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Context: As a foreigner in the US for a few months, I'm wondering how to react regarding medical bills. Indeed, I had to go to hospital and received medical bills. Surprisingly, some of my colleagues told me in substance:

Don't worry about these bills, you don't have to pay them, no one is doing it here.

(I must clarify that they are wealthy upscale members, who can afford paying these bills.)
More recently, I stuck upon this comment that triggered me and led me to ask this question. This comment globally says:

some medical providers [...] figure out what you will owe, and that's how much they require (or at best, simply ask for) [highlighting is mine.]

In my understanding, this implies that some are not always required to pay these bills.

Regarding my experience, I'm however considering myself obliged by expenses I do, and thus pay what I owe. I've hence paid above mentioned medical bills. (P.-S.: I've paid them in full, since my home-country insurance reimburses my expenses ex post.)

Question: Is it common in the US not to pay medical bills? Or do I misunderstood what had been said?

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    You misunderstood. Most people pay their medical bills. According to one article I saw, it is the number 1 cause of bankruptcy in the US. – Pete B. Apr 28 '17 at 14:59
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    In some situations, you may receive medical bills which are entirely payable by your medical insurance provider, solely for your record-keeping. In this sense, people may receive medical bills which they "don't have to pay." However, people do not as a rule leave medical bills unpaid. Either your insurer pays, or you pay, or some combination of the two. – user4556274 Apr 28 '17 at 16:02
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    You say you're in US for a couple of months, but in general, if you think you might decide you'd like to live in US for a lengthy period and open bank accounts, obtain mortgages or car loans or credit cards, it is a very bad idea to walk away from debts. Not only will doing so damage your credit rating, but they may come after you for the unpaid debts. They won't pursue you out of the country, but you might find yourself in court trying to prevent the savings you were about to use for a deposit on a house being seized. An argument you won't win. – Flynn Apr 28 '17 at 17:55
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    @PeteB. I've also seen those articles and "studies." Having worked at a bankruptcy firm through college I'm skeptical of the underlying data to say the least. I have a feeling any bankruptcy petition including a medical bill gets lumped in to the "bankruptcy caused by a medical bill" bucket. 5 and 6 digit credit card bills were way more common than 5 digit medical bills. – quid Apr 28 '17 at 20:13
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    @PeteB. " Most people pay their medical bills. According to one article I saw, [medical bills are] the number 1 cause of bankruptcy in the US." But bankruptcy is an example of not paying! – David Richerby May 1 '17 at 8:41
41

Is it common in the US not to pay medical bills?

Certainly not. What some might do, however, is not pay them immediately, with the intent to negotiate them down or get them written off. You can also see if there's a discount for paying immediately - I've had moderate success with this, but it was during a time where we couldn't pay them all immediately, so I was more trying to figure out which ones to pay first rather than just haggling.

The obvious risk is that they go to a collections agency and get reported as unpaid debt to your credit. I'm with you, however - it's a service that you received and it should be paid.

I must precise that they are wealthy upscale members, who can afford paying these bills.

Are you certain that they have large medical bills? I suppose it's possible that they have resources that can negotiate these on their behalf, or they don't care about the impact to their credit score. But to say "no one is doing it here" seems ludicrous.

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    Assuming you don't have insurance, these bills are not legitimate charges for a service you received. They're something like 100 to 500 times the negotiated price insurance companies have set up for the exact same service. As such I would not feel the least bit bad about not paying, letting the medical provider sell the account to a collector for 10% of its fake nominal value, and then not paying the collector either. – R.. Apr 29 '17 at 3:14
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    @R.. I think you've confused 100% to 500% higher than negotiated (probably realistic) with a factor of 100 higher (absolutely impossible, if the insurance only paid .01 times the invoice price, the MDs wouldn't even be making minimum wage). And factor of 500 cannot be believed by anyone who spent even a few seconds thinking about it. – Ben Voigt Apr 29 '17 at 5:29
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    @BenVoigt: No, I'm not confused. I've seen line items that were originally billed at over $500 reduced to $5 paid by insurance and $0 owed by patient. Maybe more common is 5-20x rather than 100-500x, but it's still ridiculous and the provider is still making more money selling the bogus debt to a collector than they would get paid by insurance. – R.. Apr 29 '17 at 18:55
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    @R..: One heavily padded item is not the same as the entire bill. And the way averages work, one heavily padded item barely even influences the resulting ratio. (That is, if one $500 item is actually $5, thus ratio of 100, and the next is actually $250, thus ratio of 2.0, then the "average" is 1000/255 or less than 4.0, not halfway between 2.0 and 100) – Ben Voigt Apr 30 '17 at 0:17
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    An individual can buy a bottle of Aspirin off Amazon.com for less than 1 cent per pill. That same pill can cost you upwards of $15 on your hospital bill. I'm not good at math, but that's considerably more than 500x. And that's just what I can buy off Amazon without any sort of bulk discount. – Rob P. May 1 '17 at 2:13
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In addition to the good answers already provided, I want to point out that many (most?) providers will handle filing your health insurance claim for you even though it's really your responsibility.

So here's how medical bills "you don't have to pay" might come about:

  1. go to the doctor. $100 is owed to the practice.
  2. the doctor's staff files the necessary paperwork with your insurance
  3. the end of the month comes around and bills are automatically generated. Because insurance hasn't responded yet, your balance is still $100. (Note that it's possible to cycle on this step for a couple of months depending on your insurance provider.)
  4. on the 15th (to pick a random date) insurance pays the portion it deems fit. Your balance is now $0*.
  5. the end of the month comes around and bills are automatically generated. You received a "Balance Due $0" statement.

* It's possible that your balance is $4, or $20, or $65, or even still $100 depending on your particular insurance plan. Whatever is left at this step is what you pay.

  • Assuming of course that this foreigner has insurance which will cover the medical expense in a U.S. hospital. – Wildcard Apr 28 '17 at 23:17
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    @Wildcard: The question says "I've paid them in full, since my home-country insurance reimburses my expenses ex post." He simply seems unaware about the propensity for direct billing to insurance instead of the consumer applying for reimbursement. Huge difference in required liquid assets. – Ben Voigt Apr 29 '17 at 5:36
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    @BenVoigt, ah yes, missed that. – Wildcard Apr 29 '17 at 5:37
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There are some uniquely American issues in this question (and answer), but some general principles as well.

  1. In general, most Americans are covered by some form of medical insurance. One of the effects of this is that the true cost of medical procedures are hidden from the consumer. Instead, the cost of insurance and the cost of the procedure are completely disconnected.
  2. There are two related concepts that must not be confused: those who are able to pay, vs. those who are willing to pay. For example, credit bureaus now offer products to calculate "propensity to pay" scores - i.e. how likely is this individual to pay their bills? Some providers are even consulting these services up front - in tandem with pre-service clearance or eligibility checks - to attempt to ensure they will receive payment for the services they provide, before providing the service.
    1. There are many who are willing to pay but are unable to do so.
    2. There are also many who are able to pay but are unwilling to do so.
    3. In my experience, more Americans are willing but unable than are able but unwilling.
    4. The majority of Americans are both able and willing.
  3. In the case of your friends who advised you that "Americans don't have to pay those bills", are either:
    1. Deadbeats (able, but not willing)
    2. Covered by insurance and have disconnected the cost of procedures from the cost of insurance (able and willing, more or less)
    3. Poor (willing, but not able) - seems unlikely, given your description
    4. Negotiating, directly or indirectly, with the provider and have neglected to mention this as an alternative (able and willing, more or less) - also seems unlikely, given your description

Regarding the comment that you quoted, the context (some of which you excluded) needs some clarification.

  • They're primarily talking about copayment or deductible. ("they take your insurance, figure out what you will owe...") There are a lot of factors that go into these.
    • Copayments are a fixed charge determined by your insurance company, that you pay on a per-visit basis. Many insurance plans have copayments in the $20 to $50 range. This may be an up-front fee, or the provider can bill you.
    • The deductible is some amount that you will pay out of pocket for the entire year. If it's January, you will probably end up paying a large chunk of the service cost. If it's December, and you've already paid out your full deductible, the insurance company pays instead. Low deductibles mean you pay less out of pocket, but the insurance is more expensive, and vice versa.
    • The insurance company will either have pre-negotiated rates for specific services, or will negotiate with the provider. (I'm glossing over some huge things such as in-network, etc.)
    • If the provider submits a claim, the insurance company will typically respond with a negotiated rate. This negotiated rate will be what both your deductible and their payment will be based on. For example, let's say they submit a claim for $200. The insurance company responds, "According to our pre-negotiated agreement, you may only claim $160 for that service." Your copayment is $20, and you've met your deductible. The insurance company pays $140, and the provider bills you $20. On the other hand, if you had not met your deductible, depending on the terms of your insurance, you might be billed the full $160 (but never the $200) or some large percentage of it.
  • Most likely, if the provider requires you to pay up front before service, that means you've probably tripped one of the propensity-to-pay factors - such as not having paid for medical services in the past.
  • Assuming you have insurance, the copayment would be the most likely up-front charge.
  • If you do not have insurance, you can still negotiate with the provider. You probably won't get quite as good a deal, but they may be willing to accept a payment plan, write off certain charges, etc. Don't forget, they want to stay in business too, so they would rather get paid over 6 to 12 months than for you to never pay, or even worse (from a business perspective) never use their service in the first place.
  • 1
    This is by far the best answer to this question. One big point I'd like to make on "negotiated insurance rates", though: anyone without health insurance should be aware that the amount charged by the hospital is never equivalent to the amount expected to be collected. "Charges" are always intentionally inflated (due in large part to the way Medicare reimbursement works). Over the decades the system has become a vicious cycle where hospitals "officially" bill grossly inflated charges so that they can recoup a reasonable Medicare reimbursement percentage. Insurance companies play this game... – DanK May 1 '17 at 15:37
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    ..as well and come to contractual agreements with hospitals to come up with reasonable reimbursement plans. Where this becomes a huge problem, is with "Self-Pay" individuals as they end up getting billed the fully charged amount (and with no institution in place to negotiate for them they often don't realize how much they are being overcharged). Hospitals are becoming more aware of these situations and most will knock down charges to more reasonable amounts if you bring it up. TL;DR: If you are uninsured, talk to your hospital about negotiating your charges due before making any payments. – DanK May 1 '17 at 15:37
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Is it common in the US not to pay medical bills? Or do I misunderstood what had been said?

I would feel comfortable saying that most people who face medical bills don't pay them. They are unable. If they were able, they would have gotten medical insurance. In America, something like 55% of individuals do not have even $500 of savings, so when a big medical bill rolls in especially on top of lost work hours, they don't have a lot of options.

The hospitals are trying to rip them off

Hospitals charge reasonable prices to insurance companies and Medicare. These fees are negotiated in advance and reflect the hospital's actual costs. This is called "usual, reasonable and customary".

Hospitals charge a wildly inflated, criminally outrageous "cash price" to the uninsured. For instance back when Medicare paid about $175 for an ambulance ride, a friend was billed $1100 for the exact same thing. The hospital aims to scare the living daylights out of the patient (caring nothing about what that does to their health!) Perfect world, the patient pays them the $1100 instead of paying their rent. If the patient puts up a fight, they hope to haggle them down to something like $400, remember it really costs $175.

This tactic is a huge profit-center for hospitals, even the "charity" hospitals, and they feel justified because so many uninsured don't pay at all (the hospital considers them "deadbeats".) Well, patients don't pay because cash prices are unreachable, so they just give up.

Anyway, your friends are correct, don't even think of paying those cash billing amounts. Research and find out what Medicare pays, offer 60% of that, and haggle it to 100%. And sleep well knowing you paid what is fair.

Not all services are as overpriced as my example, but most are at least 50% too high.

Or you may have misunderstood what they said

The hospital does send you all the bills as a formality, even while they submit them to your insurance company. And then the insurance company usually pays them, so it is correct to "not pay that bill".

A lot of medical offices will check with your insurance company even before you leave the office, and ask you to immediately pay anything the insurance won't cover. For instance they often have "co-pays" where you pay $20 and they pay the rest.

To be clear: if your insurance company negotiates a rate with the hospital, say $185 for the ambulance ride, that is your price, which you are entitled to as a member of that insurance system.

Yeah, it's that complicated

A lot of people get their livelihood from the inefficiency in medical insurance and billing. Their political power is why it's so hard for America to install a simpler system (or even replace Obamacare in an ideal political environment). It is also a big part of why America spends 18% of GDP on healthcare instead of 7-11% like our European peers who do not have to account for every gauze or rebill multiple insurers. Sorting out "who pays" would be expensive even if everyone did pay.

  • Haggling with a hospital just feels wrong. That's what governments and regulations are for... – curiousdannii May 1 '17 at 11:39
  • Hospitals basically have to charge outrageous rates in order to keep the insurance companies from screwing them over. If you tell them you don't have insurance, though, many will have some program to offer their services at a discount. (At least both the big chains around here do.) – cHao May 1 '17 at 16:44
6

Is it common in the US not to pay medical bills? Or do I misunderstood what had been said?

There has definitely been a misunderstanding as it is not that common for people to not pay medical bills. Yes, there are those that cannot afford to pay them, and that does contribute to increasing prices, but overall people do pay.

I think there is an aspect to this that has not been covered by the other two answers. What is common, at least in my experience, is that medical providers (i.e. doctors, hospitals, radiology, etc) are much more likely to work with you on establishing a payment plan than utilities, credit card companies, banks, etc are. This is different than holding off payment in the hopes of negotiating a reduction in payment. I am speaking of paying the total amount, but over multiple payments, and without a penalty for paying over multiple payments. And usually they will ask you what you can afford. If you can pay $50 per month, likely that will work. And even what I do that and call to pay the monthly amount, they will ask if I will pay that or some other (including lesser) amount. Also, if I skip a month (usually from forgetting, not intentionally) there is again no additional fee. This doesn't cover ALL providers, but so far has been consistent across all of the ones I have used. I suspect this is what your colleagues were referring to.

3

What you have here is an interesting argument. Right now, this is totally complicated by the state of "forced insurance" that is currently in such hot debate right now.

As a general rule of thumb though, most Americans pay their medical bills in one way or another. Though It is also accurate to say that most Americans have avoided paying a medical bill at one point or another.

I will give an example that will help clarify. My wife gets a Iron infusion shot one every year or so. We choose not to have insurance. The cost to us is around $275. We know this upfront and have always paid it up front. Except for one year. One year we had insurance. The facility that does the infusions charged us $23,500 to do the infusion that year. The insurance paid $275 to them. We refused to pay the remaining $23,225.

This is a real example using real numbers. SO while we are more then able to pay the "normal" amount, and we could, in theory, pay the inflated amount, We out right refuse to.

The medical facility tried to negotiated the amount down to $11,000 but we refused. They then tried to talk us into a credit plan. We refused. Then they negotiated the entire thing down to $500. We refused. Finally, after 2 years of fighting they agreed that the service had been pair for by the insurance. And sent us a $0 bill.

The entire time, that facility was more then willing to keep doing this annual service for $275.At no time were we denied care. We did have a dent in our credit for a while, but honestly it didn't matter to us.

Wrap Up

It is fair to say that most Americans do pay their medical bills, but it is also fair to say that most Americans do not pay all their medical bills. The situation is complicated, and made more so by recent changes. Heath insurance is the U.S. is nearly criminal and while some changes have been made in recent years the same overriding truth exists. Sometimes, a medical bill, when going through insurance, is just plain silly, and the only recourse you have as a customer is to not pay it, for a while, till you get it sorted out.

1

Personal story here: I ended up at the Santa Monica hospital without insurance and left with a bill of $30k-$35k.

They really helped me, so I felt like I had a duty to pay them.

However, close inspection revealed ridiculous markups on some items which I would have disputed, but I noticed that I had been billed for a few thousands of services not rendered.

I got very mad at them for this, they apologized, told me they'd fix it. I never heard back from them and they never put it in collection either. I'm assuming they (rightfully) got scared that I'd go to court and this would be bad publicity.

Sometimes I feel guilty I didn't pay them anything, sometimes I feel like they tried to screw me.

0

My answer might be out of date due to the Affordable Health Care law. I will answer for the way things were prior to that law taking effect.

In my experience, hospitals have a financial assistance program you can apply for. If you can show a financial need, the hospital will only charge you a certain percentage of your bill. A person with a very low income will likely only be charged 5 or 10% of the theoretical balance. That would be assuming the person is at or near the poverty level (which has an official definition -- but to give you an idea, your cashier at McDonald's is probably at or near the poverty level).

Also note that sometimes it takes a while for hospital charges to be submitted to insurance, and to be approved and paid. Thus, many people have learned through experience to ignore the first bill that comes in from a hospital, and wait a month before paying. There can be a dramatic drop in the "What you owe" line after the insurance company responds, and the billing office adjusts the bill to the negotiated amount and subtracts off what the insurance company covered.

0

While it is not common, it is also not "uncommon." A subtle distinction.

If you are poor, you almost certainly get some kind of government assistance (not even talking about Obamacare or Trumpcare, but just general assistance.) If you are middle class or rich, that is where you get hit the most. They seem to realize you "can't get blood from a stone" and don't try to get payment out of poor people. But middle class and rich people, yes it just takes longer but they do hang in there with billing.

My own experience is that years and years ago (way before Obamacare) I had a time in the hospital with a lot of tests, but I was poor and sleeping on a relatives floor at the time. I got all the tests I needed, and they took great care of me, and the hospital wrote it off as "charity care."

protected by Chris W. Rea May 11 '18 at 11:00

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