- Oh, I feel awful this morning.

I think I'm gonna go to the doctor.

- Oh, I'm sorry, hun, but we can't afford that right now, - But I can barely breathe.

(coughs) - Well, I'm sure it's nothing a little menthol rub can't fix.

Oh, and I was thinking, I think we might have to cancel the kiddos gymnastics classes.

I mean, a sprained ankle just isn't in the budget.

If that conversation seems equally messed up and real, you're not alone.

In a recent poll, a quarter of American adults delayed medical care in the last 12 months because of the cost.

That's a statistic that would make anyone feel ill. - We are living in a strange time of incredible medical advancement and monstrous amounts of medical debt.

How did it get this way and what can you do to keep it from putting your finances in the emergency room?

(bright music) - Obviously people have been getting sick for like ever, but prior to us gaining awareness of all things microscopic, physical ailments were seen as products of mystifying phenomena like supernatural consequences to behavior, and healthcare was more of a spiritual undertaking.

Because of this, healthcare services were typically sponsored by wealthy patrons and religious communities as a form of charity.

Here's a direct quote of the financial policy written in 1284 by the hospital complex of al-Mansur Qalawun in Cairo, a sophisticated medical complex of its time.

"The hospital shall keep all patients "until they are completely recovered.

"All costs are to be born by the hospital "whether the people come from a far or near, "whether they are residents or foreigners, "strong or weak, low or high, rich or poor, "employed or unemployed.

"There are no conditions of consideration and payment.

"None is objected to or even indirectly hinted at "for non-payment.

"The entire service is through the magnificence of God, "the generous one."

- Wow, imagine the Hippocratic oath of do no harm extending to the financial wing of the hospital.

But to be fair, medical care wasn't nearly as effective as it is now.

And over the centuries, healthcare costs became more and more an individual responsibility.

The modern American situation of medical innovation and out of reach costs really started in the 1920s.

Expensive innovations like X-rays, sophisticated surgery, and anesthesia were becoming commonplace, and the associated costs were outpacing the normal person's budget.

- At the time, the Committee on the Cost of Medical Care worked for five years to come up with a plan to make things cheaper.

Their solution, hospitals and practitioners should work in teams and be paid either by private insurance or compulsory plans paid through taxes.

But this plan was branded as Soviet and essentially shelved.

After World War II, the US really started to move in a different trajectory than other industrialized nations.

Wage freezes induced employers to start offering health benefits as a way to attract employees.

Almost 90 years later, we are still used to obtaining health benefits directly from our employer, not the government.

- Decade after decade has seen the American system try to address the issue of ballooning costs with very limited success.

In 2019, the American Journal of Public Health did a study showing that 66.5% of personal bankruptcy filings were mainly due to medical expenses.

I know our international viewers are now laughing in their respective countries because the idea that an illness could result in financial ruin is almost unheard of in the rest of the world.

The reasons why we are such an outlier here are complicated, but in general, other wealthy countries have tended towards tax funded nearly universal coverage that people don't have the option to opt out of.

This is typically known as a single payer system like in Norway, Japan, the UK, Denmark, and the UAE just to name a few.

To be clear, these systems have their own issues, but putting patients into dire financial straits just isn't one of them.

- And even in countries with similar private insurance networks, there are big differences.

First off, you have government mandated controls on the price of things like premiums and pharmaceuticals.

Plus, insurers tend to pay the same costs for the same healthcare services regardless of location.

In contrast, the American system with the exceptions of Medicare and Medicaid relies on voluntary private engagement, sans intense price controls.

There's also a splitting of responsibility and jurisdiction between the federal government and state governments.

This leaves us with an unwieldy patchwork of coverage and pricing, inevitably leading to headaches for our citizens and fuller pockets for the insurance companies sitting in the middle.

- In 2010, the Affordable Care Act actually introduced a profit margin cap mandating that insurance companies spent 80% of every dollar on care and 20% on administrative costs, but they didn't limit overall profit levels, so they've essentially been incentivized to increase costs.

In 2022 alone, America's largest private health insurance providers raked in a staggering $41 billion in profits.

And so what happens when someone needs high priced medical care and insurance won't pay for it?

Debt.

- The amount of medical debt carried by Americans is actually hard to nail down.

For example, someone could take on credit card debt because of a medical emergency or a trip to Hawaii.

A credit report doesn't make that distinction clear, but it's at least $220 billion in the most recent numbers.

At least with other expensive purchases like a car or house, you can decide ahead of time for what you're looking for and set your budget parameters.

There are also standardized debt products like an auto loan, a mortgage, or a student loan.

You can also somewhat easily shop around and compare before you take one out, but when your appendix decides to blow up, there's no standard regulated form of debt that you can reach for or time to shop around.

- [Philip] Even though you have limited control over getting into this type of debt, a late payment on a medical collection can take your score just like it would with any other debt.

In 2022, the main three credit bureaus decided to drop evidence of paid collections.

Stop reporting medical debts under $500 and increase the time a medical collection shows up on your report from 180 days to a year.

But most people with medical debt owe over a thousand dollars, so big whoop.

The CFPB says about 15 million people still have medical debt reflected on their credit.

Obviously, this is a systemic issue, but what can you do as an individual about it?

- First off, let's talk prevention.

Get the best health insurance you can afford, even if you're healthy and familiarize yourself with their coverage limits beforehand.

You can also research which hospitals and urgent cares closest to you accept your insurance.

Put those addresses and contact information in your phone ahead of time should you need them.

Once you are post-care, ask for an itemized list of charges.

Medical billing mistakes are rampant.

Some studies show anywhere from 50 to 80% of bills have errors on them.

In this instance, don't trust.

Always verify.

- Secondly, if you do end up with a larger medical bill, engage with it immediately and be ready to negotiate.

Ideally, you're doing this directly with the hospital or provider beforehand for a non-urgent need, but it can also happen post-procedure.

Selling an unpaid bill to a collections agency is a headache for them, so they wanna get around that too.

Credit bureaus have also extended the time it takes for a medical collection to show up to a full year, so you have got some time to negotiate with them directly too.

But don't let that tempt you into just forgetting about it.

The worst thing you can do is ignore the bill entirely.

- Third, know your rights.

There are laws in place like the No Surprises Act.

If you are uninsured, you have the right to an estimate of costs beforehand, and if the final bill comes out to more, you could possibly contest it.

And even those with insurance need to watch out.

If you go to a hospital that is in network, there might be individual providers within it that are considered out of network.

No joke.

Thankfully there are newer laws aiming to fix these types of situations, but every state is different, so this is where you have to some research and see what is and isn't allowed.

- Finally, almost every hospital provides some form of charity assistance.

There are also nonprofit organizations that help match patients up with support as well as medical advocate associations for certain illnesses or disabilities.

And whatever you do, try to keep medical debt and consumer debt separate.

Converting a medical debt into a personal loan or credit card makes it far more likely that it will end up hurting your finances, - And this system isn't just broken financially.

It would be one thing if these awful costs led to the healthiest citizenry in the world, but our life expectancy and rates of infant mortality, unmanaged asthma and diabetes are atrocious.

- Not many people are happy with the current system, but the silver lining is that it is mostly the result of governmental policy or lack thereof.

- Which means at least theoretically, that citizens of a democracy have a say in how it's organized.

It's one of the many ways in which participating in electoral politics can impact your pocketbook.