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Cancel Medical Debt

A new study shows Americans have $140 billion in medical debt. Time to end it.

Photo of medical bills received by Americans in debt
UrbanBohemian (Flickr)

It’s a crowded field, but there are few things unique to American life that are bleaker than the concept of medical debt. So it’s a good thing, then, that it turns out there’s much more of it than we previously knew.


Here’s a ‘Fun’ Anecdote About Our Healthcare System

Nearly one in five Americans, to the tune of $140 billion, had medical debt in collections between January 2009 and June 2020, according to a study published Tuesday in the Journal of the American Medical Association. This is an increase of more than 70 percent from a 2016 estimate of medical debt, which is “highest among individuals who lived in the South and in zip codes in the lowest income deciles and became more concentrated in lower-income communities in states that did not expand Medicaid,” according to the study’s authors—meaning that the people least able to handle the astronomical cost of medical care are saddled with this burden.

And those numbers likely don’t capture the full breadth of the crisis, as the New York Times pointed out:

The $140 billion in debt does not count all medical bills owed to health care providers, because it measures only debts that have been sold to collections agencies. The increasing number of lawsuits that hospitals file against patients to collect debt, which can lead to legal fees or wage garnishments, are not included in the figure. Nor are the medical bills that patients pay with credit cards or have on long-term payment plans. Some of the difference between the new estimate and the older, smaller one may reflect differences in how different credit rating agencies categorize debts.

The new paper does not include data during the coronavirus pandemic, which is not yet available.

Our friend Libby Watson has been sharing stories like this since she launched the newsletter Sick Note earlier this year. In one case, a person with Type 1 diabetes said he just straight-up doesn’t pay the co-pay for his bloodwork. “There’s so much about being a diabetic, I have so much medical debt right now and I just don’t pay it,” Drew, the patient, told her. “I don’t have an option.” And while medical debt itself doesn’t affect your credit score, it can if the bill ultimately goes to debt collectors. (As someone whose doctor told me that I need bloodwork and then had that request rejected by my insurance company after the fact, I do not blame him for skipping out on this bill.)


The Reality of Healthcare in America Should Make You Uncomfortable

This is the logical endpoint of making healthcare a commodity. Requiring people to pay for medical care they need to stay alive forces them to put the cost on credit cards, payment plans, and their credit reports. It’s how bills pile up and consume people’s finances. It’s why people are driven to “steal” care—or more often just forgo care entirely because they can’t afford it. More than 530,000 people a year who file for bankruptcy cite medical issues as a contributor to the problem, a 2019 study found. (This was the source of one of the dumbest “fact checks” of the 2020 presidential campaign, by the way. )

That the $140 billion in debt has mostly been accrued by people whose only crime is being poor and living in a state run by Republicans still trying to kill Obamacare—which itself won’t solve the problem either—makes the situation even worse. Nearly 28 percent of Black households and 21 percent of Latino households held medical debt as of the 2018 Survey of Income and Program Participation, a substantially larger share than the 17 percent of white households who have medical debt. It’s a crisis exacerbated by class and race factors, which is one of the main reasons no one bothers to fix it.

But we should fix it—and we can. A national healthcare system or Medicare for All would end the crisis entirely, not to mention many more problems with healthcare in the U.S.), but the federal government could take a number of steps to get rid of the already-existing debt. One idea, as Sen. Bernie Sanders proposed during the presidential campaign, is to simply pay it off. (Some of the biggest agencies in debt collections, by the way, have faced massive fines in the past for scamming consumers. This is an industry that should not exist.)

Eliminating that medical debt could be part of a larger debt relief plan that includes forgiving the existing $1.7 trillion in student loan debt; unlike the bad-faith (and wrong) arguments about who’s helped by student loan debt, no one can make a halfway serious claim that rich people are the main beneficiaries of a plan to kill off medical debt. And given that Congress is currently weighing more than $4 trillion in investments across two different bills, $140 billion is a comparative drop in the bucket for something that would immediately improve the lives of millions of people.

One of the worst products of healthcare in the U.S. is that receiving it often compounds physical pain with financial anxiety, and this is one way to solve that without upsetting the underlying, severely broken system too much. If the worst thing that happens is that debt collection companies go bankrupt themselves, well, that’s just an added bonus.