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Tennessee’s Healthcare Crisis: Bankruptcies, Closing Hospitals, And Medical Debt

The State of Tennessee is in the midst of a health care crisis, where its residents are struggling with debt, bankruptcies, and a lack of access to health care, while suffering from some of the highest rates in the United States of preventable illnesses.

In December 2013, 32-year-old Katie Phillips in Knoxville, Tennessee gave birth to her son, Keegan, who was born with Prader-Willi Syndrome, a genetic disorder that produces a variety of symptoms. Keegan spent three months in the neonatal intensive care unit, but Tennessee’s Medicaid program did not cover the first five to six weeks of care, leaving Phillips’ family with thousands of dollars in medical debt.

Shortly after Phillips and her husband were able to bring Keegan home, she was diagnosed with cervical cancer. She required two surgeries and their medical debt increased by thousands of dollars.

“There was no way we would have been able to get out from underneath that, so we filed for bankruptcy in 2014,” said Phillips. “We weren’t sure of what we would be able to do because the issue comes down to: do you lose the doctor for your child over medical bills or pay typical everyday bills?”

Though the Phillips family’s financial situation has improved since filing for bankruptcy, they’ve continued to accrue medical debt from the constant care and therapy their five-year-old son Keegan requires.

Tennessee was the last state to pass the Katie Beckett waiver earlier this year. The waiver provides Medicaid insurance to children with disabilities who don’t qualify for Medicaid otherwise because their parents’ income is over the limit set by the state, which is currently $2,313 a month for an individual.

“We still drown in medical debt with a special needs child unless your state offers something. If you make over $30,000 a year, you cannot get any help. He may be disabled, but he’s still not getting help because it’s all based on income,” said Phillips.

She is still waiting on the waiver to go into effect to provide relief to her family and others throughout Tennessee.

Over 500,000 Americans file for bankruptcy in the United States every year because of debt accrued due to a medical illness, about 66.5 percent of all bankruptcies.

Michele Johnson, executive director of the Tennessee Justice Center, a nonprofit legal advocacy organization based in Nashville, argues Tennessee leads the nation in personal bankruptcy rates due to medical debt.

“We’re number one in the nation for failure to expand Medicaid,” said Johnson.

She added,“We have a crisis in America where you have to be a billionaire to survive a medical emergency really without health coverage. We have an issue where the costs of health care outpaces regular inflation, and it grows at a rate much faster than the wages of low-income folks and really all Americans.”

Tennessee, with the highest rate of personal bankruptcy in the U.S., also ranks among states with the highest rates of medical debt and poor health outcomes.

Twelve hospitals have closed in Tennessee since 2013, the highest rate per capita in the U.S. These closures have devastated rural communities, leaving thousands of people without nearby access to health care and a void of hundreds of jobs.

Between 2016 and 2018, Tennessee experienced the largest increase in uninsured children in the U.S., with 25,000 children losing health insurance coverage. The state leads the country in childhood obesity. It is fifth highest in diabetes and regularly in the top five states for opioid prescriptions and overdoses. It also often ranks in the bottom ten states for overall health and life expectancy.

Around 675,000 people, or around one in ten residents in Tennessee, have no health insurance coverage at all.

But Tennessee’s health care industry is thriving. Nashville, Tennessee is often touted as the health care industry capital due to the 17 publicly traded health care corporations headquartered in the city.

One of Nashville’s largest health care corporations, the for-profit hospital chain HCA, is attributed to developing the large-scale for-profit hospital model that has shaped the U.S. healthcare system into what it is today, one where millions of Americans are left without access to medical care or with soaring medical bills and insurance coverage costs.

In 2018, HCA reported a profit of $3.8 billion, while paying its CEO a salary of $21.4 million, or 383 times the median salary of an HCA employee. Another Nashville-based health care corporation, LifePoint Health, was purchased by a private equity firm at the end of 2018 for $5.6 billion, resulting in a payout of nearly $120 million to four of the company’s top executives.

The economic prosperity afforded to Tennessee’s health care corporate executives is in stark contrast to conditions faced by workers throughout the state.

Tennessee has one of the highest percentages of workers making minimum wage or less at 4.1 percent of the workforce, and the state is only one of four without its own minimum wage standards above the federal minimum wage of $7.25 an hour.

A report conducted by the Tennessee Department of Economic & Community Development in 2017 found there was a direct correlation between the state’s poorest counties and counties with the worst health outcomes.

Nearly 1-in-4 Tennesseans have a medical bill listed on their credit history, the 10th highest in the country, according to a report conducted by the Nashville-based nonprofit Sycamore Institute in May 2019. (The researchers noted the available data on medical debt doesn’t fully illustrate the extent of the problem.)

“It stands in the way of people getting ahead. It can really feed or start a cycle of debt. People will turn to credit cards, payday loans as a way to pay for a medical bill. If someone pays a medical bill using one of these means, it doesn’t show up in the statistics we’re citing,” said Mandy Pellegrin, policy director at the Sycamore Institute.

The Sycamore Institute published a follow-up report with 12 policy prescriptions to address medical debt in Tennessee, including calls for policymakers to address surprise billing, enroll more people into health insurance coverage, and regulate debt collector practices.

Despite the harrowing health and debt statistics, Tennessee legislators have taken little action to solve the state’s health care issues and have offered questionable policy solutions.

The state passed a law in 2018 that allows uninsured patients to barter goods and services in exchange for health care, pushed for work requirements attached to Medicaid eligibility, and is currently proposing funding the state’s Medicaid program through a block grant program from the federal government, which would provide the state with a capped lump sum of funding and more autonomy over its use.

Tennessee would be the first state in the nation to fund Medicaid through block grants, which opponents argue will result in reduced benefits for Tennesseans who rely on the program, as the restructuring incentivizes the state to reduce cuts and enrollment. The Trump Administration has supported the use of Medicaid block grant funding as a mechanism to cut federal spending.

“Our political leaders on both sides of the aisle have historically and wrongfully had a serious commitment to health care corporatism over the lives of human beings,” said Kristen Grimm of Franklin, Tennessee, who founded a nonprofit, Mothers for Medicare for All. Only one congressional representative in Tennessee, Steve Cohen, has co-sponsored Medicare for All legislation.

Due to a chronic vascular condition, Grimm’s son has required 24 surgeries over his lifetime, and her family has struggled with staving off bankruptcy while trying to cover the medical expenses that weren’t covered by private insurance.

“We need a comprehensive federal solution that comprehensively reforms the way we deliver health care in the U.S. For all the good that Medicaid has done, Medicaid fails to cover people long term. It was never meant to achieve universal coverage,” concluded Grimm.

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Michael Sainato

Michael Sainato

Michael Sainato is a Freelance Journalist based in Gainesville, Florida. His writing has appeared in The Intercept, The Hill, The Guardian, Denver Post, Truth-Out, and several other publications. Follow him on Twitter @MSainat1