41% of adults in the U.S. are beset by health care system systematically pushing patients into debt on mass scale, investigation by KHN and NPR shows
Elizabeth Woodruff emptied her retirement account and took on three jobs after she and her husband were sued by a New York hospital for nearly $ 10,000 where his infected leg was amputated. To see also : Department of Health News.
Ariane Buck, a young father in Arizona who sells health insurance, could not schedule an appointment with her doctor due to a dangerous intestinal infection because the office said she had unpaid bills.
Allyson Ward and her husband recharged credit cards, borrowed from relatives and delayed repayment of student loans after they were left with $ 80,000 in debt due to the premature birth of their twins. Ward, a nurse, took on additional shifts for nurses, weekdays and nights.
“I wanted to be a mom,” she said. “But we had to have money.”
Among the more than 100 million people in America – including 41% of adults – the three are burdened by a health care system that systematically pushes patients into debt on a massive scale, according to a study by KHN and NPR.
The investigation reveals a problem that, despite new attention from the White House and Congress, is far more widespread than previously reported. This is because much of the debt that patients accumulate is hidden as credit card balances, family loans or payment plans to hospitals and other healthcare professionals.
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To calculate the true extent and burden of this debt, the KHN-NPR investigation relies on a nationwide survey conducted by the KFF for this project. The survey is designed to cover not only bills that patients could not afford, but also other loans that are used to pay for health care. New analyzes by the credit bureau, hospital billing and credit card data by Urban Institute and other research partners also inform about the project. KHN and NPR journalists conducted hundreds of interviews with patients, physicians, health industry leaders, consumer advocates, and researchers.
Half of American adults say they borrowed for medical, dental bills
Half of U.S. adults report they’ve gone into debt because of medical, dental bills
In the last five years, more than half of American adults said they were in debt for health or dental bills, according to a KFF survey.
A quarter of adults with health care debts owe more than $ 5,000. And about 1 in 5 with any amount of debt said he did not expect to ever repay it.
“Debt is no longer just a mistake 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 was on the board of the non-profit organization RIP Medical Debt. “We have a health care system almost perfectly designed to create debt.”
The burden is forcing families to reduce their spending on food and other basic necessities. Millions have been driven from their homes or bankrupt, the poll showed.
Health debt creates additional difficulties for people with cancer and other chronic diseases. Debt levels in U.S. counties with the highest disease rates could be three or four times higher than those in the healthiest counties, according to an analysis by the Urban Institute.
Debt also deepens racial disparities.
And it prevents Americans from saving for retirement, investing in their children’s education, or setting up traditional building blocks for a secure future, such as borrowing for college or buying a home. Debt from health care is almost twice as common for adults under the age of 30 than for those aged 65 and over, a KFF study showed.
Perhaps most perversely, medical debt blocks patients from caring.
According to the survey, approximately 1 in 7 people with debt said they were denied access to a hospital, doctor or other service provider due to unpaid bills. An even larger share – about two-thirds – have postponed the care they or a family member need due to expenses.
“It’s barbaric,” said Dr. Miriam Atkins, an oncologist from Georgia who, like many doctors, said that patients gave up treatment for fear of debt.
Patient debts are accumulating despite the significant Affordable Care Act of 2010.
The law expanded insurance to tens of millions of Americans. Yet it has also led to years of strong profits for the medical industry, which has been steadily raising prices over the past decade.
Hospitals recorded their most profitable year in history in 2019, recording a total profit margin of 7.6%, according to the Federal Advisory Board for Medicare Payments. Many hospitals thrived even during the pandemic.
But for many Americans, the law has not fulfilled the promise of more affordable care. Instead, they faced thousands of dollars in bills as health insurers shifted costs to patients through larger franchises.
Now, the highly lucrative industry is capitalizing on patients’ inability to pay. Hospitals and other health workers are pushing millions into credit cards and other loans. According to research firm IBISWorld, they attract patients with high interest rates while making a 29% profit for lenders.
Patient debt also maintains a shadowy collection business that feeds hospitals – including public university systems and nonprofits that are granted tax breaks to serve their communities – that sell debts in private business to collection companies that, in turn, seek patients.
“People are being bullied at any time of the day. Many come to us with no idea where the debt came from, ”said Eric Zell, a supervisory attorney at the Cleveland Legal Aid Society. “It looks like an epidemic.”
Americans in debt to hospitals, credit cards and relatives
Americans in debt to hospitals, credit cards and relatives
The American debt crisis is triggered by a simple reality: half of adult Americans do not have the cash to cover an unexpected $ 500 health care bill, according to a KFF survey.
As a result, many simply do not pay. The flood of unpaid bills has made medical debt the most common form of debt on the consumer credit record.
Since last year, 58% of debts recorded in the collection were related to the health account, according to the data of the Bureau for Financial Protection of Consumers. That is almost four times more debt that can be attributed to telecommunications bills, which is the next most common form of debt on credit records.
But medical debt on credit reports represents only a fraction of the money Americans owe for health care, a KHN-NPR investigation shows.
It is difficult to know what the total health debt of Americans is because so much has not been recorded. But an earlier analysis of federal KFF data estimated that the collective medical debt amounted to at least 195 billion dollars in 2019, which is more than the Greek economy.
The balance on credit cards, which is also not recorded as health debt, may be significant, according to an analysis of credit card records by JPMorgan Chase Institute. The financial research group found that the monthly balance of a typical cardholder jumped 34% after high medical expenses.
The monthly balance then declined as people paid their bills. But for a year they remained about 10% above what they were before medical expenses. The situation for a comparable group of card users without major medical costs remained relatively the same.
It is unclear how much of the higher balances ended up as debt, as the institute’s data do not differentiate between cardholders who repay the balance each month from those who do not. But about half of cardholders across the country have a balance on their cards, which usually adds interest and fees.
Medical debts large and small
For many Americans, debt from medical or dental care can be relatively low. About a third owe less than $ 1,000, a KFF study found.
Even small debts can take a toll.
Edy Adams, a 31-year-old medical student in Texas, has been haunted by debt collectors for years over a medical examination she received after she was sexually abused.
Adams recently graduated from college and lived in Chicago.
Police never found the perpetrator. But two years after the attack, Adams began receiving calls from collectors who said he owed $ 130.68.
Illinois law prohibits victims from charging for such tests. But no matter how many times Adams explained the mistake, the calls came, each forcing, as she said, to relive the worst day of her life.
Sometimes when collectors called, Adams would cry on the phone.
“I was distraught,” she recalled. “I was haunted by this zombie account. I couldn’t stop. “
Health care debt can also be disastrous.
Sherrie Foy, 63, and her husband Michael saw that their carefully planned retirement was interrupted when Foy’s colon had to be removed.
After Michael withdrew from Consolidated Edison, New York, the couple moved to rural southwest Virginia. Sherrie had room to take care of the rescued horses.
The couple diligently rescued. And they had retirement health insurance through Con Edison. But Sherrie’s surgery led to a number of complications, months in the hospital and medical bills that crossed the $ 1 million mark on the couple’s health plan.
When Foy could not pay more than $ 775,000 she owed the University of Virginia health system, the medical center sued, which was once a common practice the university said it curbed. The couple declared bankruptcy.
The Foys cashed in a life insurance policy to pay the bankruptcy attorney and liquidate the savings accounts the couple opened for their grandchildren.
“They took everything we had,” Foy said. “We have nothing now.”
According to a KFF survey, approximately 1 in 8 medically indebted Americans owes $ 10,000 or more.
While most expect to repay the debt, 23% said it will take at least three years; 18% said they did not expect it to ever pay off.
Medical debt is a broad reach in American health care
Medical debt’s wide reach in American health care
Debts have long lurked in the shadow of American health care.
In the 19th century, male patients at New York’s Bellevue Hospital had to transport passengers on the East River, and new mothers had to scrub floors to pay their debts, according to the history of the American hospitals of Charles Rosenberg.
However, the agreements were mostly informal. More often, doctors simply wrote off bills that patients could not afford, said historian Jonathan Engel. “There was no idea about the treatment delay.”
Today, debt from medical and dental bills touches almost every corner of American society, burdening even those who have insurance through business or government programs such as Medicare.
Nearly half of Americans in households earning more than $ 90,000 a year have had health care debts in the past five years, a KFF study found.
Women are more likely to be in debt than men. And parents are more likely to have health care debts than people without children.
But the crisis has hit the poorest and uninsured hardest.
Debt is most widespread in the south, according to an analysis of Urban Institute’s credit records. There, insurance protection is weaker, many states have not expanded Medicaid, and chronic diseases are more prevalent.
Across the country, according to the poll, black adults are 50 percent more likely and Latinos 35 percent more than whites to owe money for care. (Hispanics can be any race or combination of races.)
In some places, such as the nation’s capital, the differences are even greater, according to the Urban Institute: health debt in Washington’s predominantly minority neighborhoods, D.C., is nearly four times more common than in white neighborhoods.
In minority communities already struggling with fewer educational and economic opportunities, debt can be disastrous, said Joseph Leitmann-Santa Cruz, executive director of Capital Area Asset Builders, a nonprofit that provides financial advice to low-income Washington residents.
“It’s like another hand is tied behind their back,” he said.
Health debt can also prevent young people from making savings, finishing school, or getting a job. One analysis of credit data showed that health care debt peaked for typical Americans in their late 20s and early 30s and then declined as they age.
Cheyenne Dantone’s health debt left out her career before she began.
Dantoni, 31, was diagnosed with blood cancer while in college. The cancer went into remission, but when Danton changed her health plans, she received thousands of dollars in medical bills because one of her primary service providers was offline.
She enrolled in a medical credit card, only to get stuck paying even more interest. Other bills went into collection, which reduced her creditworthiness. Dantona still dreams of working with injured wild animals and without parents, but has been forced to return to her mother outside of Minneapolis.
“She’s trapped,” said Danton’s sister, Desiree. “Her life is paused.”
Barriers to care can prevent patients from seeking it
Barriers to care can keep the sick from seeking it
Desiree Dantona said that because of the debt, her sister also hesitated to seek care to ensure that her cancer remained in remission.
Medical workers say that this is one of the most devastating effects of the American debt crisis, keeping patients away from care and accumulating toxic stress on patients when they are most vulnerable.
Financial pressures can slow patients’ recovery and even increase their chances of death, cancer researchers have found.
However, the link between illness and debt is a defining characteristic of American health care, according to the Urban Institute, which analyzed credit records and other demographic data on poverty, race, and health.
U.S. counties with the highest proportion of residents with multiple chronic conditions, such as diabetes and heart disease, also tend to have the most health debts. This makes illness a stronger predictor of health debt than poverty or insurance.
In the 100 U.S. counties with the highest rates of chronic illness, nearly a quarter of adults have health debts on their credit files, compared to less than 1 in 10 in the healthiest counties.
The problem is so widespread that even many doctors and business leaders admit that debt has become a black spot on American health care.
“There is no reason in this country for people to have a health debt that is destroying them,” said George Halvorson, former CEO of Kaiser Permanente, the country’s largest integrated medical system and health plan. The KP has a relatively generous policy of financial assistance, but sometimes sues patients. (The health system is not linked to KHN.)
Halvorson cited the growth of high-deductible health insurance as a key driver of the debt crisis. “People go bankrupt when they get care,” he said, “even if they have insurance.”
The Affordable Care Act has strengthened financial protection for millions of Americans, not only by increasing health coverage but also by setting insurance standards that were supposed to limit how much patients have to pay out of their own pockets.
By some measures, the law has worked, research shows. In California, there was an 11% drop in monthly use of payday loans after the state expanded coverage through the law.
But legal limits on out-of-pocket spending have proved too high for most Americans. Federal regulations allow maximum out-of-pocket amounts on individual plans of up to $ 8,700.
In addition, the law has not stopped the growth of high-deductibility plans, which have become the standard in the past decade. That has forced many Americans to pay thousands of dollars out of their own pockets before their coverage begins.
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Last year, the average annual deductible for one worker with coverage at work exceeded $ 1,400, which is almost four times more than in 2006, according to an annual survey by KFF employers. Family deductibles can exceed $ 10,000.
While health plans require patients to pay more, hospitals, drug manufacturers and other health workers are raising prices.
From 2012 to 2016, medical care prices rose 16%, nearly four times the overall inflation rate, according to a report by the nonprofit Institute for Health Care Costs.
For many Americans, the combination of high prices and high out-of-pocket costs almost inevitably means debt. The KFF survey showed that 6 out of 10 able-bodied adults with coverage have been in charge of care in the last five years, which is only slightly lower than the rate of the uninsured.
Even Medicare coverage can leave patients on the hook for thousands of dollars in drug and treatment costs, studies show.
About a third of seniors owe money for care, a survey showed. And 37% of them said that they or someone in their household was forced to reduce spending on food, clothing or other basic things because of what they owed; 12% said they took on extra work.
The widespread burden of medical debt has sparked new interest from elected officials, regulators and industry leaders.
In March, following a warning from the Consumer Financial Protection Bureau, major credit report companies said they would remove health debts below $ 500 and those repaid from consumer credit reports.
In April, the Biden administration announced a new CFPB action against debt collectors and an initiative by the Ministry of Health and Social Services to gather more information on how hospitals provide financial assistance.
The actions welcomed the advocates of the patients. However, the changes are unlikely to address the root causes of this national crisis.
“The number 1, and number 2, 3 and 4, reason for people to get into medical debt is that they have no money,” said Alan Cohen, co-founder of Centivo, an insurance company that has worked in health benefits for more than 30 years. “It’s not complicated.”
Buck, a father in Arizona who has been denied care, saw this first hand while selling Medicare plans to seniors. “I had old people crying with me on the phone,” he said. “That’s awful.”
Now 30, Buck faces his own struggles. He recovered from an intestinal infection, but after being forced to go to a hospital emergency room, he received thousands of dollars in medical bills.
It was more crowded when Buck’s wife landed in the emergency room because of an ovarian cyst.
Today, the Bucks, who have three children, estimate they owe more than $ 50,000, including medical bills they put on credit cards they can’t repay.
“We all had to reduce everything,” Buck said. Children wear handles. They save on school supplies and rely on the family for Christmas presents. Dinner outside for chili is extravagance.
“It hurts when my kids ask me to go somewhere and I can’t,” Buck said. “I feel like I’ve failed as a parent.”
The couple is preparing to file for bankruptcy.
About This Project
“Diagnosis: Debt” is a reporting partnership between KHN and NPR that investigates the extent, impact, and causes of medical debt in America.
The series relies on the KFF Health Care Debt Survey, a survey designed and analyzed by KFF public opinion researchers in collaboration with KHN journalists and editors. The survey was conducted from February 25 to March 20, 2022, online and by phone, in English and Spanish, among a nationally representative sample of 2,375 American adults, including 1,292 adults with current health care debt and 382 adults who are had a health care debt for the past five years. The sampling error margin is plus or minus 3 percentage points for the full sample and 3 percentage points for those with current debt. For subgroup-based results, the margin of sampling error may be higher.
Additional research was conducted by the Urban Institute, which analyzed credit bureaus and other demographic data on poverty, race, and health to investigate where medical debt is concentrated in the U.S. and what factors are associated with high debt levels.
The JPMorgan Chase Institute analyzed records from a sample of Chase credit card holders to see how high medical expenses could affect clients ’condition.
KHN and NPR reporters also conducted hundreds of interviews with patients across the country; talked to physicians, health industry leaders, consumer advocates, debt advocates, and researchers; and reviewed a number of studies and surveys on health debts.
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health issues. Along with policy analysis and surveys, KHN is one of the three main operational programs at KFF (Kaiser Family Foundation). KFF is a non-profit organization that provides information on health issues to the nation.
Our stories may be republished online or in print under the Creative Commons license CC BY-NC-ND 4.0. Please edit just for style or to shorten, give the appropriate attribution and link to our website. Please see our republishing guidelines for using photos and graphics.
What is the medical debt Relief Act?
Proposal of the Law on Amendments to the Law on Fair Credit Reporting in order to introduce a waiting period of one year before the health debt is reported on the consumer’s credit report and to remove repaid and settled health debts from credit reports that are fully paid or settled, amend the Law on Fair Debt Collection to ensure …
How does health debt write-off work? Debt reduction and forgiveness through self-negotiation Sometimes a healthcare professional will work with you if you are able to pay a certain amount of your cash bill in advance. If you do not have insurance, you can ask the supplier to provide you with the payment rate that those with insurance have.
What is the Debt Relief Act?
Updated September 5, 2019 – The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from debt repayment at their principal residence. Debt reduced by mortgage restructuring, as well as mortgage debt that is forgiven in connection with enforcement, qualify for this relief.
Can medical debt be forgiven?
How does debt forgiveness work for medical bills? If you owe money to a hospital or health care provider, you may qualify for debt forgiveness. Eligibility is usually based on income, family size and other factors. Ask about debt forgiveness even if you think your income is too high to qualify.
Can medical debt be settled?
If you have billing medical bills or think you can take on the job of a medical billing lawyer, you may be able to negotiate the lower costs of your medical bills yourself. For billing medical bills, know that debt collectors generally buy penny-dollar debts.
How can I negotiate a hospital bill?
How to negotiate a medical bill
- Request a detailed invoice. One of the first things to do is ask for a detailed bill from your healthcare provider. …
- See Explanation of Benefits (EOB). Your insurance company can send you an EOB. …
- See financial assistance policies. …
- Call your ISP to ask about options.
What happens to a charge-off after 7 years?
As your attorney has told you, negative information such as foreclosures and account repayments remain on your credit reports for seven years from the date of the first missed payment. Once this cycle is over, they will automatically fall.
Is it true that after 7 years your loan is clear? Highlights: Most negative information generally stays on credit reports for 7 years. Bankruptcy stays on your Equifax credit report for 7 to 10 years, depending on the type of bankruptcy. Closed accounts paid by agreement remain on your Equifax credit report for up to 10 years.
Do charge-offs disappear after 7 years?
How to remove a charge. Repayment remains in your credit report for seven years from the date the account in question first became delinquent. (If the repayment occurs for the first time after a six-month delay, it will remain in your credit report for six and a half years.)
How long can a charged off debt be collected?
How long can a debt collector claim an old debt? Each state has a law called the statute of limitations that specifies the period of time during which a creditor or collector can sue borrowers to collect debts. In most states, it takes between four and six years after the last debt is paid.