The Crisis of Medical Debt in the US

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Photo by Josh Appel | Unsplash

An elderly woman experiences a medical emergency. She receives a hospital bill for thousands of dollars. Her insurance does not cover all of it, and she does not have the money to pay the rest. To save money, pay off the debt, and avoid adding to what she owes, she does not fill her prescriptions for multiple chronic illnesses and avoids preventative care. Her health suffers. This leads to another health emergency, which generates more debt. This vicious cycle traps too many patients in the US.

Over 100 million individuals in the US have health care debt, according to a 2022 Kaiser Health News and NPR investigation. In a recent episode of the Institute for Healthcare Improvement (IHI) Turn on the Lights podcast, Berneta L. Haynes, a staff attorney with the National Consumer Law Center and former Director at Georgia Watch, joined IHI President and CEO Kedar Mate and IHI President Emeritus and Senior Fellow Don Berwick to discuss this uniquely American problem.

The Inequitable and Far-Reaching Impacts of Medical Debt

Like many issues in health care, medical debt disproportionately impacts historically marginalized groups. Haynes notes that uninsured patients and those with chronic conditions deal with this burden at higher rates. Medical debt is also more highly concentrated in the South, where many states have not expanded Medicaid. Black families — many of whom live in the South and also have chronic conditions — are hit disproportionately hard by debt. A nationwide KFF poll found that 56 percent of Black adults owe money for a medical bill compared to 37 percent of White adults.

Medical debt can infiltrate all aspects of an individual’s life. For instance, as debt collectors repeatedly make contact, people will often sacrifice paying for food and rent to make debt payments. Medical debt can also have a negative impact on credit scores, making it more difficult to secure housing or even a job. “Outside of material consequences . . . there is this persistent stress people experience when they are dealing with medical debt,” added Haynes. This chronic stress worsens well-being and can aggravate health outcomes.

“Debt is not a morality issue”

In their conversation, Berwick raised the “cultural misperception” linking “debt and merit, debt and personal effort” in the US. “Debt is not a morality issue,” Haynes agreed. She added that the view that many Americans hold — that debt represents a moral failing — deters individuals from seeking and accepting assistance. When Haynes counsels individuals to declare bankruptcy — explaining that “bankruptcy is a legal instrument that allows you to get back on clear footing” — they are often resistant to do so. Haynes wants those struggling with debt to understand that needing or asking for help is no reason for shame.

Reason for Cautious Optimism

According to recent data from the White House, 8.2 million fewer Americans are struggling with medical debt compared to the start of 2020. While Haynes said she is “hesitant to claim victory so early,” she noted that the COVID-19 pandemic threw many health inequities, including medical debt, into sharp relief and led to an uptick in energy to address the issue.

Haynes also pointed to recent policy changes that have helped prevent patients from going into debt, including Medicaid expansion and the No Surprises Act, a law that protects patients from unexpected medical bills when they receive most emergency services, non-emergency services from out-of-network providers at in-network facilities, and services from out-of-network air ambulance service providers.

While these policies are steps in the right direction, Haynes emphasized that more action is needed. She suggested making changes to the Affordable Care Act, including broadening income eligibility requirements for Medicaid, ensuring providers screen patients for financial assistance eligibility before billing them, providing reasonable notice to patients before debt collection action is taken, and allowing patients to hold hospitals accountable for violating financial assistance laws in court. Haynes also recommended creating a federal program that offers an insurance plan for those in states that have not expanded Medicaid, incorporating medical debt cancellation and Medicaid expansion in a larger strategy towards racial justice reparations, and enacting a national publicly funded single-payer health plan administered at the state and local levels.  

Despite challenges, continued efforts to cancel and prevent health care debt are creating real change. Haynes remains hopeful as the “groundswell of interest” continues around fixing the medical debt crisis in the US.

Sam Culbert is an IHI Marketing Coordinator.

To learn more, listen to the complete IHI Turn on the Lights Podcast episode Penalized for Being Sick: The Uniquely American Crisis of Medical Debt with Berneta L. Haynes.

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For those struggling with debt, Berneta Haynes recommends the Georgia Consumer Guide for Medical Bills And Debt. While some of the content is specific to Georgia residents, much of the guide is applicable in all US states.