Despite insurance, medical bills push family to bankruptcy

By Kate Santich
Orlando Sentinel, July 30, 2011

The day their daughter was born should have been one of the happiest of Simon and Marsha Sutherland’s lives. Both previously married, they were having their first child together, a 6-pound, 10-ounce, dark-haired girl they would name Ellie Marguerite.

The pregnancy had seemed perfectly healthy. But moments after Ellie made her entrance into the world, doctors ordered her rushed to Winnie Palmer’s neonatal intensive-care unit, fearing she’d had a seizure. Marsha didn’t even have a chance to hold her daughter in her arms.

Ellie’s birth on Aug. 30, 2007, began a 25-day, $74,000 stay in one of the most expensive places in any hospital. More daunting, it would launch a four-year journey of fear, hope, devotion and grief — a journey made all the more difficult by financial devastation.

Ultimately, it led two middle-class parents with good jobs, two major health-insurance policies and a house in suburbia into foreclosure and bankruptcy.

“To this day,” Simon said, “we still have creditors calling us, wanting to talk to Ellie. They’ll say things like, ‘We want to discuss how she’s going to take care of this overdue bill.’ I just lose it.”

Ellie Sutherland died June 26. She was two months shy of her fourth birthday.

Though financial failures often have been blamed on careless consumer borrowing or the widespread layoffs of the recession, the Sutherlands’ financial storyline is strikingly common.

Two years ago, researchers at Harvard and Ohio universities reported that 62 percent of all bankruptcies were related to medical debt. An American family, they said, filed for bankruptcy in the aftermath of illness every 90 seconds — and three-quarters of those families had health insurance.

Although the data used for the study is now 4 years old, most experts interviewed said the problem is likely only to have worsened, at least until this year, as out-of-pocket medical costs have continued to spiral.

In addition, widespread layoffs have contributed to the rapid rise in uninsured Americans, who now number more than 59 million. For most of them, any major medical expense threatens to overwhelm their resources, leading to further bankruptcies and driving up costs for those who can pay. According to Families USA — a nonprofit, nonpartisan consumer-advocacy group — the shifting of uncompensated care onto insured patients results in a “hidden health tax.”

For an average family health-insurance policy, that means an additional $1,017 a year in deductibles, copays and other out-of-pocket expenses.

Pointing fingers

When Marsha Sutherland became pregnant with Ellie, she was a full-time reading teacher at Windy Ridge School in southwest Orange County. Husband Simon was a manager of a chain pizzeria. Together, they made about $100,000 a year. Each had insurance.

She had two children from a previous marriage; he had three. They had a nice three-bedroom home with plans for a swimming pool — plans they put on hold when they found out about the pregnancy, long before they knew Ellie would have extensive needs.

For most of their daughter’s life, Marsha and Simon would have no diagnosis. Ellie was nearly deaf, couldn’t sit up and was prone to dangerously high fevers. Half her face had almost no muscle tone, and in the second year, she began scratching at her eyes and cheeks and biting her lip until she bled profusely.

“I’d go to get her up, and she’d be a mess,” Marsha said.

Eventually, doctors removed eight of her front teeth to protect her. But in her scratching, Ellie managed to damage one of her corneas.

There were two trips to The Johns Hopkins Hospital. There were extensive blood panels conducted to look for missing genes. And there were almost weekly visits to Central Florida specialists for Ellie’s hearing, eyes, spine and gastrointestinal system.

With two insurance companies — Marsha’s was the primary coverage — “we were thinking that what one didn’t cover, the other would,” Simon said. “Instead, they were both pointing the finger at each other, and neither wanted to pay anything. It was a royal battle.”

Though Marsha tried to continue working part time, after only a few months it became clear that taking care of Ellie wasn’t just full-time; it was virtually around the clock. Simon became the lone breadwinner.

Marsha tried to sign Ellie up for Social Security disability, and when that failed, for Medicaid. Even after the family was down to a single income, though, the couple made too much to qualify.

“I was very overwhelmed at first,” Marsha said. “Now I know that the game is that they automatically deny you at least three times — any parent in our world knows that. But back then, I was naive, and I was exhausted trying to keep Ellie going and me going, and I just didn’t have it in me at the time to keep up the fight.”

For the first trip to Johns Hopkins, for instance, Marsha had gotten preapproval from her insurer, only to have the company deny coverage when the bills came due. And though the policy had a $10,000 out-of-pocket cap, there were so many copays, deductibles and prescription costs excluded that the Sutherlands spent close to $20,000 the first year alone.

“I finally had to decide that a house wasn’t important,” Marsha said. “It was my family that mattered.”

Simon said he applied for a loan modification, only to have the mortgage company come back with a plan for even higher payments. A month before Ellie’s second birthday, the Sutherlands filed for bankruptcy.

“We did have some wonderful doctors who really helped us,” Marsha said. “But others — we were going three times a week, paying a $60 copay each visit, and they wouldn’t budge. I could see what the stress was doing to Simon. Something had to give.”

New rules

If Ellie had been born today, her parents’ insurance plan — because of the federal health-care overhaul — would have no limit on how much coverage the policy would pay out over a lifetime. If Ellie were born in 2014, there also would be strict out-of-pocket limits that would include such things as prescription-drug costs.

“We heard a lot of these stories, and especially when they involve children that had years of medical expenses ahead of them, we knew the families were going to hit that cap, and probably a lot sooner than they expected,” said Laura Goodhue, executive director of Florida CHAIN, a nonprofit dedicated to health-care access. “That part will definitely get better.”

There are also new rules in effect that nonprofit hospitals have to widely post their charity policies for patients who can’t pay their bills. But in Florida, Goodhue noted, “there are way more for-profit than nonprofit hospitals.”

Jon Gabel, a senior fellow at the National Opinion Research Center, a nonpartisan think tank based in Chicago, said another benefit of the health-care overhaul will be the vast number of lower-income families eligible for subsidies on their health-insurance premiums, making coverage much more affordable.

But those provisions don’t kick in until 2014 — and only if the health-care law isn’t overturned. And it’s not a panacea for medical bankruptcy.

“I’m not saying the Affordable Care Act doesn’t do some good things, but it’s actually pretty modest” in certain areas, said law professor Melissa Jacoby, an expert on medical debt at the University of North Carolina. “If someone has a very rare or complicated condition, for instance, they may seek the help of a specialist that is out of network.”

Even under the new law, those costs will not be covered, and they won’t count toward the policyholder’s out-of-pocket maximum.

Timothy Jost, a professor at Washington and Lee University School of Law and an expert on health-care coverage internationally, said another factor is the potential battle by some states, including Florida, over the coming increases to Medicaid coverage mandated by the new federal law.

“People are talking about cutting Medicaid. People are talking about cutting Medicare. And at that point, I don’t know what we do,” said Jost, whose 40-year-old nephew has severe developmental disabilities and has needed care all his life. “People like my nephew are just going to have to die because they cannot take care of themselves, and people can’t take care of them for free. I think we [still] have a very serious public-policy issue ahead of us.”

The battles end

In January, Simon Sutherland, the Southeast’s 2009 manager of the year for his pizza chain, was let go from his job. His restaurant had the highest sales in the nation for his company for 2010.

“I would hope it had nothing to do with the insurance costs,” he said. “But our franchise was a small group with its own policy, and there were two other people in this group who had cancer — and then Ellie. From 2010 to 2011, our premiums went up 70 percent. My eyes just popped.”

The job loss, ironically, made his daughter eligible for Medicaid at last. Suddenly, all the battles over coverage were over, and administrators even asked whether the girl might need a wheelchair.

The Sutherlands were still paying off the $5,000 tab for the wheelchair their private insurance refused to cover.

By then, the family had found a nice rental home in the Dr. Phillips area whose owner, a fellow devout Christian, had agreed to give the family a chance. They survived on unemployment and the kindness of friends and strangers until late June, when Ellie unexpectedly went to sleep one night and didn’t wake up again.

“I found her in her crib, warm but still, and not breathing, early Sunday morning, approx. 2:30 a.m.,” Marsha wrote in an online journal she used to update friends and relatives. “She was so quiet and still as I rushed her into her daddy. He tried, the medics tried and then the medical staff at [the hospital] tried, but I know she was gone the minute I touched her sweet body.”

Despite the debts wiped away by the bankruptcy, the Sutherlands still owe about $2,000 on Ellie’s medical bills, not including her funeral expenses. Marsha and Simon have no credit cards, and they no longer have any insurance coverage themselves. For now, they simply hope they don’t get sick.

ksantich@tribune.com or 407-420-5503

Source: Orlando Sentinel

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