By Pat Palmer
Learn more about Pat on NerdWallet’s Ask an Advisor
Medical bills are the No. 1 reason Americans file for bankruptcy. They cause people to lose their homes, life savings and assets. They can be detrimental to your credit score, affecting the types of loans you qualify for and even preventing you from qualifying altogether.
One stay in the hospital could destroy your economic well-being. An evening in the emergency room – even if the underlying problem might not be considered severe – could have you owing what it costs to buy a car.
Medical billing overcharges can affect your financial health long after your medical condition has been treated.
This raises the question: Why are medical bills so high in America?
Numerous factors contribute to the high cost of health care in the U.S., especially when compared with similar nations around the world. Health care systems pay their administrative staff handsomely in America, exceeding $150 billion annually, and this figure continues to rise.
Although the U.S. boasts some of the best medical care in the world, we also offer some of the most expensive care. On average, America’s doctors, health care facilities and pharmaceutical companies charge more than in any other nation in the world.
Compared to other industrialized countries with similar infrastructures and economies, such as Australia, Canada and much of Europe, the United States has the highest health care expenditure – 17.7% of the gross domestic product. Similarly, per capita, the U.S. ranks among the highest for the amount that taxpayers pay for health care, with only Norway having a higher public expenditure.
Overtreatment, whether intentional or not, accounts for a host of waste in America’s health care system. Approximately one-third of patients receive duplicate or unnecessary care. Unnecessary diagnostic procedures and tests — which might include electrocardiograms and blood tests — are very common. Becker’s Hospital Review, an industry publication, states that in the U.S., MRIs are prescribed twice as often as any other country.
But perhaps more commonly, many of these factors are due to human error. Services that were ordered, but never rendered, could cause you to be charged more than you owe. Unbundled items can cause you to pay twice and sometimes three times for the same item or service.
What you can do
If you are informed enough to know what to look for, you can help prevent medical overcharging on your own bills. After you have received treatment in an emergency room or hospital, request an itemized statement of your bill. The bill that the facility automatically sends out is in a summary format and does not give any detailed information on your charges. You should receive an Explanation of Benefits from your insurance company if you carry health insurance. Scrutinize this document to make sure your insurance company is taking care of everything it is responsible for.
Even before you use the services of a health care facility, you can begin lowering your medical bills. Check for prices ahead of time and shop for the best value at area health care facilities if you are having a planned procedure. Being prepared to pay up front can also help you save more money in the long run. Many facilities offer a prompt-pay discount for paying a bill in its entirety within a specified amount of time.
One of the most valuable tools to ensure you are only paying true and accurate charges and fair and reasonable prices is to use the expertise of a knowledgeable, trusted medical billing advocate who specializes in medical bill compliance reviews.
Infographic courtesy of Pat Palmer.