THE HUMAN COST OF AMERICA’S $140B OUTSTANDING MEDICAL DEBT
In July of this year the Stanford Institute of Economic Policy Research put out a report revealing that Americans actually owe $140B in medical debt well above the widely-reported $81B referenced during the presidential election. The researchers accessed TransUnion’s anonymized records of 40M individuals from 2009–2020, tracking the amount of total medical debt in collections and the amount of the new debt acquired in a 12-month period. Debt related to COVID was excluded from the study. Here are some of the key findings:
Medical debt constitutes the largest debt in collection vs. all other sources combined- Over 18% of Americans hold medical debt currently in collections. Of those, 55% have no other debt. And 60% of individuals incurring medical debt had some level of health insurance but faced rising denials by their insurance carriers.
The South has the most people with medical debt while the Northeast has the lowest debt loads- In the South, close to 24% of residents have medical debt vs.10% in the Northeast.
The 12 states that did not expand Medicaid saw the highest rise in medical debt- As expected, these are states predominately located in the South. The states that did expand their Medicaid plans saw considerable decline in debt.
The debt load of the poorest communities rose significantly- The average addition in medical debt in 2020 was $836- up from an annual amount of $630 in 2009. The average medical debt for Americans stands at $2,424 today.
The long-term consequences of rising medical debt can be devastating for our nation. It is estimated that over 40% of adults rely on home remedies or OTC drugs instead of going to a doctor and many indicate that doctors never explain the cost of procedures to them. As a result, people neglect medical problems, significantly bringing down the overall standard of healthcare of our nation.
Although there are no magical answers to this daunting problem, there are a few things we can and should do. We need to form more organizations that help patients negotiate or even seek forgiveness for their medical debt. Price transparency, increased Medicaid coverage and lowering premiums for Obamacare plans (already underway thanks to President Biden) are some measures that can further ease the burden. We all know that when a nation’s health declines, its economy will eventually suffer. Lets avoid the headline: “America In Decline” and do something about medical debt!
