Medical Debt Collections from Self Pay Accounts to Increase in 2009

Medical debt collectors prepare yourselves.  Patient-portion bad debt from insured workers will likely reach a new high in 2009.

According to a recent survey by Watson Wyatt, 50 percent fewer U.S. workers opted to sign up for higher-premium insurance plans to keep their deductible and co-pays lower and more predictable.  The human resources consulting firm said only 19 percent of the employees in employer-sponsored plans enrolled in the higher premium plans during their company’s open enrollment, compared to 38 percent who choose higher premium plans last year.

That doesn’t bode well for health care providers, according to observers. Benefits experts expect health care costs to increase an average of 10.6 percent in 2009.  And with job loses mounting and economists predicting unemployment reaching double digit figures in 2009, consumers are holding on to their money.  

“Workers will continue to look for avenues to save money in tight times,” Cathy Tripp, Watson Wyatt’s national leader of consumerism, said a press release.

Standard and Poors’ Analyst Jeffrey Englander said the housing crisis has already impacted the number of elective procedures hospitals perform. Now, the bear market is taking a toll on hospitals’ ability to fund their charity care programs.

“Because of the pullback in the stock market, (hospitals) are getting less in charitable donations and they are getting lower returns on their portfolio,” said Englander, who covers for-profit health care facilities for S&P.  

There are some positive consequences stemming from consumers’ savings efforts. Watson Wyatt’s survey found that 66 percent of respondents said they are taking steps to improve their personal health, up 4 percent from last year.  Meanwhile, 46 percent said they are choosing lower-cost prescription drug options, compared to 42 percent last year.  And the number of patients negotiating lower prices with their doctors doubled to two percent.

Despite their efforts to save money, some actions workers are taking could lead to higher health care cost in the future.  The survey found that 17 percent of respondents avoided a recommended doctors’ visit, and 17 percent did not fill a prescription or skipped a dose of prescribed medication, up from 13 percent in 2007.

There are signs that the economic crisis could also leave fewer Americans prepared for the cost of health care once they retire. Watson Wyatt said its survey found that health costs led 13 percent of respondents to cut back on contributions to their retirement savings plan, while 20 percent said their ability to save for retirement was reduced because of health care costs.  Also, twice as many workers reported some difficulty paying for basic needs, that they had depleted their personal savings, or a need to borrow money this year than did 2007’s survey respondents.  

“The health–wealth connection is more clear than ever, as pressures from high health costs continue to pose challenges to both companies and employees,” said Tripp.