Millions of Americans experience medical debt every year, and this leads some to file for bankruptcy. [1] Medical Bankruptcies by Country https://worldpopulationreview.com/country-rankings/medical-bankruptcies-by-country We looked into some of the key statistics relating to medical debt in the U.S., including how many people are affected and the average cost of medical expenses.
Even though more than 90% of the U.S. population has some form of health insurance coverage, medical debt is still a longstanding concern. [2] Census Bureau Health Insurance Statistics https://www.census.gov/library/publications/2021/demo/p60-274.html Medical bankruptcy is a phenomenon that is almost unheard of outside of the U.S. as many other countries have single-payer healthcare systems financed by taxes. [1] Medical Bankruptcies by Country https://worldpopulationreview.com/country-rankings/medical-bankruptcies-by-country
Medical debt is debt incurred by a person due to medical costs and related expenses. If medical debts are left unpaid for a long period of time, they can affect your credit score and even lead to medical bankruptcy.
Across the U.S. 9% of American adults have significant medical debt (23 million people), with the national total at an estimated $195 billion. Of the 23 million Americans with significant medical debt, most owe over $1,000, and 11 million owe more than $2,000. The remaining 6 million people owe more than $5,000, with 3 million people owing over $10,000 in medical debt.
Source [3] Burden of Medical Debt in the U.S. https://www.healthsystemtracker.org/brief/the-burden-of-medical-debt-in-the-united-states/
Even people with good health insurance can find themselves in medical debt as claims can be denied and certain treatments aren’t covered.
Most health insurance policies will also include a deductible amount that the policyholder has to pay before the insurance company will start contributing to costs. The higher the deductible, the lower the monthly cost of the insurance plan.
Healthcare costs in the U.S. are among the highest in the world, and the U.S. is the highest spending country worldwide on healthcare. [4] Per Capita Health Expenditure by Country https://www.statista.com/statistics/236541/per-capita-health-expenditure-by-country/
The table below shows the average monthly health insurance premiums for benchmark plans without a subsidy for each state. The highest monthly premium for 2022 is in Wyoming at $762 per month, and the lowest monthly premium is in New Hampshire at $309 per month.
Source [5] Health Insurance Spending by State https://www.kff.org/health-reform/state-indicatojamr/marketplace-average-benchmark-premiums/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D
There are a number of factors that can impact how much you pay for your health insurance premiums, including:
As mentioned, the deductible on your health insurance policy will also affect how much you pay each month. You can choose how much you want your deductible amount to be, but be aware choosing a higher one will mean you’ll have to pay more out of your own pocket if you need medical treatment.
One survey found that most respondents (45.88%) had medical insurance through Medicare or Medicaid, and 37.65% had employer-provided medical coverage through their workplace. Of the remaining respondents, 11.76% had self-purchased insurance through an exchange, and 4.71% had no medical insurance at all.
Source [6] Medical Debt Survey 2021 https://www.debt.com/research/medical-debt-survey/
These figures are representative of one survey from 2021 where American adults were asked about medical debt [6] Medical Debt Survey 2021 https://www.debt.com/research/medical-debt-survey/, but the latest data from the U.S. Census Bureau in 2020 states that 8.6% of Americans, or 28 million people, did not have health insurance at any point in that year. [2] Census Bureau Health Insurance Statistics https://www.census.gov/library/publications/2021/demo/p60-274.html
In 2014, the U.S. government gave states the choice to expand Medicaid, the nation’s public health insurance system, to people with incomes up to 138% of the federal poverty level. All states chose to expand Medicaid in 2014 except for the following:
The remaining 12 states have not chosen to expand Medicaid as of 2022.
| States that expanded Medicaid between 2014 and 2021 | States that have not expanded Medicaid |
|---|---|
| Alaska | Alabama |
| Arizona | Florida |
| Arkansas | Georgia |
| California | Kansas |
| Connecticut | Mississippi |
| Delaware | North Carolina |
| Hawaii | South Carolina |
| Idaho | South Dakota |
| Indiana | Tennessee |
| Iowa | Texas |
| Kentucky | Wisconsin |
| Louisiana | Wyoming |
| Maine | |
| Maryland | |
| Massachusetts | |
| Michigan | |
| Minnesota | |
| Missouri | |
| Montana | |
| Nebraska | |
| Nevada | |
| New Hampshire | |
| New Jersey | |
| New Mexico | |
| New York | |
| North Dakota | |
| Ohio | |
| Oklahoma | |
| Oregon | |
| Pennsylvania | |
| Rhode Island | |
| Utah | |
| Vermont | |
| Virginia | |
| Washington | |
| West Virginia |
Source [7] Medicaid Expansion States https://www.kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/
Between 2010 and 2013, the mean medical debt and non-medical debt in collections per person stayed fairly consistent across the U.S. The mean non-medical debt was slightly higher during this time at $908 per person in 2010, compared to the average medical debt of $827 in the same year.
In 2014, when the U.S. government gave states the option to expand Medicaid to people with low incomes, both medical and non-medical debt began to decline. It was also at this point that medical debt began to overtake non-medical debt as the largest source of debt in collections. In 2009, the mean non-medical debt was $119 more than medical debt, but by 2015, medical debt was $102 more than non-medical debt.
As of 2020, mean medical debt is still higher at $429 per person, whereas non-medical debt sits at $390 per person. Take a look at the table below to see the change over time from 2009 to 2020.
Source [8] Average Medical Debt Per Person https://jamanetwork.com/journals/jama/article-abstract/2782187
One survey found that the number of people dealing with this type of debt has increased from 2020 when 46% of Americans had medical debt, to 2021 when 50% of Americans now have medical debt of some kind.
However, fewer medical bills were sent to collections in 2021 (46%) compared to 2020 (56%). [6] Medical Debt Survey 2021 https://www.debt.com/research/medical-debt-survey/
The amount of medical debt decreased during the COVID-19 pandemic, partly due to a reduction in elective medical procedures, increased funding for Medicaid, and legislation that partially-shielded families from COVID-19-related medical costs.
Data shows that during the pandemic, medical and non-medical debt followed the same downward trends as in pre-pandemic times. Studies found no net association between COVID-19 and medical debt, with data showing that any increase was offset by the decrease in routine procedures and the addition of government healthcare policies. [9] Medical Debt and COVID-19 https://jamanetwork.com/journals/jama-health-forum/fullarticle/2792645
Data from the U.S. Census Bureau between 2009 and 2020 shows the stock of medical debt which measures all debt collections listed on credit reports. This data shows that an estimated 17.8% of people had medical debt in collections, and 13% had accrued the debt in the 12 months prior. The average amount of medical debt per person was $429, with $311 accrued during the prior year.
The South had the highest percentage of people in medical debt collections (23.8%) and the highest medical debt per person ($616). The Northeast region had the lowest percentage of medical debt collections at 10.8% of people, and the lowest medical debt per person at $167.
Source [8] Average Medical Debt Per Person https://jamanetwork.com/journals/jama/article-abstract/2782187
Medical debt flow refers to new debt collections received during the preceding 12 months. Between 2013 and 2020, all states that chose to expand Medicaid in 2014 experienced a decline in the mean flow of medical debt which was 34 percentage points higher than the states that did not expand Medicaid.
For the expanded Medicaid states, average medical debt reduced from $330 to $175, whereas in the non-expanded states, mean medical debt reduced from $613 to $550.
There’s no specific definition for a ‘medical bankruptcy’, but researchers refer to it as a bankruptcy where someone has had to mortgage their home due to medical costs, has lost two weeks of work or more for medical reasons, or has more than $1,000 in medical debt.
Outside of the U.S., medical bankruptcy is a fairly rare occurrence, with many other developed countries financing their healthcare systems through taxes. [1] Medical Bankruptcies by Country https://worldpopulationreview.com/country-rankings/medical-bankruptcies-by-country
Statistics show that medical debt is responsible for 66.5% of all personal bankruptcies in the U.S., amounting to roughly 275,000 medical bankruptcies in 2021. More than 500,000 American families experience bankruptcy due to medical expenses each year. [10] Medical Bankruptcies in the U.S. https://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2018.304901
A recent survey on behalf of Self Financial found that two-thirds of respondents had avoided seeking medical help because of financial worries.
A recent survey found that the most common reason people experienced medical debt was emergency room visits. Of those asked, 39% said they had experienced medical debt as a result of an emergency room visit. The next most common cause was visiting with a doctor or specialist, with 28% saying this led to medical debt.
Less common causes were elective surgery (8%) and ambulance use (8%), and 9% of participants said a COVID-19-related hospital stay caused them to experience medical debt.
Source [11] Medical Debt Survey https://www.lendingtree.com/personal/medical-debt-survey/
Yes, an unpaid medical bill can affect your credit score. Healthcare providers typically do not directly report to the three nationwide credit agencies (TransUnion, Equifax, and Experian); however, they can turn your debt over to collection agencies, and the debt collector can report them.
In the past even paid medical collection debt could be reported to the bureaus which could have a negative impact to your credit report. However, changes from the three major credit agencies taking place on July 1, 2022, mean that paid medical collection debt no longer appears on credit reports. The time before unpaid medical collection debt appears has also been increased from 6 months to 1 year, giving people more time to pay medical bills before they have an effect on credit.
Starting in the first half of 2023, credit agencies will no longer include medical debt under $500 on credit reports. [12] Medical Debt and Credit Scores https://www.equifax.com/personal/education/credit/score/can-medical-debt-impact-credit-scores/
The three nationwide credit reporting agencies (NCRAs) introduced the changes to support consumers who are dealing with unexpected medical bills.
Medical debt may be removed from your credit report after a certain amount of time, usually 7 years, but the debt itself never expires. The length of the statute of limitations on medical debts varies depending on your state and how the initial payment contract was created.
If you have outstanding medical debt, you might be able to make an agreement with your creditors where you pay a debt settlement. This means you pay less than the full amount you owe to satisfy your creditor, and the rest is forgiven. It’s important to do your research on any debt settlements like this as there could be possible tax and credit reporting implications involved.
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