Medical credit cards come under fire at Senate medical debt hearing

Some employers are offering medical credit cards to help workers cope with high health care deductibles and other out-of-pocket health care costs.

Dr. Luke Messac, a Harvard medical school emergency medicine instructor, testified on Capitol Hill Thursday that he believes the cards are making patients’ medical debt problems worse.

One problem is the potential for profound conflicts of interest, Messac told members of the  the U.S. Senate Health, Education, Labor and Pensions Committee.

“You could imagine a world where the same private equity firm owns the credit card and owns the hospital,” Messac said.

Another problem, Messac said, is that different rules for provisions such as “annual percentage rates,” or interest rates, apply to what patients owe doctors and hospitals and what patients owe the medical credit card companies.

When patients use the cards to pay for care, “what you’re doing is transferring debt owed to a hospital or clinician to a credit card with a super high APR,” he said. “This is a new way of trying to further financialize the cost of getting exorbitantly high-priced health care.”

Messac appeared as a witness at a Senate HELP hearing on medical debt  in America.

Messac talked about medical credit cards in response to a question from Sen. Chris Murphy, D-Conn. Murphy cited the story of a hospital system in North Carolina that began offering medical credit cards. The percentage of patients paying interest on their medical bills increased to 46%, from 9%.

Related: Medical credit cards: CFPB urged to abolish deferred interest at hearing

Benedic Ippolito, a senior fellow at the American Enterprise Institute, described the rise of credit cards as a reason for Congress to be careful about taking steps such as limiting health care providers’ bill collection efforts.

The restrictions have caused providers to seek more payments for care upfront, and the need to come up with cash for care upfront has led to a big increase in use of medical credit cards, Ippolito said.

Another witness, Allyson Ward, a neonatal nurse with good employer-sponsored health benefits, talked about ending up with $80,000 in out-of-pocket costs after she gave birth to twins 10 weeks before their due debt.

“Even with an employer-sponsored health care plan, we still continue to balance how to pay for the services that our boys need with past debt,” she said.

Sen. Bernie Sanders, the independent from Vermont who chairs the committee, and Messac said the only solution to the U.S. medical debt burden is to create a government-run universal health care system, to reduce the cost of care.

Sen. Mike Braun, R-Ind., the highest-ranking Republican on the committee, said the solution is better price transparency.

Many health care providers now have markets to themselves, or share dominance over markets with a few friendly competitors, and they’re performing the role of utilities, he said.

“Utilities get regulated,” Braun said. “If the industry doesn’t wake up, that’s exactly what’s going to happen.”

Braun and Sanders have joined to introduce the Health Care Prices Revealed and Information to Consumers Explained Transparency Act bill, which would put hospital price disclosure rules in federal law, and Braun said he believes that kind of transparency law may be the only hope of keeping the United States from ending up with a government-run health care system.