NerdWallet's Smart Money Podcast - How to Manage Medical Debt with Emily Maloney

Episode Date: August 29, 2022

Medical debt can be confusing and, for some, financially debilitating. In this episode of the Nerdy Book Club series, NerdWallet writer Kim Palmer talks with author Emily Maloney about her personal experience with the health care system — both as an ER worker and a patient. Maloney also sheds light on how quickly medical costs can spiral out of control.  In her book of essays, “Cost of Living,” Emily Maloney shares how, after accumulating thousands of dollars of debt, she eventually gets free of it and suggests ways that those currently weighed down by medical debt can do the same. She also offers insight into the debt collection process in light of recent changes. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Welcome to the NerdWallet Smart Money Podcast, where we typically answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Sean Piles. We have a special episode in store for you today. Regular Smart Money guest and personal finance nerd Kim Palmer is kicking off the next episode in our book club series, where she talks with authors of personal finance books about their advice for how you can manage your money. So Kim, welcome back on to Smart Money. Thank you so much for having me. Who are you talking with this episode? I am speaking with Emily Maloney, author of Cost of Living, a series of essays based on her own experiences about the cost of healthcare

and the impact of medical debt in this country. She shares her insight into what goes on behind the scenes from the perspective of both an ER worker and a patient. Sounds great. Well, I will let you take things from here. Thank you, Emily. Welcome to Smart Money. Thanks so much for having me. In this book, you share your own experience, both as a patient who accrues a lot of medical debt and also as an ER technician where you really observe firsthand how much money can impact the care that people receive. This is such a personal story on so many levels. Why did you decide to share your experience? When I first started working on pieces about the ER and about my medical debt, I kept running into people who had experiences that mirrored mine. I would speak

to a friend and they would say, oh, yeah, I have some medical debt or, oh, we got a bill and we just ignored it, that sort of thing. And it just seemed really common, but it also was highly stigmatized, right? Especially because my debt was mental healthcare related. But I do feel that any medical debt can be highly stigmatized. I'm hoping that in offering my book to the world, I can try and break down some of those stigmas. In your job as an ER tech, were you surprised by how much money played a role in treatment decisions? This is something that really jumped out at me when I was reading your book. I mean, you write about being

told to use fewer supplies or to conserve money in other ways that might not always put the patient first. At least that's how it seemed to me. A lot of small hospitals like the one I worked at can be in debt themselves because they're not able to collect the bills on their patients. And so especially if you're working in an area of high need and low insurance, you're ending up with potential for the hospital itself to be in debt, which was true for the hospital that I was working at. In the chapter Heartbroke, you talk about what happened when an EKG machine gave faulty readings. EKG machines, of course, monitor electrical signals from hearts. And one day, the one you were using

in your ER gave everyone the same reading. It sounds like that machine was admitting people who maybe didn't need to be there and clearing people who might have needed to be there. Did you see a lot of this kind of thing happening where understaffing, under training, maybe older equipment led to expensive mistakes when you worked in the ER? Absolutely. I think what actually happened here was user error, not a broken machine explicitly, if that makes sense. So the leads are swapped and that can yield false information. I don't know what happened with these patients who were admitted

under false or incorrect information from the EKG results. But I do know that user error is very common in any setting like this because you're constantly making hundreds of small decisions. And because of the lack of human capital, you're understaffed or undertrained. It's very common to end up in this situation. And I know that what occurred in the ER wouldn't have happened had we had newer equipment. I mean, it's pretty disturbing to think that you can enter the ER, you expect a certain level of care, you might not receive it as this situation shows. And then at the same time, you know, other people, you could end up paying a lot for care you don't need or might not need.

Right, right. And absolutely, I think that that can be true. There's so many opportunities for error. We don't have a nationally standardized electronic medical record system. And so what gets entered in, you know, one hospital system's EMR might not match up with another hospital system's EMR. So if you travel or if you go to a different hospital system, the information that they might have for you might be out of date or incorrect. So there's so many different places that I think we could improve. But in the meantime, it's costing patients a lot of money. I want to talk more about your medical debt too, which is such a common experience.

The Consumer Financial Protection Bureau reports that one in five U.S. households owes medical debt. And you share that a suicide attempt when you were 19 led to a large amount of medical debt as a result of your treatment and related care. I want to stop here briefly to share that there are resources available for people having suicidal thoughts, such as the Suicide and Crisis Lifeline at 988. People might be wondering how you accrued so much debt during your recovery. Can you tell us a bit about that? Did you have health insurance at the time? I did, but it didn't cover mental health care. How much of a financial burden was that for you? It was huge. It was something I tried to ignore and was basically unsuccessful at ignoring. It weighed heavily on everything I did from the work that I chose to do to I was routinely getting called by

collection agency. They were trying to get me to increase my payment. It was very stressful at the time. And I feel like my experience, unfortunately, is a common one. And did it impact your ability to do other things? Like I imagine maybe impacted your credit score or your ability to afford things like a car or a home or just general everyday life? Oh, absolutely in how medical debt shows up. Equifax, Experian, and TransUnion have agreed to remove most medical debts from consumers' credit reports within the next year. Specifically, as of July 1st, paid medical debts no longer show up on credit reports. In addition, no new medical debts will show up on credit reports until 12 months have passed, and that's up from the current six months. And by June 30th, 2023,

the three bureaus will also stop reporting unpaid medical debts under $500. The Biden administration has also reduced or eliminated medical debt as a factor in government lending decisions, which does impact people's ability to get home and business loans. Do you think overall that is a positive step and something that will really help people? I hope so. We'll see how it plays out. And going back to your situation for a second, I know you shared, you know, your medical debt was significant. It was, I think, five figures. How did you eventually succeed in paying it off? Well, the fact is I didn't. A strange thing happened. I had been banking at this same bank forever and the bank was sold. And so I had to reach out. I thought, you know, I'll be proactive. I'll reach

out to the collection agency and let them know about the change in the routing numbers or whatnot. And so that way they can start debiting my account from the new bank. And when I called, it turned out that it was beyond the statute of limitations. In your book, you tell this story, and it is probably unusual that a collection agency would alert you to this fact. You write that the collection agency went ahead, they removed your auto pay information from your account, so you were able to stop making payments. We should also talk here about the different rules that affect debt. Each state has its own rules about how long a creditor can sue someone over a debt. This is known as the state statute of limitations. Once the statute has

expired, technically the collector can't force you to pay using a lawsuit, but it can continue other collection efforts. There's a whole separate set of federal rules about how long a debt can be reported on your credit reports. Typically, it's seven years and 180 days after the date the debt first went delinquent. It is worth noting, though, that having a debt fall off your credit report doesn't mean the collector can't keep trying to collect it. So your situation was probably somewhat unusual, and even you say you were surprised by it. I'd been paying it for so long, I just figured I'd be paying it for the rest of my life. And it was mid five figures. Originally, my bill was somewhere in the $50,000 range.

In terms of, you know, I had telemetry bills, I had a bill for the ambulance, I had a bill for the ER doc, I had a bill for the ambulance. I had a bill for the ER doc. I had a bill for the emergency department care. They billed several cardiologists who are expensive people. And so it was just a litany of things that I just anticipated paying indefinitely. Wow. That's incredible. Well, I wanted to also ask you about people's ability to negotiate, because I think this is also an area where people might not really know what power they have, if any. Is it something you would encourage people to do to negotiate their bills with the hospital, with other providers? I mean, how much power do people have there? I think people have more power than they may think. Something sort of ironic about my own situation is that there were two hospitals in the area. There was the hospital where my psychiatrist had privileges, and that was the hospital that I went to. But had I been taken to the other hospital on the other side of the river, I would have not been subject to this medical debt because it's a

public hospital and the state can pick up the difference if you're declared indigent. So there's different plans like that in public hospitals and public health care, where you might not be paying as much or at all, depending on what your personal financial situation is like. And then I think if your healthcare isn't comprehensive, if you have health insurance, but it's just not covering everything, then you might consider negotiating directly with whatever office that you're working with, whether it's a medical office for like private practice or, you know, something along the lines of a hospitalization or something like that. I think the other thing to consider is that if you do have health insurance,

start with calling them before you make any plans for if there's a surgery or something like that that you need taken care of. I would definitely start by calling the customer service line for your health insurance. And what about once a bill is already in collections? Can you negotiate at that point? Do you have leeway to negotiate bills in collections more versus the ones that are coming to you from the provider? I do think you have more power in those kinds of scenarios because those are debts that have already been written off.

John Oliver famously on Last Week Tonight a couple seasons ago bought up a bunch of medical debt and forgave it. And you can do that for basically pennies on the dollar. And so at the point at which you're at a collection agency, I think you do have a lot more power than you would otherwise. And if you do get a bill in the mail and it's just shockingly large and you feel like you can't pay for it, is one thing to check if mistakes were made? I mean, do hospitals and providers make mistakes and bill people more than they should? All the time. I think it's really important to make sure that your insurance has been billed. I have now a pretty good health insurance plan through my husband's work.

And recently I ordered a medication that had to be sent from a different pharmacy, like a mail order pharmacy. And, you know, they initially quoted me like $10,000. And I said, well, did you run it through insurance? And they said no. So I said, can you call me back once you've run it through insurance? Because my heart stopped at that point. I just thought, oh, my gosh, you know, like $10,000 for this medication. Maybe I don't need this medication after all. So yes, absolutely. It happens all the time. And I think the thing that makes it so frustrating is that even if you think of yourself as savvy and able to manage complex personal finance issues, you still have to spend a lot of time on the phone, in email, making sure that if you do have health insurance, that your health insurance is covering what it is that they said that they would cover and that they're being appropriately billed, that they have the right codes and so forth. So it can be really tricky. And especially if you don't have a lot of time

to work on that kind of thing. I think it speaks to how people do need to speak up for themselves. But also we have to acknowledge, I mean, not everyone has that ability, especially when you're having major health challenges. It's not as easy as it sounds, probably. Right, right. Not at all. You know, I've worked in the industry in health care. I know some of the codes that need to be used for certain things. Like I have that experience. I have that lived experience.

But a lot of people don't or they don't have the time to sit on the phone all day with their insurance company. So I do think that we're going to need to make some dramatic and drastic changes. I wanted to ask you what else you think should change? Are there other changes in regulation that would help people? I'm a big proponent of a single payer healthcare system. I wrote this book basically as a treatise or a love letter to a single payer healthcare system that we just, you know, unfortunately don't have in this country. But barring that, there are a lot of

different things. I think that, for example, we don't have enough residency spots for physicians. But if those spots were funded, then people would have more access to healthcare, because there would be more physicians and more people providing care. And so people would be able to get their basic needs met. But yeah, if we could have a single payer health care system, I think that would be fantastic. And what about for consumers, assuming we're working within the same system and there aren't other big changes, what else can consumers do just to make sure they're as protected as possible if they do suddenly face a situation

like this or a huge bill that they weren't expecting? Are there other things you can do in advance to sort of be prepared and to protect yourself? Being as informed as you possibly can about your condition, about your needs, being able to advocate for yourself. These are all things that would result in better healthcare and also lower costs. Being able to sort of sit down with your healthcare plan, study the fine print, see what's covered and what's not covered, and be able to make decisions from there while advocating for yourself and your needs as a patient. I think those are probably the best things I can potentially offer someone. I wish there was more, unfortunately. I learned so much about how hospitals charge

from reading your book. Thank you so much for being on our podcast. Do you have any final thoughts to share what you'd like listeners to take away from your book? If you are in a position where you have medical debt or you've had medical debt, just know that you're not alone. There's a lot of other people out there and there are some potential strategies and plans you can put into place to just be less stressed and hopefully less in debt. Thank you so much. That is all we have for this episode. To share your thoughts on how to budget, pay off debt, or manage finances, shoot us an email at podcast at nerdwallet.com. Also visit nerdwallet.com slash podcast for more info on

this episode. And remember to subscribe, rate, and review us wherever you're getting this podcast. And here's our brief disclaimer thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance raters, but we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.