‘A Shocking Amount of Misery’: Medical Debt in America
November 3, 2022
Samantha and Ariane Buck say they were turned away from a physician’s office because of money they owed, forcing them to seek emergency care. They estimate they now have about $50,000 in medical debt. (Photo by Ash Ponders for KHN and NPR)
Even though more Americans than ever have health insurance, medical debt is a pervasive problem in the United States.
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Note: This transcript has been created with a combination of machine ears and human eyes. There may be small differences between this document and the audio version, which is one of many reasons we encourage you to listen to the episode!
Dan Gorenstein: The numbers on medical debt in the U.S. are staggering:
Around 100 million Americans have health care debt.
Together, they owe at least $140 billion.
And the impacts can be devastating.
Noam Levey: Being driven from their homes, having to think twice about bringing their children to the doctor. The amount of suffering out there is hard to overstate.
DG: Today, we talk with a journalist who’s spent the last year chronicling the problem of medical debt and a researcher who’s digging into solutions.
NL: The thing that I think distinguishes medical debt is that it is so fundamentally at odds with the Hippocratic principle of health care, of doing no harm, that I think it just cries out to be exposed for what it is.
DG: Noam Levey has been covering health care for more than a decade, first at the Los Angeles Times and now as a senior correspondent for Kaiser Health News.
For the last year, he’s been the lead reporter on a major series on medical debt from Kaiser and NPR called Diagnosis: Debt.
Noam says people usually think about medical debt as a hospital or doctor’s bill that goes unpaid for so long that debt collectors get involved and it ends up on someone’s credit report.
NL: I think that’s a fine definition. But it significantly undercounts just how many people are burdened with medical debt. So, for example, if I go to the doctor’s office and I put my bill on my credit card and I don’t pay off that credit card, that’s going to show up with credit card debt. But that’s medical debt. If I go to the hospital and I get put on a payment plan where I’m paying my $5,000 or $10,000 bill off over the next three years or something, that’s not going to get recorded as medical debt. But I’m in debt for medical care. Even if I borrow from my friends or I borrow from my uncle or my parents, I’m in debt for medical care. What we essentially have now is a system that is creating debt on an industrial scale.
DG: When you say on an industrial scale, Noam, how big is this problem?
NL: What we found is 100 million people in this country have some kind of health care debt. The burden falls especially hard on certain Americans. Black Americans have much more medical debt than white Americans do. People in the South have a lot more medical debt. But almost half of Americans in households making more than $90,000 have had health care debt in the last five years. 60% of people who have health insurance have had medical debt. It’s hard to overstate the extent of misery that’s out there.
DG: Some studies have linked this debt to a greater likelihood of having chronic pain, depression, early death and attempting suicide.
Surveys show that it leads people to avoid care like skipping prescriptions, especially among people of color and people with disabilities.
But there’s limited research on whether medical debt directly causes people’s health to deteriorate.
DG: Noam, is it typical for people to be experiencing the misery that you described or is it more typical for someone to be like, yeah, I owed a couple hundred bucks for a couple of months or a couple of years, and I had the debt collector chasing me. But it really at the end of the day, it wasn’t that big of a deal.
NL: It’s sort of both. About a third of people who have medical debt owe less than $1,000. But a quarter of people owe I think more than $5,000. More than half say they’ve had to make a difficult sacrifice, like using up all their savings, moving in with friends and family or losing their homes. So I don’t think it’s hyperbole to say that there’s a shocking amount of misery out there.
DG: You’ve talked with, I think, over 100 people in medical debt in the last year.
Is there someone whose story really captures what you’ve been telling us about how medical debt has become this permanent feature in the U.S. health system and the misery that it inflicts?
NL: I talked to a family in Phoenix, Arizona, earlier this year that really stuck with me.
Ariane Buck: My name is Ariane Buck. I’m married with three kids.
NL: I remember I could hear his family in the background. I mean, he’s got three kids running around and I’m calling him around dinnertime. He’s wrapping up his work selling health plans over the phone.
AB: We’re always really nervous to call or even try and go to the doctor because I know I’m going to end up with a huge bill.
NL: The reason I called Ariane actually was because he had said he had been denied medical care as a result of his medical debt. He had developed an intestinal infection and he had been very sick.
AB: It was really concerning. I wasn’t keeping anything down. I wasn’t able to use the bathroom properly.
NL: His wife actually called their doctor’s office and said my husband’s been on his back for the last two days, where can we bring him in to get him looked at?
AB: However, I was denied due to me owing them less than $100.
NL: The doctor’s office had said you’ve got outstanding balances here. You can’t come here. If you’re really worried, go to the emergency room.
AB: We finally got me there to the E.R. to go get seen, and the doctor basically told my wife and me that if I hadn’t come at that time, I probably would not have made it.
NL: The irony, of course, was that as a result of that trip to the emergency room, the medical debt that they had got increased by another several thousand dollars. And so the fact that his physician’s office wouldn’t see him made a medium sized problem that much bigger.
DG: What are you thinking as you’re hearing this story, as this problem he’s got is getting compounded?
NL: When I heard his story, you know, I’m shaking my head thinking, good Lord, I mean, what kind of a system do we have where this is the way that patients get treated over a few hundred dollars?
DG: As head-shaking as it was, Noam also knew it was pretty common.
A Kaiser Family Foundation survey found 1 in 7 people with medical debt say they’ve been denied care because of it.
Noam says when he last spoke with the Bucks this summer, they owed more than $50,000.
And they were filing for bankruptcy.
This debt, Ariane said, has made it hard for him to be the dad he wants to be.
AB: It makes me feel terrible because I can’t show them the things that I want to show them or take them to the places that they want to go.
NL: The thing that really struck me was this feeling that because of owing money for medical care, he’s unable to provide much for his kids beyond, as he said, a roof over their heads.
AB: We’ve had teachers who send home things saying, hey, you guys need this, and we don’t have the extra money to go buy it. We’ve stopped going on family trips, even go to the mall, the small things like that. It makes you feel like a failure to be honest.
NL: To hear a parent talk about being unable to provide even really basic things, that’s hard under the best of circumstances. But to think that the health care system is doing that to somebody? There’s something really wrong about that. And that, I think, is what really struck me.
DG: Did you say to him, what do you think, Ariane, that this is the health care system that’s doing this to you?
NL: Yeah. I usually ask patients at the end, sort of. what’s your takeaway? Ariane, was, I thought, very, very eloquent about saying this isn’t the way a health care system should treat people.
AB: That’s just not right. And I feel like that should be something that we all, not just me, but everyone should be able to at least be able to get to a doctor when they feel ill and not have to worry about coming out of it on the worst end of the stick.
DG: You said you like to end your interviews asking people about big takeaways. Any big takeaways you’d like to share with us?
NL: Medical debt is very complicated for many different reasons, but at its core, it’s really not complicated at all. Half of Americans don’t have $500 in the bank to cover an unexpected medical bill. The average deductible on a health plan that you get from your employer is north of $2,000 now, more if you’ve got a family plan. It doesn’t take a Nobel Prize in economics to understand that if any trip to the hospital is going to generate at least a $2,000 bill, there’s going to be debt. And ultimately, that’s a problem for hospitals, it’s a problem for doctors, and it’s a problem for taxpayers.
DG: Alright, Noam. Thank you so much for taking the time to talk to us on Tradeoffs.
NL: Yeah, my pleasure. Thanks for having me, Dan.
DG: When we come back, we ask one medical debt researcher about possible solutions to this pressing problem.
DG: Welcome back.
To help us think through what kinds of policies could help the 100 million Americans struggling with some $140 billion in medical debt, people like Ariane Buck, we called up UCLA’s Wes Yin.
Wes Yin: I’m an economist, and I focus on issues of consumer finance, inequality and health care.
DG: Wes is part of a research team that has spent the last several years trying to better understand the scope and impact of medical debt.
Their work provides some of the best insights we have into how different solutions could actually shake out.
One forthcoming paper looks at the idea of canceling debt.
The team found that when a hospital wiped out what the patient owed and temporarily reduced how much patients had to pay, those patients became much more likely to see their doctor, get important screenings and fill their prescriptions.
WY: It turns out, though, that the effects that we observed are short lived.
DG: Within six months, patients’ who had their debt forgiven were back to getting less care, no better able to afford it than they were before.
Wes says this suggests to him that getting rid of someone’s medical debt might help in the short-term, but it’s really more of a Band-Aid than a fix.
WY: I think that a big distinction here is the difference between canceling medical debt and avoiding medical debt before it happens. Canceling medical debt that’s occurred is a one-time cancellation. It doesn’t necessarily impact the future debts that may occur in the future.
DG: Wes says a better way to protect against future medical debt is to make sure people have good insurance.
He and his colleagues released a major paper in JAMA last year that found that medical debt dropped far more in states that expanded Medicaid.
WY: I think what was surprising to me was the size of the effects and just how pronounced they were. In the states that expanded Medicaid, the amount of debt basically was halved. And in places that didn’t, it was essentially unchanged.
DG: Like the hundreds of other studies showing the positive impacts of Medicaid expansion, this finding has not convinced conservative lawmakers in the final 12 states to get on board.
And Wes notes that expanding Medicaid only helps some people.
WY: Medicaid expansion will certainly help the individuals who are eligible for Medicaid. But what about the people who are right above Medicaid? What about the people who have employer sponsored insurance that have big deductibles? And so what are the public policies that we can do to also not only expand access to insurance, but also to improve the coverage and quality of plans that people can afford?
DG: There’s more data to come from Wes and his collaborators.
By the end of this year, they hope to publish what could be their most illuminating study yet: a randomized control trial evaluating the impacts of canceling medical debt.
Since 2017, the researchers have been following two groups of people with medical debt: one group that was randomly assigned to have their debt paid off, and another that would continue to carry their debts.
WY: We are then able to compare the individuals who have randomly received the debt abolishment to those who did not receive it and track their outcomes over time. We are trying to understand the impacts of the medical debt abolishment on mental health, physical health, utilization, as well as their ability to to buy their basic needs.
DG: Wes says this study should, for the first time, help clarify if medical debt actually causes people’s health to get worse — their physical, mental and financial health.
All the attention on medical debt in recent years has led to a flurry of state and federal policies being enacted. To help us understand how effective they are likely to be, we have asked Wes to play a little game with us that we are calling…
SFX: Rank! That! Policy!
DG: Now, the rules of this game are pretty simple, Wes. I’m going to read off a policy and you’re going to tell me, on a scale of 1 to 10, how big of a dent you think it’s going to make in the medical debt problem. Are you ready to play?
WY: I’m ready to play. Count me in.
DG: Okay. And I just also want to be clear to the audience out there, we are not making light of the medical debt problem. It is serious, and it is real. But we also want to talk about dense policy things in a way that are going to be easy to understand and follow along here.
So, Wes, let’s start with the more than 20 states that have laws requiring hospitals to offer free care to poor patients or limiting certain collection tactics. Wes?
SFX: Rank! That! Policy!
WY: All right. Well, for this one, I think it’s a two. It’s not out of lack of effort or good intentions. It’s just that a lot of states really aren’t clear about how much is required in financial assistance. It’s also really difficult to enforce. So I’m going to give it a two.
DG: Now, what about these two policies from the Biden administration? First, the administration is going to take medical debt out of consideration when deciding whether to give someone a loan, like for a small business or a house.
SFX: Rank! That! Policy!
WY: So it’s like a doctor treating a disease that’s already there. It’s not preventative. But we know that when people have debt, it affects their credit scores, it affects their abilities to get loans, it raises their interest rates. If that’s implemented well, that really limits the negative impact that medical debt has on people’s abilities to get federal loans. So that’s a good thing. I’m going to give that a six.
DG: OK, let’s talk about the second Biden policy. They plan to use data on hospital debt collection practices to decide which facilities get federal grant dollars.
WY: Yeah, you know what? That’s the big wild card for me. All the devils are in the implementation details. If they don’t really enforce using this for potential grant-making to those hospitals, then it might not have a lot of power there. But at the very least having the federal government get more data on debt collections practices, the amount of debt that’s held by hospitals really has the potential for some big changes down the road. So I’m going to give that a six also, but I’m going to give that a slight edge just for its potential.
DG: Right. And the more information you have, the easier it is to ultimately craft policies that are responsive to the problem.
DG: Okay. So let’s move on to Congress, which banned surprise out-of-network medical bills through the No Surprises Act. Wes, you know what I’m going to ask next…
SFX: Rank! That! Policy!
WY: I’m of two minds about this one. It’s not a really big source of medical debt, but it really is one of the more galling sources of medical debt. Emergency department spending is about one-tenth of all hospital spending. And the surprise billing addresses just a small part of the emergency department billing. So this gets rid of that, which I think is great, but it doesn’t solve, you know, a bigger source of the problem. So let’s give it a five overall.
DG: Excellent. OK. We’ve got one more for you to rank, Wes.
Starting next year in 2023, the three biggest credit reporting agencies say that they’re going to remove unpaid medical debts under $500 from people’s credit reports. That could be as much as 70% of medical debt currently on credit reports.
For the last time, Wes…
SFX: Rank! That! Policy!
WY: You know, I’m really bullish on this one as well. Having medical debt can impact someone’s credit score, which affects their interest rates and ability to borrow. It may even affect employment decisions and rental decisions. So anything that we can do to dampen the negative effects of having medical debt is a good thing. So I’m going to give this one a six.
DG: A six, OK. Wes, thank you so much for being our first ever contestant on…
SFX: Rank! That! Policy!
WY: Great. Thanks for having me.
DG: It has been a joy.
Wes says to really go after medical debt, policymakers must address what he considers the root causes: high medical prices and people’s inability to afford good health insurance.
That, he says, will take things like raising the minimum wage, more government support for health insurance, slowing down health care mergers and maybe capping prices.
The most salient point: Medical debt is a pernicious and widespread problem that demands attention.
To learn more, visit our website, where we have links to additional research and the entire KHN and NPR series Diagnosis: Debt.
You’ll find it all at tradeoffs.org.
I’m Dan Gorenstein. This is Tradeoffs.
Tradeoffs’ coverage of health care costs is supported, in part, by Arnold Ventures and West Health.
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Selected Reporting and Research on Medical Debt:
Diagnosis: Debt (Kaiser Health News and NPR)
A New Category of “Never Events”—Ending Harmful Hospital Policies (Dave Chokshi and Adam Beckman, JAMA Forum, 10/27/2022)
Arizona measure could be a model for Democrats nationwide (Megan Messerly, Politico, 10/26/2022)
The Impact of Financial Assistance Programs on Health Care Utilization (Alyce Adams, Raymond Kluender, Neale Mahoney, Jinglin Wang, Francis Wong and Wesley Yin; American Economic Review: Insights; 9/2022)
Medical Debt Is Being Wiped Off Credit Reports. What That Means for You. (Ayse Kelce, Wall Street Journal, 7/11/2022)
Debt in America: An Interactive Map (Urban Institute, 6/23/2022)
Health Care Debt In The U.S.: The Broad Consequences Of Medical And Dental Bills (Lunna Lopes, Audrey Kearney, Alex Montero, Liz Hamel and Mollyann Brodie; Kaiser Family Foundation; 6/16/2022)
The burden of medical debt in the United States (Matthew Rae, Gary Claxton, Krutika Amin, Emma Wager, Jared Ortaliza and Cynthia Cox; Peterson-KFF Health System Tracker; 3/10/2022)
States Move to Protect Hospital Patients from Heavy Medical Debt (Anna Wilde Mathews, Wall Street Journal, 2/7/2022)
Medical Debt Burden in the United States (Consumer Financial Protection Bureau, 2/2022)
Medical Debt in the US, 2009-2020 (Raymond Kluender, Neale Mahoney, Francis Wong and Wesley Yin; JAMA; 7/20/2021)
Noam Levey, Senior Correspondent, Kaiser Health News
Wesley Yin, PhD, Associate Professor of Economics, UCLA
The Tradeoffs theme song was composed by Ty Citerman, with additional music this episode from Blue Dot Sessions and Epidemic Sound.
This episode was produced by Ryan Levi and mixed by Andrew Parrella. Editing assistance from Cate Cahan.
Additional thanks to: Erin Fuse Brown, Jack Cardinal, Stephen Rouzer, the Tradeoffs Advisory Board and our stellar staff!