Medical debt in the United States is once again reaching unprecedented levels.
According to recent findings from the Peterson-KFF Health System Tracker, an estimated 20 million American adults pay approximately $220 billion in health care costs.
“Medical debt is interesting in some ways,” Matthew Ray, associate director of nonprofit KFF's healthcare marketplace program, told Yahoo Finance. “Medical debt is a chronic condition that can cause you to borrow money over a long period of time or have an accident and then feel better afterward. However, sometimes medical debt can impair your ability to earn an income. … We have incurred huge costs for care and lost income.”
“vicious circle”
KFF research also showed that people with medical debt also have a significant impact on their financial well-being. Most adults with unpaid medical bills owe at least $1,000, and 14% owe more than $10,000.
There were also significant disparities by race, ethnicity, income class, and region. Black Americans have the highest rate of medical debt at 13%, and the Southeastern United States, which has a large Black population, has the highest proportion of residents with medical debt.
Mississippi had the second highest percentage of adults with medical debt at 15.2%. Only South Dakota had a higher rate in the U.S., with 17.7% of residents carrying medical debt.
Ray noted that the long-term effects of medical debt contribute to overall inequality in the United States.
“What's hard to think about this problem is that it ripples through household finances over years and years in ways that we don't always think about when we think about health insurance and the uninsured rate. That's the thing,” Ray said. “There's a lot more going on in how all of this impacts households' ability to accumulate assets and build wealth over generations.”
For example, 40% of U.S. adults with medical debt say they have borrowed money from their retirement accounts, compared to just 6% of adults without medical debt. People with unpaid medical bills were also significantly more likely to take out payday loans with very high interest rates, sell items to pawnshops for money, or take out a car loan.
Mr Ray highlighted that the number of people using payday lenders for medical loans was “truly shocking”.
“They just end up in a vicious cycle of financial situations that makes it difficult for them to acquire assets and build wealth over the years,” he reiterated.
“I can't afford to pay it because the cost is too high.”
According to the KFF survey results, there are limits to health insurance coverage.
Among insured adults with medical debt, 35% say they have not filled a prescription for a medication due to cost in the past 12 months (compared to 7% of adults without medical debt), and 41% have not filled a prescription for medication due to cost in the past 12 months. I didn't go to the doctor or clinic for this. Medical problems due to costs (compared to 9% without medical debt).
“We have health insurance to cover medical costs, but for a variety of reasons, people end up incurring large medical debts even if they have insurance,” Ray said. said. “This happens because the cost burden is so high that people can't afford high deductibles, high copays, high coinsurance, etc.”
“You end up seeing a doctor who is out of network, and your plan doesn't cover that,” Ray continued. “Eventually, you end up needing specialized medications that your plan doesn't cover, or you can't afford the ongoing costs. That could happen.”
According to KFF, the average deductible amounted to $1,735 in 2023, and the average annual premium for employer-sponsored insurance was $8,435 for single coverage and $23,968 for family coverage.
Medicaid expansion is also a factor. More than a decade after the Affordable Care Act made the Medicaid option available, 10 states still have not adopted Medicaid expansion. The majority of them are among those with the highest rates of medical debt.
“Medicaid expansion is a big deal,” Ray said. “It's life-changing because it allows people who don't have insurance to get insurance.”
Adriana Belmonte is a reporter and editor covering politics and health policy at Yahoo Finance. You can follow her on Twitter @adrianambells Please contact adriana@yahoofinance.com.
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