Why Are 40% of Americans Struggling With Healthcare Debt?

Young brunette curly female reading her bill papers, looking stressed.
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While much of the focus on debt centers on mortgages, credit card bills and student loans, a new survey from the Kaiser Family Foundation spells out just how pervasive healthcare debt is in the United States.

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The KFF Health Care Debt Survey, part of a larger investigation published last week by the Kaiser Health Network and NPR, found that more than 100 million Americans are saddled with healthcare debt. That figure includes 41% of U.S. adults.

Nearly one-quarter (24%) of respondents said they have medical or dental bills that are either past due or haven’t been paid at all, while 21% said they have medical or dental bills that are being paid off over time directly to providers. Most of those with medical debt are middle- or lower-income Americans, with well over half (68%) living in households with annual incomes below $40,000.

As KHN noted, the investigation reveals a problem that is “far more pervasive than previously reported” — despite recent attention from the White House and Congress. That’s mainly because much of the healthcare debt patients accrue is hidden as credit card balances, loans from family or payment plans to hospitals and other medical providers.

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One-quarter of adults with health care debt owe more than $5,000, the report found. About one in five respondents with any amount of debt said they don’t expect to ever pay it off.

“Debt is no longer just a bug in our system. It is one of the main products,” said Dr. Rishi Manchanda, who has worked with low-income patients in California for more than a decade and served on the board of the nonprofit RIP Medical Debt. “We have a healthcare system almost perfectly designed to create debt.”

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The KFF survey was designed to capture not just bills patients can’t afford to pay, but also other loans used to pay for healthcare. Research included analyses of credit bureau, hospital billing and credit card data conducted by the Urban Institute and other partners, as well as KHN and NPR interviews of hundreds of patients, physicians, health industry leaders, consumer advocates and researchers.

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Roughly one in seven Americans with debt said they’ve been denied access to a hospital, doctor or other provider because of unpaid bills. An even greater share — around two-thirds — have put off care they or a family member need because of cost.

Much of the blame is put on a healthcare system that is “pushing patients into debt on a mass scale,” the report said. That’s the case even after the 2010 Affordable Care Act was passed. The law expanded insurance coverage to tens of millions of Americans but also “ushered in years of robust profits” for the medical industry, which continues to raise prices.

For many Americans, the law “failed to live up to its promise of more affordable care,” according to the report. Instead, many have run up medical bills totaling thousands of dollars amid a move by health insurers to shift costs onto patients through higher deductibles.

“Now, a highly lucrative industry is capitalizing on patients’ inability to pay,” the report said. “Hospitals and other medical providers are pushing millions into credit cards and other loans. These stick patients with high interest rates while generating profits for the lenders that top 29%, according to research firm IBISWorld.”

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Many Americans have been forced to cut spending elsewhere — including on essentials — to tackle their medical and healthcare debt. The KFF survey found that 63% of respondents have had to cut spending on food, clothing and other basics. Nearly half (48%) have exhausted all or most of their savings to pay for healthcare debt. Nearly three in 10 (28%) have delayed buying a home or paying for education.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

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