Just how much medical bad debt do uninsured hospital patients rack up each year? According to a new report released this week by the U.S. Department of Health and Human Services, about $49 billion.

It sounds like a potential gold mine in collection payments for buyers and collectors of health care receivables. The problem is uninsured patients can only afford to pay in full for about 12 percent of the medical debt they incur, the HHS study found. That’s because most uninsured hospital patients have no cash savings or other financial assets.

Half of the estimated 50 million uninsured Americans have no savings or financial assets at all, the report found. Even the higher income earners, those earning above 400 percent of the federal poverty level — $89,400 or more a year for a family of four — have less than $4,100 in savings or assets.

Much of HHS’ report was based on data taken from hospital records from 2006-2007, before the Great Recession that wiped out much American households’ wealth. The report was done primarily to show why expanding coverage under the Affordable Care Act is important. The law would require nearly every American who can afford it to buy health care coverage. But opponents of the law are challenging the mandate, with two cases being heard this week in U.S. appeals courts.

Jim Richards, CEO of Capio Partners, a medical debt buyer based in Atlanta, told insideARM.com that he believes the government’s report is on point.

“The math is correct,” Richards said, adding that the amount of bad debt hospitals rack up annually since then has increased about 20 percent.  He blamed population growth, higher unemployment and higher deductibles and co-pays privately insured patients are required to pay but cannot or do not.

Still, Richards said the uninsured Americans who are paying their hospital bills in full are not as well off as even the government report suggests. He said the uninsured patients who pay their hospitals bills in full typically have balances under $1,000.  Even the upper income uninsured patients, most of whom are small business owners, have limited means to pay the high health insurance premiums or account  balances in full if the bills exceed $10,000.

Health care policy experts agree that the level of payment by the uninsured is not a sustainable model for hospitals, taxpayers or the privately insured, who are billed higher premiums and taxes to cover the losses hospitals incur treating the uninsured. Of the nearly 50 million uninsured Americans, nearly 2 million uninsured Americans are hospitalized, HHS said. Nearly 60 percent of those patients rack up bills of $10,000 or more.

But collection agencies have the tools to determine who has the ability to pay or are willing to pay what they can afford now, said Ron Fauqhur, co-founder and Sr. Vice President, Chief Strategy Officer of Ontario Systems, a collection software solutions company based in Muncie, Ind.

“It does no good to talk to people who have no assets, and no ability to pay the bills,” at least not now, Fauqhur said. He noted that although most patients may not be able to pay most medical bills in full, many will honor the debt when their financial circumstances change because they are satisfied and appreciate the care they received.  That’s why analytical tools will play a bigger role in collections, helping agencies determine who to talk to and when, even checking back periodically when a debtor’s financial picture has change.

“Agencies don’t have the resources to deal with every account that comes down the pike,” Fauqhur said.  “The volume will be there, but determining which accounts they should work will be the key,” he said.

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