With serious illness, even insured can go in debt

12:03 am | 75°
October 12, 2009 |
News

With serious illness, even insured can go in debt

by Ginger Rough - Oct. 12, 2009 12:00 AM
The Arizona Republic

Families facing serious illness soon discover there is a vast difference between what insurance covers and the actual cost of treatment.

Patients with chronic or life-threatening medical problems or severe injuries - spinal damage, liver failure, cancer - often find themselves sucked into a downward financial spiral from which it's nearly impossible to escape.

Some Arizona families caught in that vise said they do not know what level of help to expect from health-care reform proposals being debated in Congress. They have more-pressing issues on their minds.

But their situation, insured yet still buried in medical debt, is being targeted by some measures in the legislation, including:

• Annual caps on patients' out-of-pocket costs.

• A requirement that insurers offer benefits that meet minimum quality standards with fewer gaps in coverage.

• A prohibition on insurers denying coverage of a pre-existing condition.

The question is, will that be enough?

Kristen and Sean Souza, of Scottsdale, deal with the issue every day.

In June, their 3-year-old daughter, Taylor, was diagnosed with leukemia.

Her health is the priority, but bills from chemotherapy and bone-marrow treatments, prescriptions and extended hospital stays are mounting, and Kristen hasn't been able to work much.

"Financially, it takes a toll. Emotionally, it takes a toll," Kristen said. "You just have to power through and do what you can do.

"There's no such thing as amazing benefits when you have a cancer patient."

Taylor is home now, in between rounds of chemotherapy. She sleeps in her own bed, hugs her dog, plays princess and has tea parties with her twin sister, Savannah.

The family celebrated Halloween early on Friday; neighbors put out a special batch of candy.

The Souzas didn't have a choice.

Taylor will be back at Phoenix Children's Hospital by midweek.

A downward spiral

There are no figures on how many insured families find themselves severely in debt because of health-care bills, but recent surveys suggest that millions are suffering.

A July report released by the Commonwealth Fund, a private foundation, found that in 2007, nearly one-third of insured Americans had medical debt.

A Harvard Medical School analysis of bankruptcies filed that same year found that as many as 62 percent were at least partially linked to medical bills. Three-fourths had health insurance when their illness began.

"Cancer, severe accidents . . . these are low-probability events," said Marjorie Baldwin, director of the School of Health, Management and Policy at the W.P. Carey School of Business at Arizona State University. "But they are catastrophic when they occur, and they are very unpredictable."

Families can descend into financial turmoil quickly or slowly, over months or years.

A patient is diagnosed with multiple sclerosis, kidney disease or another illness. Hospital stays, expensive drug treatments and countless tests follow.

The medical bills accumulate, via co-pays, prescriptions, unmet deductibles and other uncovered, out-of-network expenses.

At some point, the time and toll of treatment force the patient or a parent to take a leave from work, slashing a family's income.

Eventually, the patient's medical costs may get so high that they reach an insurance policy's maximum annual or lifetime cap, leaving the patient on the hook for all other expenses.

"It's sort of a perfect storm of trouble," said Steffie Woolhandler, the Harvard Medical School professor who wrote the August report on medical debt and bankruptcy.

Kelly Muscarello expects to be billed $30,000 for treatments in coming months.

The 34-year-old Chandler woman has lupus and diabetes and is on dialysis. But it's a temporary fix. She needs a kidney transplant.

She has insurance through her husband's job, but there are gaps in the coverage. Her policy, for example, doesn't pay for some of the prescriptions she needs, nor for co-pays, some laboratory work and pre-surgery tests. Her policy will cover the actual surgery only "up to a certain amount," and she'll have to come up with the rest.

"We'll probably have to consolidate our debt. . . . We may eventually have to choose what to pay," Muscarello says. "We don't want to go the bankruptcy route," which damages a person's credit.

Prospects for help

Reform advocates say congressional proposals that would take away an insurer's ability to deny coverage based on a pre-existing condition or drop policyholders based on undisclosed medical history, a practice known as rescission, would help protect seriously ill patients.

Other efforts to cap the maximum out-of-pocket expenses that a patient or family could incur in a given year also could alleviate the financial burden, proponents say.

But not everyone likes where the bill is headed.

Rep. John Shadegg, R-Ariz., says reform proposals that mandate coverage and eliminate caps would increase health-insurance costs for everyone and give government too much control of the health-care system.

He has proposed covering Americans with chronic illnesses through "high-risk" pools that offer coverage at rates comparable to those charged to healthy people.

He also advocates for a change in tax policy so that Americans could opt out of employer-sponsored benefits and instead buy an independent plan without losing the tax advantage.

Like with the employer policy, the employee could pay premiums with pre-tax dollars.

Bills keep mounting

Back in Scottsdale, Souza isn't spending a lot of time thinking about health-care reform.

She's too busy worrying about Taylor and fitting in quality time with her other daughter, Savannah.

She knows she's in an exhausting, emotionally draining situation. Something will have to change. The bills keep adding up.

"We'll probably have to cash in our 401(k)," Souza said. "We're going to have to figure it out. If we have to sell the house or move in with my mom, then that's what we will do."

For now, little things matter: Tonight, the Make-A-Wish Foundation will grant Taylor's wish to go to Disneyland.

If her treatment goes well, the family can make the trip next year.

http://www.azcentral.com/arizonarepublic/news/articles/2009/10/12/20091012medicaldebt1012.html