A recent study by the Peterson-KFF Health System Tracker has revealed that medical debt in the United States has once again reached unprecedented levels, affecting approximately 20 million American adults who collectively owe around $220 billion in medical bills. This alarming situation sheds light on the complexities and challenges individuals face when dealing with healthcare costs in the country.
Matthew Rae, Associate Director of the Program on the Health Care Marketplace at the non-profit KFF, describes medical debt as a multifaceted issue. It encompasses both chronic conditions financed over an extended period and sudden, significant expenses that not only strain individuals’ finances but also diminish their income. The implications of medical debt extend beyond the immediate financial burden, creating a ripple effect that impacts individuals’ ability to earn and accumulate assets over the long term.
The study indicates that the majority of adults with medical debt owe at least $1,000, with 14% facing debts exceeding $10,000. Racial, ethnic, income, and geographic disparities are evident, with Black Americans having the highest percentage of medical debt (13%), and regions like the southeastern US, where a significant Black population resides, experiencing the highest share of residents burdened by medical debt. Mississippi stands out with the second-largest share of adults with medical debt at 15.2%, emphasizing the regional disparities.
Rae emphasizes the lasting impact of medical debt on overall inequities in the US, affecting households’ ability to accumulate wealth over generations. The study reveals that individuals with medical debt often resort to borrowing from retirement accounts, seeking payday loans with exorbitant interest rates, selling possessions to pawn shops, or taking out loans against their vehicles, trapping them in a vicious cycle that hampers their financial well-being.
Despite having health insurance coverage, the study highlights significant challenges faced by insured individuals with medical debt. High out-of-pocket costs, including deductibles, copays, and coinsurances, lead to situations where individuals cannot afford necessary healthcare services. For insured adults with medical debt, 35% reported not filling a prescription due to cost, and 41% refrained from seeking medical attention for a health problem due to financial constraints.
Rae points out that the high cost-sharing associated with health insurance plans contributes to individuals accumulating medical debt, even when they have coverage. Factors such as high deductibles, copays, and coinsurances, coupled with out-of-network services and uncovered specialty drugs, contribute to the financial strain on individuals.
The study underscores the critical role of Medicaid expansion in mitigating medical debt. While the Affordable Care Act made Medicaid expansion available over a decade ago, 10 states have yet to adopt it, contributing to higher rates of medical debt in these regions. Rae emphasizes the life-changing impact of Medicaid expansion for individuals who gain coverage.
The alarming findings of the study highlight the urgent need for comprehensive measures to address the medical debt crisis in the US, focusing on reducing disparities, improving access to affordable healthcare, and reevaluating the cost-sharing structures within health insurance plans.