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When Good Health Insurance Doesn't Do You Any Good

The most unusual thing about Rabbi Ben-Tzion Welton's struggle with unanticipated medical expenses may be that he's so far avoided bankruptcy.
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(Photo: KOMU PHOTOS/ Eric Staszczak)

(Photo: KOMU PHOTOS/ Eric Staszczak)

Ben-Tzion Welton, a Chabad rabbi, has devoted much of his life to public service in the San Francisco Bay Area, where he and his wife Sharona raised four children. He has worked as an advocate for the disabled and, more recently, founded and headed a Berkeley-based non-profit organization known as Sunrise Kosher, a Bay Area kosher certification agency.

Two years ago, he was a middle-class Californian with good health insurance that he thought would help him in time of need.

Then he got really sick.

Now 64, Welton had serious digestive problems that were difficult to diagnose. He saw specialists and underwent an operation to remove an obstruction. He incurred thousands of dollars in medical expenses that weren’t covered by his Kaiser Permanente insurance policy, including out-of-network costs and home health-care related costs. His income suffered because he was unable to work as much.

An estimated one in five American adults were contacted by a debt collector about medical bills in 2014, including nearly 6.15 million Californians.

The rabbi was part of a surprising national statistic: The majority of people who incur medical debts have health insurance.

“I felt like it wasn’t right,” his son, Levi Welton, tells Capital & Main. “My father worked hard. He paid his taxes and he had [health] insurance. This is a clear story of how you can have good insurance, but it really doesn’t do you any good.”

The elder Welton’s situation is hardly unique, particularly among working- and middle-class Californians. The Golden State had the highest number of bankruptcies due to medical bills, with 248,002 bankruptcies in a single year, according to a study published by NerdWallet Health, a personal finance site. Medical debt was the leading cause of bankruptcy among Americans, and approximately 1.7 million people nationwide filed for bankruptcy in 2013 due to medical bills.

The Affordable Care Act and an expansion of California’s Medicaid program (known as Medi-Cal) have improved access to health care for millions of previously uninsured Californians, particularly low-income residents. But it hasn’t solved the serious problem of medical debt—which often results in bankruptcy—that affects people like Rabbi Welton, even when they have good insurance.

(Photo: Rabbi Ben-Tzion Welton)

(Photo: Rabbi Ben-Tzion Welton)

“It’s absolutely not just poor people,” says Andrew Fitch, an analyst for NerdWallet. “It’s really affecting middle-class Americans.”

Fitch rattles off recent statistics to prove his point: An estimated one in five American adults were contacted by a debt collector about medical bills in 2014, including nearly 6.15 million Californians. In 2013 state residents paid up to $1.75 billion in medical debt to third-party collectors.

“While the chances of falling into medical debt are greater for people who are uninsured, most people who experience difficulty paying medical bills have health insurance,” states a 2014 report by the Kaiser Family Foundation titled “Medical Debt Among People with Health Insurance.” (The foundation is not connected with Kaiser Permanente.)

The Kaiser report examined nearly two dozen cases of people nationwide who faced serious medical debt. It found that the problems affected people of all ages, and with annual incomes ranging from $10,000 a year to more than $100,000. Most of the case studies focused on people who struggled with medical debt while covered under employer-sponsored health plans that would be considered typical and mainstream.

Among insured individuals, the study found, unaffordable medical debts resulted primarily from cost-sharing for care not covered by insurance. This includes deductibles and co-pays, which can total thousands of dollars a year. Out-of-network costs also were burdensome, and many people inadvertently received non-network care while hospitalized.

Medical debt was the leading cause of bankruptcy among Americans, and approximately 1.7 million people nationwide filed for bankruptcy in 2013 due to medical bills.

Stephanie Woolhandler is a public health professor at the City University of New York at Hunter College, and an advocate of a single-payer health system. She says that while the Affordable Care Act has provided access to health care for many people who were previously uninsured, it has, for some others, also accelerated the trend toward higher deductibles, co-pays, and gaps in insurance by putting a government approval on skimpier insurance coverage overall.

As a result of the higher deductibles and gaps, Woolhandler cautions, “we’re likely to see more bankruptcies,” among middle-class and working people.

“When you go from a system you used to have—a private insurance with a good safety net—to a system with very high co-pays and deductibles and big gaps, you are creating more inequality,” Woolhandler adds. “The health system becomes a way of increasing inequality instead of a way of equalizing things between rich and poor.”

The consequences of medical debt are serious, says Karen Pollitz, an author of the report from the Kaiser Family Foundation, where she is a senior fellow. “People forego care, they get behind on other bills, all the way to losing their home, depleting their savings or even declaring bankruptcy,” she says. “Bankruptcy is the end of the line.”

So far, Rabbi Welton has been able to avoid that dire consequence—at least partly with the help of an online crowd-funding organization known as GiveForward, which specializes in helping people with unexpected medical bills.

Levi Welton says the idea of turning to an online funding site came to him by chance.

“I was watching Breaking Bad and there was a scene with a crowdfunding website,” he says, recalling that his father was initially reluctant. The rabbi has insisted that part of any money raised should go toward paying a health advocate to help others navigate the health care system. So far, 234 donors have given a total of $27,207 to help Welton, according to the site.

Overall, GiveForward has helped families raise more than $150 million since 2008 to help cover medical expenses, out-of-pocket costs, and other unanticipated expenses.

“It’s acts like this,” says Levi Welton, “that remind me that even in times of great darkness, light will always shine.”

This post originally appeared on Capital & Main, a Pacific Standard partner site, as “Navigating the Serious Cracks in Health Care Coverage." It is part of a month-long series exploring how economic inequality is transforming California, and what can be done to rebuild our vanishing middle class.