In a notable shift, individuals with health insurance now constitute the majority of debtors struggling American hospitals grapple with, report medical billing analysts. This marks a significant departure from just a few years ago when those with health insurance comprised only about one in 10 bills classified as “bad debt.”
Colleen Hall, Senior Vice President for Kodiak Solutions, a billing, accounting, and consulting firm closely aligned with hospitals, highlighted the evolving landscape. “We always used to consider bad debt, especially bad debt write-offs from a hospital perspective, those [patients] that have the ability to pay but don’t,” she stated. “Now, it’s not as if these patients across the board are even able to pay because [out-of-pocket costs are] such an astronomical amount related to what their general income might be.”
While acknowledging the contentious nature of the “bad debt” metric, experts in the hospital billing industry argue that it underscores the proliferation of complex health insurance products with substantial out-of-pocket costs.
Matt Szaflarski, Director of Revenue Cycle Intelligence at Kodiak Solutions, noted a turning point around the 2018-2019 timeframe. Although the trend has stabilized since then, it persists, with more than half of all “bad debt” attributed to insured individuals.
In 2018, a mere 11.1% of hospitals’ bad debt originated from insured “self-pay” accounts or patients whose insurance mandated out-of-pocket payments, according to Kodiak. Fast forward to 2022, and the proportion of those unable or unwilling to settle their bills soared to 57.6% of all hospitals’ bad debt.
