[S2E20] Vincent Catalano: Let’s Not Normalize Medical Debt

A New York Times headline stopped Vincent cold during a walk through Battery Park: the Trump administration is proposing to let insurers finance medical debt on behalf of patients who can't pay their bills.

It sounds like a safety net. It's a new market.

In this Hot Health Take, Vincent breaks down exactly who benefits when hospitals, insurance companies, and banks are all handed a piece of the medical debt pie, and what it means for the sick consumer already struggling to cover a deductible. He also makes the case for the policy position he's been building toward for years, one that's controversial in his industry, and one he no longer has any reason to stay quiet about.

About Vincent Catalano: Vincent Catalano brings over 23 years of employee benefits experience as an independent consultant and host of the CLEARly Beneficial Podcast. His unique position outside corporate constraints allows him to have frank conversations about healthcare issues that others can't address.

Disclaimer: The information provided in this podcast is for educational and informational purposes only and should not be construed as legal, financial, or professional advice. Listeners should consult with qualified professionals regarding their specific situations.

Transcript

SPEAKER_00 0:02

Welcome to the Clearly Beneficial Podcast, the show where we rip off the band-aid and explore the future of healthcare, benefits, and the people driving innovation in the industry.

SPEAKER_01 0:16

So here we are, uh sitting in Battery Park in Lower Manhattan, New York. For those of you who don't know, um I'm a native New Yorker, born and raised here right in Manhattan, and um it's always great to come home. It's always great to get the vibe of the city and uh between the Knicks winning last night and all the tourists and everything going on. Uh this place is just popping. But as I sit here, you know, looking at the many, many, many hundreds of people walking by, enjoying um the ferries, enjoying the parks, enjoying everything about New York. I I was thinking about the um article I saw today in the New York Times about how the Trump administration now wants to allow insurers to finance debt on behalf of people who aren't able to pay their bills. Now, this is a scary, scary, scary idea. Because you're now giving this power to an entity that probably shouldn't have it, right? You know, uh the way a claim works is you know, someone goes to a hospital, they present themselves, they present their insurance, and then the insurance the hospital then bills the insurance company for whatever it is that went on in the hospital, and the insurance company pays some percentage of what's billed. And then the hospital then says, oh, okay, so Mary Jane's net bill from us is $5,000. Pick a number. And that might be what's left over, whether deductible or whatever. But ultimately, it's the hospital that is responsible for collecting that money, not the insurance company. So what's being proposed now adds an interesting additional layer to the mess. So imagine now you get a bill from a hospital for $5,000 that you legitimately owe after insurance paid for what they paid. Are you then now supposed to go back to your insurance company and say, oh, um, I owe this hospital $5,000, um, which was my deductible or some coinsurance or whatever? Um, would you finance that for me at some you know, interest rate? So I'm literally sitting here thinking that every single entity is like chomping at the bit. And when I say entity, I mean the hospital who may not get paid because the person can't afford their deductible and and the cost is going to be excited to enter into the situation where an insurance company will now finance that insurance or out-of-pocket cost of the hospital. So the hospital's gonna get paid. So the hospital's ecstatic, right? They don't have to send that person to collections. Hospital's ecstatic. Insurance company now says, oh, now we have the ability of fronting money to these people who need it, and we get paid an interest rate. But most insurance companies won't ultimately do that because they'll engage with the banks, who I'm sure upon hearing this today, said, Hey, amazing. We now have a new market for uh debt, and it's all gonna be medical debt. So you think you had consumer debt and home mortgage debt? Um, this is going to legitimize medical debt as a thing. And oh my god, are we kidding ourselves that as a society we're gonna allow this um to happen? Um, I think it's damn scary that we're gonna allow hospital systems and insurers and banks to normalize medical debt, right? So that everybody um uh you know gets their piece of the pie, and who gets screwed, um the consumer. And at the same time, it's not just the consumer, it's the sick consumer. It's the consumer who's got stuff going on, who is stressed out about their treatments, who is stressed out about everything. So now we're gonna layer another thing of debt on this. And I could just see this happening, right? Where people at the banks are gonna get creative and they're gonna go, oh, so this person owns a house, so now we're gonna allow them to borrow medical debt against the house and tap into the equity and have liens. And I can just see this whole thing happening, you know, having read that this morning. And um, you know, I I'm literally now speechless thinking about what I just told you. Because it is I think it's just a travesty of everything. And um this is why I become more of an advocate for the Medicare for All idea. Um everybody deserves to be on Medicare. Everybody deserves to be on Medicare. And um that is something that people really should start fighting for. Because now being someone who is on Medicare and looking at the plan structure I have, um, this is traditional Medicare, not Medicare organic, um it's the best medical plan I've ever been on. And that includes any employer plan I was on or sold to clients over the years. So um, you know, things I have been advocating for and talking about recently, whether it's this or broker compensation or whatever, um, are things that are controversial to the industries, but I don't care. I have to say what I want. And um, you should all listen. Anyway, take care from New York, Vincent Catalano, on behalf of the Clevelandly Beneficial Podcast. This podcast reflects the personal views of the host and guests, not their employers or sponsors. See you next time.