Medical Debt is a Severe Financial Burden in the United States

By: Ranier Simons, ADAP Blog Guest Contributor

Medical debt is a major financial crisis in the United States. It is a major barrier to financial health and even physical health. Studies show that medical debt is negatively correlated with health issues. People who have problems paying their medical bills have a shorter life expectancy, poorer mental health, health issues like hypertension, and lower self-reported health status.[1] 

Photo Source: The Sycamore Institute

Even though over 90 percent of the U.S population has some semblance of health insurance, medical debt is still a pervasive and debilitating issue.[2] Present-day medical insurance plans have many cost-sharing requirements that saddle patients with bills they cannot pay. With high monthly premiums, these requirements, such as high deductibles and co-payments, result in bad life decisions. People face juggling basic needs such as food, clothing, and housing with paying medical bills generated by necessary care. Moreover, people borrow from family or even financial institutions, going into even further debt to take care of their medical bills.

The Kaiser Family Foundation published a brief shining light on the burden of medical debt in the United States. The overall finding was that the burden of medical debt is stratified along racial and economic lines, age cohorts, strength of insurance coverage, and health status. The data source was the Survey of Income and Program Participation (SIPP). Significant medical debt was defined as people who owed more than $250 in unpaid medical bills as of December 2019.[2]  The survey shows that people in the United States owe, at the minimum, approximately $195 billion in medical debt. Roughly six percent of adults have over $1,000 in medical debt, and one percent (about 3 million people) owe over $10,000.[2]

Photo Source: KFF

Along racial lines, African-Americans are reported to be more likely to have significant medical debt. Of the 9 percent of adults surveyed who meet the study threshold of high debt, 16 percent of those are non-Hispanic African-American. This contrasts to 9 percent of non-Hispanic White Americans and 4 percent of non-Hispanic Asian-Americans. Regarding gender, more women report having high medical debt than men; 11 percent and 8 percent, respectively. Part of this discrepancy could be attributed to women having lower incomes and increased healthcare expenditures associated with childbirth.

Unsurprisingly, older adults are more likely to have significant medical debt than younger people. However, there is a distinction apparent among those later in life. The report shows that the percentages decrease when older adults reach Medicare age. Twelve percent of adults aged 50-64 report significant medical debt, in contrast to 6 percent of those aged 65-79.[2] 

In terms of income, those with lower or moderate incomes are more likely to have high medical debt. Twelve percent of adults with incomes below 400% of the federal poverty level have such debt. Income is essential because some do not have liquid assets to pay out of pocket maximums, deductibles, and co-insurances, even with insurance. Sixteen percent of adults stated they would need to take on credit card debt to meet an unexpected $400 expense.[2] Four hundred dollars could easily be an emergency room visit co-pay for a privately insured person or even an urgent care visit for someone who was not insured.

Health status in combination with income is another relationship leading to medical debt. Those with more medical issues, by definition, have more medical expenditures due to chronic health maintenance needs, and higher utilization of services generates more bills that accumulate over time. Those with more serious medical issues cannot earn as much income being hindered physically by their medical problems in both ability and maintaining consistent employment.

Geography was also shown to be a factor by the report. People living in rural states in the South reported as being 12% of those reporting high medical debt, as opposed to 10% in the Midwest, 6% in the West, and 8% in the northeast. Related to this geographical distribution is Medicaid. Twelve states that have not expanded Medicaid under the Affordable Care Act are Alabama, Florida, Georgia, Kansas, Mississippi, North Carolina, South Carolina, South Dakota, Tennessee, Texas, Wisconsin, and Wyoming.[3]

The KFF report is proof that expanding coverage is not a panacea to alleviating the financial burden associated with medical debt. Effective change will come with restructuring healthcare finance, socioeconomic infrastructure, wholistic population needs assessment, and re-examining the country’s value system.

[1] Pellegrin, M. (2021, May 19). How medical debt affects health. Retrieved from https://www.sycamoreinstitutetn.org/how-medical-debt-affects-health/
[2] Rae, M., Claxton, G., Amin, K., Wager, E., Ortaliza, J., & Cox, Cynthia. (2022, March 10). The burden of medical debt in the United States. Retrieved from https://www.healthsystemtracker.org/brief/the-burden-of-medical-debt-in-the-united-states/
[3] Holahan, J., Buettgens, M., Banthin, J., & Simpson,M. (2021, June 30). Filling in the gap in states that have not expanded Medicaid eligibility. Retrieved from https://www.commonwealthfund.org/publications/issue-briefs/2021/jun/filling-gap-states-not-expanded-medicaid

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.