experiencing it," said Massa. "It doesn't seem to be concentrated in the metro or rural areas."
Deductibles, the amount that enrollees must pay out of pocket for medical care before insurance kicks in, are now common in most health insurance plans, and they are getting bigger. Since 2002, deductible amounts have increased more than 250 percent, according to research by the Minnesota Health Department. The average deductible was $3,200 in 2015, but it is not unusual for deductibles to reach $7,500.
"Actually, deductibles are going up faster than [insurance] coverage and faster than premiums," said Massa.
Hospital executives said another trend in health insurance could leave patients with even bigger medical bills to pay out of pocket.
Insurance plans are shrinking the size of their provider networks, meaning inpatient care at some hospitals is no longer covered. This becomes a problem when a patient arrives at an emergency room of an out-of-network hospital and is then admitted to the hospital for surgery. Under the ACA, the health insurer must cover the emergency care. But under the plan's rules, it won't pay for the inpatient care.
"We saw an increase in that kind of patient about a year ago," said Mary Bear-Dukes, a vice president at Allina Health. That's one reason why bad debt increased 22 percent at Allina facilities in 2017.
"With the ACA, we generally saw more people have insurance, but they have the high-deductible plans," said Matt Engelman, director of revenue cycle management at Allina. "But when it comes time to actually use them, they struggle to make payments for those deductibles."
With deductibles and narrow networks, it is important for consumers to understand what they are buying, said Bear-Dukes.
"With many of the calls that we get monthly, we really are educating [patients] about their insurance plan," she said. "You can end up as an inpatient having surgery and that could not be covered."
Although Allina's bad debt increased in 2017, the period covered by Wednesday's report, the numbers reversed in 2018, when it was down by 8 percent. The reason isn't entirely clear, but Allina officials said they lowered patients' minimum monthly payment on their bills and provided new tools to estimate costs.
Bad debt and charity care typically represent about 3 percent of a hospital's expenses, according to the hospital association.