America’s Unique Medical Debt Problem
We charge patients way more than other counties.
Longtime healthcare reporter Noah Levey* offers “Lessons from Germany to help solve the U.S. medical debt crisis.” The tl;dr version is: don’t charge people much for healthcare. But the longer version is interesting to those who don’t understand how unusual our system is.Levey begins with an anecdote, which I normally despise, but it’s at least useful:
Almost every day, Dr. Eckart Rolshoven sees the long shadow of coal mining in his clinic near the big brownstone church that dominates this small town in Germany’s Saarland.
The region’s last-operating coal shaft, just a few miles away, closed a decade ago, ending centuries of mining in the Saarland, a mostly rural state tucked between the Rhine River and the French border. But the mines left a difficult legacy, as they have in coal regions in the United States, including West Virginia.
Many of Rolshoven’s patients battle lung diseases and chronic pain from years of work underground. “We had an industry with a lot of illnesses,” said Rolshoven, a genial primary care physician who at 71 is nearing the end of a long career.
The Saarland’s residents are sicker than elsewhere in Germany. And like West Virginia, the region faces economic hurdles. For decades, German politicians, business leaders and unions have labored to adjust to the mining industry’s slow demise.
The degree to which Saarland is really Germany’s equivalent to West Virginia likely wouldn’t stand much scrutiny but the parallels are interesting.
But this is a healthier place than West Virginia in many respects. The region’s residents are less likely to die prematurely, data shows. And on average, they live four years longer than West Virginians.
There is another important difference between this former coal territory and its Appalachian counterpart: West Virginia’s economic struggles have been compounded by medical debt, a burden that affects about 100 million people in the U.S. — in no state more than West Virginia.
In the Saarland, medical debt is practically nonexistent. It’s so rare in Germany that the federal government’s statistical office doesn’t even track it.
And, no, the answer isn’t the obvious one:
The reason isn’t government health care. Germany, like the U.S., has a largely private health care system that relies on private doctors and private insurers. Like Americans, many Germans enroll in a health plan through work, splitting the cost with their employer.
But Germany has long done something the U.S. does not: It strictly limits how much patients have to pay out of their own pockets for a trip to the doctor, the hospital or the pharmacy.
Rolshoven’s patients pay nothing when they see him. That not only bolsters their health, he said. It helps maintain what Rolshoven called social peace. “It’s really important not to have to worry about these problems,” he said.
That’s a pretty sweet deal, obviously. So how does it work?
The typical individual health plan an American gets through work now comes with a more than $1,500 deductible, a particularly big sum in a state like West Virginia where residents often earn less than residents of other states.
That, in turn, is driving medical debt. A quarter of West Virginians with a credit report have medical bills in collections, almost twice the national rate, according to data compiled by the nonprofit Urban Institute. In several counties in the state, the rate is about a third.
In German health plans, known as sickness funds, there aren’t typically deductibles.
Physician visits are almost always free for patients. Copays for most prescription drugs are capped at 10 euros or less, about $10. And people admitted to the hospital pay only 10 euros a day.
“Access to medical care with minimal costs for patients has been essential,” said Armin Beck, regional director of the Knappschaft Bahn See, of KBS, a health insurance plan whose roots stretch back to the 13th century, when miners set up a mutual aid society to protect one another in case of injuries or accidents. “This has been a foundation of our community,” Beck said.
What’s not exactly clear from the report is: Who pays the difference? Either the insurance has to be more expensive to cover this, doctors and hospitals have to make less money, or both.
International surveys underscore the difference Wagner observed between her experiences and those of American families.
In one recent study of health care in 11 high-income countries, the nonprofit Commonwealth Fund found that 44% of Americans had out-of-pocket medical expenses that topped $1,000 in the previous year. Just 16% of Germans reported paying that much. The rates were even lower in France, at 10%, and Great Britain, where only 7% reported similar medical expenses.
U.S. patients were also more than twice as likely as patients in any of the 10 other countries studied to say they had serious problems paying medical bills.
“Many Americans may not understand how affordable health care is for patients in other countries,” said Reginald D. Williams II, who oversees international research at the Commonwealth Fund. “Medical debt is a largely U.S. phenomenon. It just doesn’t happen in other countries.”
Most wealthy countries in Western Europe, East Asia and elsewhere limit patients’ out-of-pocket costs.
In the Netherlands, where patients enroll in private health plans as they do in Germany, insurers typically cover all medical expenses after patients pay a standard deductible of 385 euros, or about $400. Physician visits are fully covered.
In Great Britain, where medical care that is “free at the point of service” has been a foundation of that country’s government-run National Health Service for almost 75 years, there are rarely any doctor or hospital bills.
Crucially, though, NHS and its Canadian analog, which is what most Americans think of when they conceive of as the natural alternatives to our healthcare systems, are the outliers. Most developed countries have some sort of insurance model but ones that limit costs much more than ours.
Germany’s strict limits on medical bills have periodically stoked concerns about patients overusing the health system.
But when health plans tried implementing a copay of 10 euros for physician visits, it was quickly rolled back amid criticism from patients and frustration among doctors, who didn’t like chasing after their patients for bills.
At the hospital in Püttlingen, which is operated by the Knappschaft, Dr. Marion Bolte said asking patients to pay more isn’t worth the risk, even if it might bring in more money.
“It’s better to have 20 unnecessary visits than to have one patient get harmed because they didn’t come to the hospital because they were worried about how much it would cost,” said Bolte, the chief medical officer. “We don’t want patients to worry about money. We want them to worry about getting better.”
Nationally, German patients are less likely than Americans to die from conditions that can be treated with good access to medical care, such as heart attacks, diabetes, pneumonia and some cancers, according to regional data compiled by the Paris-based Organization for Economic Cooperation and Development.
Germans are also less likely than Americans to say they had to wait to see a doctor, surveys show.
I suspect the last is a function of much more specialization here—as well as many more rural areas far from a major hospital. Regardless, it’s hard to argue that our system is superior to Germany’s.
Maintaining this system has required that Germany do something else that U.S. policymakers have historically eschewed. Germany, like most wealthy nations, regulates the prices that hospitals, doctors and drugmakers can charge. This regulation occurs through a highly structured system in which insurers negotiate collectively with physician and hospital groups to set prices.
American hospitals and other medical providers for decades have fiercely resisted limits on their prices, spending millions to fight government regulation.
Price regulation can put more financial pressure on providers, who, unlike their American counterparts, can’t just demand higher prices from insurers to bolster their bottom lines.
Mario Schüller, the hospital administrator who runs the Knappschaft hospital in Püttlingen, said hospitals must instead compete to attract patients with better care and better customer service. Those that can’t compete may close, he said.
But Schüller said he wouldn’t want to charge patients more, even if he could.
“If I had to bill patients and then try to collect from them, I’d have to pay for all that,” he said. “We’d need new staff, who would have to get paid. And if we used collections companies, they’d have to be paid, too. It becomes a devil’s bargain.”
Obviously, the administrative burden of our system is higher than that of most others. But the key seems to be in limiting payouts. That’s easier to do in a system where the state absorbs the cost of university and professional schooling than one where becoming a medical doctor requires incurring massive debt for years on end.
*I found the story at NPR but he’s employed by Kaiser Health News, an arm of the Kaiser Family Foundation; NPR apparently syndicates his reports. Before coming to KHN in January 2021, he spent 18 years with the Los Angeles Times, the last 17 of which as a national healthcare reporter.