Study Finds Rural Medical Debt Affects More Than Patients

Medical debt has been identified as a major issue for millions of Americans. But a recent study by the Rural Health Center at the University of Minnesota finds that medical debt is also having a dramatic impact on hospitals, particularly in rural areas, and the communities they support. Carrie Henning-Smith, co-director of the Rural Health Research Center, spoke with Spotlight recently about the new work. The transcript of that conversation was lightly edited for length and clarity.

Why don’t you give us some background on this study. It was part of a larger project, and you focused this part of it on seven states?

We were doing a larger study on medical debt, and we did a number of different things, much of it national, But for the interviews with the hospital administrators, yes, we talked with the administrators in seven different states (Arkansas, California, Illinois, Texas, Vermont, Washington and West Virginia).

And what was the timeframe for this?

We talked with them between January and March of last year.

And it sounds like perhaps the major headline is that medical debt is impacting much more than patients.

Yes, that’s exactly right. What we found in our larger study on medical debt is that medical debt is widespread and pervasive. It’s certainly an issue for people across the country, and it disproportionately impacts rural residents, including rural residents who have insurance. This is not just an issue for the uninsured, but in talking with rural hospital administrators, we heard their concerns about the impacts to patients and population health, but we also heard their concerns about the impact on their hospital’s bottom line. And we know that a lot of rural hospitals, especially smaller, independent rural hospitals, are operating in the red or just teetering on the margin of breaking even. So, any impact to their financial viability is going to be devastating to the community, to access to care, and to their ability to keep the doors open and provide services going forward.

And are they seeing any progress in dealing with this problem? There’s been some efforts at the federal level to write some of this off, and there’s a number of efforts, as you’re obviously well aware, on the private level as well. Is that being felt in the places where you talked to folks?

Not yet. You are right that there was an effort at the federal level, and some of the policy attention on this has been around the impact to individuals, which I think is important and warranted, but it’s been things like making sure that medical debt doesn’t show up on someone’s credit report so that they’re not then penalized again in other areas of their life. But that doesn’t help the hospitals or the health systems necessarily.

And then we’ve seen action at the state and local levels, but a lot of that action began in and has been concentrated in large urban areas—big cities that have been able to partner with what used to be called RIP Medical Debt and is now called Undue Medical Debt and work with them to buy up debt for pennies on the dollar and forgive that debt. We are starting to see some of that happen on the state level, and that gives me a lot of hope, because that will help rural residents more than the efforts in cities. But at the time that we talked with the administrators in these seven states, they weren’t yet feeling a positive impact from any of those actions.

And it sounds like there’s not necessarily an average person who encounters medical debt from what you’re saying. I guess we tend to think that it’s someone who’s uninsured, but you’re saying that’s not necessarily the case.

That’s exactly right. There are certain things that put you at greater risk of experiencing medical debt. Being uninsured is one of those, as is being lower income, both of which would seem like common sense. But we see medical debt and we see issues with healthcare affordability across the insurance spectrum. People who are uninsured and people with high deductible plans face the most risk. But we also see medical debt among people insured through Medicare, through Medicaid, through private insurance, through any other insurance type. Some of the health events that can put people at greatest risk are showing up in the emergency room or having an acute emergency condition that you didn’t expect. But we also see medical debt happen across the range of chronic conditions, things that people live with for many years, sometimes many decades. So, there’s not one profile impacted by medical debt, and I think that’s an important message to share so that we’re not assuming it’s just those people over there. It’s an issue for all of us. Everyone is impacted or very likely knows someone who is impacted whether they know it or not.

And did the administrators have particular solutions or potential solutions that they’d like to see put in place? What are the policy changes that they’d like to see?

A lot of their suggestions for policy were around insurance design, where they were seeing people who were insured and needing higher reimbursement rates at the hospital level, to make sure that they can absorb the cost of uncompensated care. We also heard from them about the burden that falls to nonprofit hospitals who have an expectation of community benefit, that they’re providing care for their community. These hospital administrators all believed deeply in the ethos of that but felt like they were too often going it alone.

If the state is saying provide care for people regardless of their ability to pay, these rural hospitals were feeling like they needed a little more financial support. And that really comes through reimbursement rates at the state and federal level through many of the people who are publicly insured.

And is that primarily Medicaid and Medicare, which we could very easily be seeing changes to, which could exacerbate this whole situation?

Particularly Medicaid. If we see the transition to a block grant or per capita limit, that’s going to impact rates of medical debt, it’s going to impact rates of uncompensated care and that’s going to fall to individuals and their ability to seek care. But it’s also going to impact small rural hospitals that are just trying to do their best to provide care to their communities.

Were there any anecdotes from administrators that particularly stuck in your mind that would be illustrative of what they’re facing?

A lot of them were sharing with us about services that they’re unable to provide because they can’t invest or have the necessary financial cushion because so much of their finances have gone toward providing uncompensated care or helping people struggling with medical debt. For instance, a hospital administrator said we can’t provide CT scans or MRIs. That sticks with me because that is very likely to lead to additional cost care. If people aren’t getting the diagnostic services that they need at the time that they need them in their community, that’s going to lead to additional emergencies. It’s going to lead to needing to travel out of your community to get the diagnostic support that you need. We heard a lot of examples like that that just build on each other. In this vicious cycle, that’s bad for patients and hospitals.

I’m sure things like wellness programs probably are some of the first things that fall by the wayside when you’re that financially strapped.

That’s exactly right—the exact sort of investments we should be making to ensure that people are healthy and have access to routine preventive care are hard to provide if you’re financially strapped.

So, tell me about the larger study that this is part of.

This is a study that we’ve been doing for the past year and a half or so, and it had a few different components. One has been analyzing the national health interview survey to look at rates of healthcare affordability issues by rural and urban location. And then we’ve also used data from the Urban Institute. They have collected a lot of data on medical debt, and medical debt in collections, which is the most extreme form of medical debt. And we’ve been able to analyze that on the county level and look at county correlates of medical debt and rural urban differences.

What I can say about that entire body of research is that we’ve found that rural residents have higher rates of medical debt, higher rates of saying they can’t pay their medical bills. And we also know that rural residents have poorer health to begin with, so this is just exacerbating that issue and making it hard for people to get the care that they need. Rural residents also tend to have more tenuous financial situations than if they’re running into medical debt that’s going to make it that much harder to put food on their table, pay their housing bills or keep the lights on.

It’s hard to keep up given the fire hose we’re all drinking from, but has the new administration said anything in particular about medical debt?

I haven’t heard anything. There’s been action at the state level here in Minnesota recently, but I haven’t heard anything from the federal administration about medical debt.