July 2008
Calls for more scrutiny
The growing ties between the lending and health-care industries are attracting legislative scrutiny because most of the nation's
hospitals are tax-exempt and are expected to provide charity care. Sen. Chuck Grassley, R-Iowa, ranking member of the Senate
Finance Committee, says nonprofit hospitals "are cozying up to banks, debt buyers, and credit-card companies to extract the
highest rates of payment from the uninsured or underinsured." He wants clear requirements for the charity care that hospitals
must provide to qualify for tax exemptions. Consumers Union, the nonprofit publisher of Consumer Reports, supports the effort.
Coping with illness in the family can trigger a financial crisis even for people covered by health insurance, says Steffie Woolhandler, an associate professor of medicine at Harvard.
Case in point: Maryann Jandris of Lehigh Acres, Fla., lost her $60,000-a-year accounting job after she took a leave of absence to help her 22-year-old daughter, Kery, through intestinal surgery and nine hospitalizations. Expenses such as co-pays up to $50 each for her daughter's nine prescriptions have wiped out more than $30,000 in savings.Maryann and her husband, David, are making minimum payments on $4,000 of medically related debt, some of it now at a 29.49 percent rate. Their mortgage lender, Wells Fargo, began foreclosure proceedings in March. "It's amazing how one illness can start a downward spiral that destroys everything you've worked so hard for," Jandris says.
The links between the credit and health-care industries hinder efforts to control health-care costs, says Elizabeth Warren, a consumer-debt expert and Harvard law professor. "When card issuers can make the same extraordinary rates of return on medical debt as they do on iPod and sneaker purchases, they become powerful political stakeholders who profit from escalating medical costs and reduced insurance coverage," she says. "They make health-care reform that much harder to achieve."
Coping with illness in the family can trigger a financial crisis even for people covered by health insurance, says Steffie Woolhandler, an associate professor of medicine at Harvard.
Case in point: Maryann Jandris of Lehigh Acres, Fla., lost her $60,000-a-year accounting job after she took a leave of absence to help her 22-year-old daughter, Kery, through intestinal surgery and nine hospitalizations. Expenses such as co-pays up to $50 each for her daughter's nine prescriptions have wiped out more than $30,000 in savings.Maryann and her husband, David, are making minimum payments on $4,000 of medically related debt, some of it now at a 29.49 percent rate. Their mortgage lender, Wells Fargo, began foreclosure proceedings in March. "It's amazing how one illness can start a downward spiral that destroys everything you've worked so hard for," Jandris says.
The links between the credit and health-care industries hinder efforts to control health-care costs, says Elizabeth Warren, a consumer-debt expert and Harvard law professor. "When card issuers can make the same extraordinary rates of return on medical debt as they do on iPod and sneaker purchases, they become powerful political stakeholders who profit from escalating medical costs and reduced insurance coverage," she says. "They make health-care reform that much harder to achieve."
