Report: Alaskans’ medical debt in collections nearly double the national amount

ANCHORAGE, Alaska (KTUU) - During the COVID-19 pandemic, agencies monitored the amount of medical debt Americans were taking on, suspecting debt levels would skyrocket. But data compiled by the Urban Institute shows that medical debt that went to collections actually went down during the pandemic.

And while Alaska remains on par with the rest of the country when it comes to the percentage of people with medical debt in collections, the dollar amount that each person owes is far greater.

While medical debt in collections represents only a portion of the overall medical debt in the United States, it’s what the Urban Institute focused on.

In Alaska, 14.1% of residents have medical debt that has gone to collections, according to data compiled by the institute in August 2021. That’s right on par with the national level, however, the difference lies in the amount of debt people owe. The typical amount of that debt in Alaska is $1,363, according to data. That’s about twice the typical amount nationwide, which is $774. It’s likely because treatment in Alaska is more expensive, according to Graham Downey, a consumer advocate with the Alaska Public Interest Research Group.

“In Alaska we have a much higher than average cost of medicine, so some procedures in Alaska cost 10 times as much as they would in Seattle,” Downey said in an interview, “and we know that for other medical things the cost can be 500% of what they would be in the Lower 48.”

That debt, or even the prospect of debt, Downey said, can be frightening.

“We know medical debt is really scary, right? We saw some studies that Americans are more afraid of medical debt than they are of serious illness, which is just really shocking,” he said.

The Urban Institute’s data only had specific amounts of outstanding debt for the five most populous regions in Alaska, but the range of debt owed is broad. In the Kenai Peninsula Borough, the typical amount of medical debt owed to collections by a single patient is $2,553. Data shows the City and Borough of Juneau, the area with the lowest typical amount of debt, is the only area of the state with debt amounts similar to the national amount, with $647 being the typical medical debt owed to collections.

While Lower 48 data shows that people in communities primarily made up of minorities — by 60% or more — typically owe more debt more often, however, that’s not the case for communities in Alaska meeting that threshold. That could be due, in part, to Alaska’s robust tribal health care system and Veterans Affairs services, Downey said.

“We do have a really wonderful tribal health system, and we also have a lot of folks in Alaska who are service members, and they’re able to get help through the VA,” Downey said. “We do know that even with those systems of support, the fact that we have any medical debt among Alaska Native and service members is really shocking and upsetting.”

Even with tribal and veterans services available, some of Alaska’s rural areas have the highest percentage of people with medical debt in collections. The Aleutians West and Yukon-Koyukuk census areas both rank highest in the state of Alaska, with more than 19% of residents holding medical debt in collections.

So what can a patient do to keep bills from going to collections, or to get out of debt once they do?

Downey said the best action to take is to stand up for yourself and do your homework. If an insurance company or doctor’s office sends you a bill, ask for the explanation of benefits. This document outlines each service performed and what it costs, and whether the insurance company paid for it or not. Take note of each service charged and find out if it should be covered by your insurance plan.

Sometimes doing the homework can also come down to exploring the options provider have to reduce bills or assist with payments. Two major Anchorage hospitals, Alaska Regional Hospital and Providence Alaska Medical Center, both have charity care programs for patients who qualify, and other programs to assist low-income patients, those without insurance or those who have exhausted their insurance benefits. Both facilities also have financial counselors available to help patients through the process.

Downey said the federal “No Surprises Act,” which went into effect on Jan. 1, offers relief for those who receive emergency services, and may find out later that some of their care providers were “out of network”, even if the hospital or primary doctor were in their insurance network.

If a bill does end up in collections, Downey said the first step is to verify the debt.

“One of the most important rights that you have is to receive written notice that verifies the debt,” Downey said. “So you should not talk to anyone on the phone, they may even try to contact you over social media. Don’t talk to anyone until they send you a written verification of the debt.”

Once that’s done, Downey said to make sure the collections company is legitimate. Also, check with the original debt-holder to verify whether they actually did send the debt to that collections company.

“There’s a lot of scams out there; a lot of identity thieves are pretending to be debt collectors, so you really want to be careful to make sure that that’s a verified and legitimate debt before you do anything else,” he said.

If contact from a collections agency becomes frequent or hostile, consumers have rights, Downey said.

“Debt collectors aren’t allowed to threaten you, they aren’t allowed to throw you in jail, they’re not mobsters, they’re not allowed to break your legs,” he said. “You can ask them to stop calling, they aren’t allowed to call at all hours of the day.”

He also said to document when and how a debt collector contacts you. If a debt collector’s behavior crosses the line into harassment or threats, Downey said it can be reported to the Alaska Banking and Securities Division and the federal Consumer Financial Protection Bureau, which both have regulatory authority, and the Alaska Public Interest Research Group, which tracks consumer complaints.

If a patient needs legal help contesting a bill to their insurance company or otherwise, Alaska Legal Services and the Northern Justice Project can provide free legal assistance to those who can’t afford it.

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