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More have health coverage but lawsuits keep rising

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MINNEAPOLIS — The number of Minnesotans who have health insurance is rising but so is the number of state residents struggling to pay their medical bills.

A Star Tribune analysis of court records finds in the past year, Minnesota's main hospital and clinic groups filed nearly 9,000 lawsuits against people with large or long-standing medical debts. That's a sharp increase since 2005.

Medical debt — once a leading cause of personal bankruptcy in the U.S. — was widely expected to decline as more Americans got health insurance following federal health reform. But shifts in the insurance market are pushing more people toward high-deductible policies that can require them to pay as much as $7,500 before any benefits kick in, the newspaper reported.

"Patients are being exposed to a greater proportion of their bill," said Dan Fromm, chief financial officer of Minneapolis-based Fairview Health Services. "That is certainly a factor in what we are seeing in our bad debt."

In Minnesota, the share of people with health insurance has climbed to 95 percent from 91 percent since 2013, as the federal Affordable Care Act has taken hold. But insurers such as Blue Cross and Blue Shield and Medica have competed to hold down premiums as more people shopped for coverage. One way to do that is to offer more products with high deductibles and other forms of "co-insurance."

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Private sector employer health coverage almost universally imposes deductibles in Minnesota. Ninety-five percent of plans have them, according to Stefan Gildemeister, health care economist at the Minnesota Department of Health. That's up from 52.8 percent in 2002 and significantly higher than the national average, Gildemister said.

As a result, even those with health insurance can face out-of-pocket costs that run to thousands of dollars, and health care providers are seeing more bills that are left unpaid.

According to the Star Tribune analysis, court cases in Minnesota filed by health firms seeking repayment have more than doubled since 2005. Last year, those firms filed 8,900 lawsuits seeking at least $19 million in delinquent accounts.

By comparison, in 2005 the firms initiated 2,475 court cases to recover $8.4 million.

Nearly one-half of all cases were filed by three of Minnesota's biggest health care systems: Fairview Health Services; Minneapolis-based Allina Health, which owns Abbott Northwestern, Unity, Mercy and other hospitals; and the Mayo Clinic in Rochester and its subsidiaries.

Fromm said the increase in court filings doesn't reflect a change in collections strategy. Fairview's collections activity "tends to be with patients who have some form of insurance that have high deductible levels," Fromm said.

Allina said its bad debt expense, including accounts written off as uncollectable, has increased 50 percent, or $30 million, since 2009. Allina points to qualified health plans formed under the Affordable Care Act (ACA), some of which have low premiums but high deductibles.

"We believe this is due in part to the fact that many people who were uninsured before the ACA are now insured with very high deductible plans and cannot afford the self-pay portion," Allina spokesman David Kanihan said.

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