Even The Insured Can’t Afford Their Medical Bills

It was another seemingly chance decision by Daniel McCarthy to sign on as a volunteer firefighter more than a decade ago that saved the family’s finances in the wake of Cassidy’s diagnosis with cancer. As it turned out, that activity allowed him to ask The Heather Pendergast Fund, a foundation set up in 2009 to help out the families of Long Island’s volunteer firefighters and EMS workers with their children’s medical expenses, to pay many of Cassidy’s medical bills.

McCarthy says the charitable foundation was a financial lifeline. Cassidy quickly racked up more than several thousand dollars in out-of-pocket medical expenses—for the surgeon, the anesthesiologist, radiologists, chemotherapy, you name it—since the family’s insurance policy had a $6,000 deductible. A few months later, Pendergast came through again when McCarthy lost his job at a local nursing home and rehabilitative center and the family suddenly had to find money for COBRA payments, which, at $2,100 a month, were more than the monthly mortgage payment on their West Babylon, Long Island, home.

“I don’t know how people who don’t have resources do this. I don’t. Many people work three, four jobs, and can’t afford the time to volunteer in an organization like the fire department that would be able to help them. There are many people living out there that need help that can’t find it,” McCarthy says.

The current debate over the future of the Affordable Care Act is obscuring a more pedestrian reality. Just because a person is insured, it doesn’t mean he or she can actually afford their doctor, hospital, pharmaceutical, and other medical bills. The point of insurance is to protect patients’ finances from the costs of everything from hospitalizations to prescription drugs, but out-of-pocket spending for people even with employer-provided health insurance has increased by more than 50 percent since 2010, according to human resources consultant Aon Hewitt. The Kaiser Family Foundation reports that in 2016, half of all insurance policy-holders faced a deductible, the amount people need to pay on their own before their insurance kicks in, of at least $1,000. For people who buy their insurance via one of the Affordable Care Act’s exchanges, that figure will be higher still: Almost 90 percent have deductibles of $1,300 for an individual or $2,600 for a family.

At the same time, the most recent Report on the Economic Well-Being of U.S. Households, an annual survey conducted by the Federal Reserve Board, found that 44 percent of adult Americans claim they could not come up with $400 in an emergency without turning to credit cards, family and friends, or selling off possessions. When this reality combines with healthcare bills, the consequences can be financially devastating.  A 2015 poll by the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health discovered that 26 percent of those who took part in the survey claimed medical bills caused severe damage to their household’s bottom line. A poll conducted earlier this year by Amino, a healthcare-transparency company, with Ipsos Public Affairs, found that 55 percent of those they surveyed claimed they had at least once received a medical bill they could not afford. No surprise, then, that the Consumer Financial Protection Bureau reported earlier this year that medical debt was the most common reason for someone to be contacted by a debt collector.

This spending is most pressing for households with the highest medical bills, the 5 percent of Americans who make up 50 percent of the country’s healthcare costs. Medicare, Medicaid, and private insurers will spend $40,375 on average per patient for someone in this group. Their out-of-pocket spending will be much less: on average, $2,582.90. This isn’t, in the scale of things, a lot of money—but given Americans’ straightened personal finances, it’s more than many can easily access.

This isn’t, it’s important to point out, a static group. A chronic illness can land someone in this category but, given the increasing prevalence of high-deductible plans, so can something as simple as a broken bone or an emergency appendectomy. Although some people will be in this group year after year, many will cycle in and out, and nearly everyone will be in it for some brief period. The fact is that nearly any illness or injury can lead to unexpected bills, and few are able to absorb those shocks without difficulty. Yet, despite the commonness of such problems, there is little in the way of a system for helping people out through these times.

Some of these people will declare bankruptcy. How many is the subject of controversy. A famous study—co-authored by Elizabeth Warren—found that suffering from a medical misfortune was the most common reason for ultimately leading someone to petition the courts for relief from their financial obligations, but another study pointed to unnecessary spending prior to the medical crisis.

As it turns out, determining what counts as a medical expense is difficult. It’s not simply doctor bills. In addition to the not-covered deductibles, there is transportation to and from medical appointments, parking fees at many hospitals, and often childcare expenses while parents are in treatment or at appointments. Time for cooking will be limited, so take-out bills can pile up, too.

“The families get to the point where it’s, ‘What do I do? Do I pay the doctor bill because I’m getting collection notices? But I gotta pay my mortgage, I gotta pay my electric bill, I’ve gotta pay the rent.’ That’s where we come in,” Tom Pendergast of the Heather Pendergast Fund told me. “They can pay their mortgage, their rent, their electric bills and not have to worry about the medical part of it.”

For many, the idea of charity to help those in need out—which is, after all, what saved the McCarthy family from financial disaster—holds much in the way of appeal, speaking to both a sense of generosity and a can-do spirit. It somehow seems, well, American, to think individual donations can compensate for a broken, expensive system that views illness as a moneymaking opportunity. So there is crowdfunding, small foundations like the Pendergast Fund, hospital-charity programs for the needy, and disease-specific resources. These efforts are patchy, and often inadequate, but they’re what’s available. Their strengths and their failings reveal a lot about the broader American healthcare system—something that is all too easy to ignore till it is your life or the life of a loved one at stake.

CancerCare was founded in 1944 as a bereavement-support organization, but quickly began helping people with the disease manage their financial issues as well. “The first hospital bill we paid, in 1944, was to Memorial Sloan Kettering for $13 and change,” said Patricia Goldsmith, the organization’s chief executive officer. Today, finances are why between 60 and 70 percent of those who contact the organization reach out, and the dilemmas are the same as those people who turn to The Heather Pendergast Fund face.  “For the most part, people call us because they are in some kind of financial crisis,” says William Goeren, CancerCare’s director of clinical programs. “The prices have increased … so that really puts the burden on the patient, who is weighing, ‘Do I pay for my mortgage or should I pay for my diagnostic test?’ These are the calls we are getting.”

CancerCare attempts to head off these sorts of financial issues, while still offering emotional support to people in need. They offer a bereavement camp—located in Pennsylvania’s Poconos—and counseling groups for cancer sufferers and their children alike. They also distribute more than $4 million in transportation, home-care, and childcare assistance.

But the heart of CancerCare’s aid is distributed through their disease-specific prescription co-pay funds, which award anywhere between $4,000 and $15,000 per patient to income-eligible patients. (“Income eligible” varies based on the fund, but is generally anywhere between 250 and 500 percent of the federal poverty line.) Last year, the organization distributed slightly more than $14.2 million in total.

Such funds are not without controversy. The cost of treating cancer, a disease that will be newly diagnosed in just under 1.7 million Americans in 2017, is skyrocketing. According to research published in the Journal of Oncology Practice, the average cost of a year of a cancer treatment drug in 2000 was less than $10,000 in total. By 2005, that had more than tripled to between $30,000 to $50,000 annually. In 2012, 12 out of the 13 drugs newly approved for cancer cost more than $100,000. Another study, this one published in JAMA Oncology, found the price of one month of an oral-cancer medication increased from $1,869 in 2000 to $11,325 in 2014. As insurance companies, desperate to clamp down on their own expenses, cut reimbursements for the more expensive drugs, and employers, hoping to cut their own costs, push employees into high-deductible health-insurance plans, more of this cost ends up being picked up by the patients.

Many believe the 2003 passage of Medicare Part D, which established coverage for pharmaceutical costs, is partially responsible for the price surge. The same legislation allowed for non-profit patient-advocacy groups to establish co-pay funds that could be funded by the pharmaceutical industry. (The CancerCare Co-Payment Foundation was established in 2007, for example.) These co-pay funds are meant by the organizations offering them to help people, but critics maintain the pharmaceutical-company contributions to organizations like CancerCare and others like it should be viewed less as charity and more as cover for the ever-increasing cost of their medications, since these donations allow pharmaceutical companies to stick insurance companies and government programs like Medicare with an ever-greater bill, while helping the consumers cover their share of the tab. “Co-pay programs are meant to mitigate criticism of high drug prices, deflect legislation on drug pricing, get around payer restrictions and get patients on expensive drugs they will stay on for a long time,” says Adriane Fugh-Berman, an associate professor at Georgetown University Medical Center and an expert on physician-industry relationships.

This is hardly unique to CancerCare. Alan Balch, the chief executive officer of the Patient Advocate Foundation, which provides both case-management services and administers co-pay funds for a range of diseases and distributed more than $50 million in assistance in the fiscal year that ended in June of 2016, tells me that while some co-pay funds remain open for a considerable period of time, others open and close quickly. “There’s only so much money that is available at any one time and there’s so much demand for it,” he says.

The evidence is clear when you visit the websites of the funds. The Patient Advocate Foundation’s chronic pain fund? Its aid is limited to $1,500 and you need to apply when it’s taking applications. “Effective 01/18/2017, we are unable to process applications that are pending or accept new or renewal applications at this time. Should additional funding for Chronic Pain Fund applicants become available in the future, it will be necessary to re-apply if assistance is still needed.” The Patient Advocate Foundation’s multiple-sclerosis and renal-cell-carcinoma funds have been closed to new applicants since 2016. It helps to have a more popular disease: Everyone I interviewed told me it was a lot easier to find funds to assist sufferers of, say, breast cancer, than it was an unusual malignant tumor. “The rarer the cancer, the less likely there will be funding for that cancer,” said William Goeren of CancerCare.

And even when medical supplicants find programs, they are not guaranteed aid even if they meet all the eligibility requirements. Amanda Collins, 36, is a Bartlesville, Oklahoma, resident who found herself financially scrambling after first her husband and then herself suffered a succession of medical crises. When the family finally obtained health insurance through Sooner Care—that’s Medicaid in Oklahoma—they were also given a list of local charities that could help out those in need.  She says she learned to call any organization, whether they were  offering aid with medical expenses or electric bills, mighty quick. “Then you call these services, not just for medical help, but any help. They tell you, ‘Oh, you have to hit us on this date,’ or ‘We get funding every month, but our funding is gone by the fifth of the month.’”

Noyes, too, found herself struggling to navigate the charities that could potentially help. When she suffered vision loss following her kidney transplant and could no longer drive, it wasn’t anyone at a medical office who informed her of the Service Center for Independent Life, a Claremont, California based organization that helps people with disabilities with everything from transportation to employment assistance. A sympathetic Uber driver told her about the program. Finally, a financial counselor at the DaVita kidney-care location where she received dialysis suggested she reach out to the American Kidney Fund, which offered Noyes help paying her health-insurance bill and Medicare Part D premium. (All end-stage renal-failure patients are eligible for Medicare.) “It gave me wiggle room,” she says.

As for hospital-based charity, it can vary widely. Most studies find for-profit hospitals provide less charity care than nonprofit medical centers. But getting aid from a non-profit hospital isn’t exactly a gimme. A paper published by the Brookings Institution in 2015 pointed out that the non-profit hospitals with the most funds that could be devoted to charity care—that is, covering or forgiving medical bills of those who cannot pay full—are not located in the geographic areas where the need is greatest. The higher the wealth in a particular region, the more money a hospital is likely to have for indigent or needy patients. But those patients who need financial assistance are likely to live in lower-income areas where there is less in the way of resources. The paper uses two hospitals in Connecticut’s Fairfield County to make the point. The facility located in the high-income New York City suburb of Greenwich offers assistance to people with higher incomes than one located in Norwalk, a less wealthy town located a mere 15 miles away. But despite the lower ceiling, a much higher percentage of the Norwalk hospital’s bad-debt cases turned out to meet the eligibility guidelines for charity care.

When I catch up with Savannah Dray—she calls me from her car, on the way back to her Tallahassee apartment from a chemotherapy session—she begins rattling off her debt. “I have all kinds of medical bills. I have pathology bills. I have radiology bills. I have oral surgeon bills because the disease eroded parts of my teeth and broke them off. Now I have a regular dental as well as an oral surgeon bill. I have bills from my CT scans, which I guess would fall under radiology. I have surgery bills.” Dray, 22, was diagnosed earlier this year with stage-three colon cancer. How much does she owe overall? She can’t tell me. The bills are coming in by the day, and have been pretty much since the January day she doubled over with pain, and went to a nearby emergency room. But it’s definitely more than $10,000. She met her own $6,250 deductible, and then switched over to her husband’s plan when she left work as an assistant manager for a chain store. She now needs to meet that $6,250 deductible too.

A financial counselor at her oncologist’s office told Dray about CancerCare, as well as programs available from the American Cancer Society and Stupid Cancer, an advocacy and aid group for young adults fighting malignancies. But Dray says she was initially so overwhelmed by her illness and all the bills, she didn’t have the energy to reach out. For Dray, crowdfunding was a more familiar process, so she went with that. Only after she raised $4,712 toward a $30,000 goal on a page she set up at GoFundMe did she send an application in to CancerCare for financial assistance.

Recommending patients experiencing trouble with their bills give crowdfunding a try has turned into all but a personal-finance trope. “Do you need money for unexpected medical and long-term-care expenses, funeral costs, or a local charitable endeavor? Maybe it’s time to turn to one of the growing number of personal ‘crowdfunding’ sites and ask the public for small donations,” chirped Kiplinger’s last fall. Newspaper articles about successful campaigns are a staple of what remains of the local press and heartwarming articles about the practice abound.

Yet for all the attention paid to crowdfunding, the limited evidence we have shows that for most people, the hype is better than the actual results. A 2015 analysis by Nerdwallet found only 11 percent of healthcare fundraisers on Fundrazr, GiveForward, GoFundMe, Plumfund, and Red Basket met the organizer’s financial target. Berliner and Kenworthy, who studied a random selection of 200 campaigns on GoFundMe, they found a very similar result. Nine in 10 were never funded in full.

In the healthcare community, some experts are increasingly down on the concept. “We don’t recommend it routinely,” says Anne Bailey, a vice president for patient support at DaVita, the chain of dialysis centers where Noyes received treatment. In her view, crowdfunding works best for a one-time emergency, not a medical issue that will potentially go on for years. “That’s just not an acceptable solution for a long-term chronic medical issue.” For the 5 percent of people with the largest medical bills, crowdfunding is unlikely to come through, or least to come through in a way that solves the financial problem in the long term.

Nonetheless, it’s also true that every little bit helps. If Dray’s campaign hasn’t met her hoped-for expectations, it’s far from useless. She’s already been able to use some of the money to pay for oral surgery, not to mention to make a co-payment for a cardiologist. If not for the GoFundMe and an account on Instagram where she sells her art, she tells me, she’s not sure she could handle her medical bills, keep a roof over her head, and food in the kitchen.

I spoke with numerous people for this piece who told me that at some point, after all the fundraising, and asking for aid for organizations, and cleaning out of retirement and savings accounts, they simply put all their remaining bills on a credit card, and hoped for the best. They simply couldn’t take the constant barrage of mail from numerous separate medical providers and facilities.

For many, the financial turmoil caused by their illness already adds to the emotional and physical turmoil they are already experiencing. “Many people call us, and I am speaking anecdotally and they are angry. They say I’ve been working my whole life, I’ve paid my taxes, I’ve been diligent, but now I’m being slammed, I have to ask for charity … There’s shame and anger in that,” says Richard Dickens, CancerCare’s director of client advocacy.

But there is more than simple embarrassment arguing against this system. It’s the equivalent of taping a few bandages over a gaping wound and hoping for the best. The cost of medical care is so high, and the personal finances of many Americans so tight,  it’s all but impossible for any organization—or all of them—to keep up, and that’s whether or not the charitable contributions they accept are part of the problem or the solution. And this is now. Should Republicans succeed in their effort to repeal the Affordable Care Act, an estimated 23 million people would lose health-insurance coverage over the next decade. That would almost certainly put even more pressure on the charitable resources available to help those in need pay for medical care.

Yet illness exists in the here and now. People need the money, so we open our wallets and we give what we can, feeling a little good about doing our part. And it does help some: As CancerCare’s Patricia Goldsmith puts it, “I can tell you that that amount of money often makes the difference between people being able to get their treatment, and not get their treatment.”

As for Cassidy McCarthy, she received what the family hopes was her last dose of chemotherapy on May 22. Both she and a brother will be attending a summer camp for children with cancer and their siblings that’s offered free of charge. Daniel McCarthy has a new job, and no longer needs assistance with his insurance premium. When a recent $45 blood-work lab bill recently arrived, the family didn’t forward it to Pendergast. They paid it themselves. “Some other people might need the money,” McCarthy said. If the family is lucky, they’re heading toward the best approach to avoiding big medical bills in the future: good health.