Public owns massive amount of medical debt despite high insurance rates
Medical debt piled up on more than 23 million people in 2019 despite high rates of insurance enrollments, with the amount due totaling at least $195 billion.
For many families in the United States, medical debt amounting to at least $250 is a considerable financial burden, according to the U.S. Census Bureau’s Survey of Income and Program Participation. Though 90% have insurance coverage through private and/or public plans, the Kaiser Family Foundation reported that roughly 16 million people in the U.S., or 6% of adults, owe over $1,000 in medical debt, and 3 million people, or 1% of adults, owe a medical debt of more than $10,000.
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“Most Americans have private health insurance, which generally requires payment of a deductible, coinsurance, and copays for medical services and prescriptions,” according to the Kaiser Family Foundation. “Many Americans, even those with private health insurance, do not have enough liquid assets to meet deductibles or out-of-pocket maximums.”
People across demographics are spending down their savings in order to make a dent in their debts. About 75% of insured people with medical debt were more likely than uninsured people, or 62%, to cut back spending on food, clothing, or basic household items.
Meanwhile, three-quarters of insured people said the amount they had to pay for their insurance copays, deductibles, or co-insurance was more than they could afford, especially those with high deductibles. Seventy-six percent of people with debt and very low insurance deductibles also reported trouble paying their bills, which would be the case when paying out-of-network co-insurance or repeated copays.
The burden of medical debt is not felt uniformly across the U.S., though. People who report being in fair or poor health, have a disability, live in rural areas and in Southern states, and those that have not expanded Medicaid to cover the poorest populations have a much higher likelihood than the alternatives of having unmanageable medical debt.
To date, 12 states have neglected to expand Medicaid, the government insurance program for the very poor and people with disabilities: Alabama, Florida, Georgia, Kansas, Mississippi, North Carolina, South Carolina, South Dakota, Tennessee, Texas, Wisconsin, and Wyoming. Twelve percent in those states have medical debt versus 8% in states that have expanded Medicaid to cover a wider swath of people living below the poverty line, which, in 2019, was $12,490 for a person living on their own and $25,750 for a family of four.
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How much the pandemic’s effect on delaying elective or preventive healthcare had on medical debts in 2020 remains to be seen. The Centers for Disease Control and Prevention calculated the percentage of people who had delayed care in 2020 by the end of June to 41%. Anxieties over possible exposure to the virus caused 32% of adults to put off or avoid seeking routine healthcare in the time period, too, foreshadowing a possible increase in overall nationwide sickness and mortality rates associated with both chronic and acute health conditions.
