Medical debt has reached unprecedented levels in the US, study finds

Medical debt has once again reached unprecedented levels in the US.

According to recent findings from the Peterson-KFF Health System Tracker, an estimated 20 million American adults owe roughly $220 billion in medical bills.

“Medical debt is kind of an interesting thing,” Matthew Rae, associate director of the Program on the Health Care Marketplace at the non-profit KFF, told Yahoo Finance. “Sometimes medical debt is chronic conditions that you’re financing over a long period of time, or you have an accident, and then you’re fine. But sometimes medical debt is stuff that also hurts your ability to earn money. … You’re taking on huge expenses to pay for your care, and you’ve also got diminished income.”

‘A vicious cycle’

KFF’s survey indicated that those with medical debt also face 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 notable disparities across racial and ethnic groups, income brackets, and geographies. Black Americans have the highest percentage of medical debt, at 13%, and the southeastern US — which has a significant Black population — has the highest share of residents with medical debt.

Mississippi had the second-largest share of adults with medical debt, at 15.2%; only South Dakota had a higher share in the US, with 17.7% of its residents in medical debt.

Rae noted that the long-term impact of medical debt contributes to overall inequities in the US.

“The challenging thing to think about with this issue is that … it ripples through your finances for years and years in ways that we don’t always think of when we’re thinking about health coverage and uninsurance rates,” Rae said. “There’s a lot more going on in how this is all impacting what it means for a household’s ability to collect assets and build wealth over generations.”

For example, 40% of US adults with medical debt stated they borrowed money from a retirement account, compared to just 6% of those without medical debt. Those with unpaid medical bills were also significantly more likely to seek out payday loans, which carry extremely high interest rates, obtain money from selling items to a pawn shop, or take out a loan against their car.

Rae emphasized that the number of people using payday lenders for their medical debt “really hit a chord.”

“They just end up in a vicious cycle of seeing their finances in ways which are going to make it hard to acquire assets and build wealth over many years,” he reiterated.

‘Your cost sharing is so high, you can’t afford it’

Having health insurance coverage only goes so far, according to KFF’s findings.

Among insured adults with medical debt, 35% indicated that they did not fill a prescription for medicine due to cost within the last 12 months (compared with 7% without medical debt), while 41% didn’t go to a doctor or clinic for a medical problem due to cost (compared with 9% without medical debt).

“We have health insurance to help us pay for medical expenditures, but for lots of reasons, people are ending up with big amounts of medical debt, even though they have coverage,” Rae said. “That happens because your cost sharing is so high, you can’t afford it — the high deductibles, high copays, high coinsurances.”

“You end up seeing a doctor who’s out of network, and your plan doesn’t cover it,” Rae continued. “You end up needing a specialty drug that your plan doesn’t cover or that you can’t afford the ongoing cost sharing. All of these things can mean that you’re financing big expenses, even though you have a plan.”

According to KFF, the average deductible hit $1,735 in 2023, and the average annual premium through employer-sponsored insurance was $8,435 for single coverage and $23,968 for family coverage.

Medicaid expansion is also a factor. There are still 10 states that haven’t adopted Medicaid expansion more than a decade after the Affordable Care Act made the option available. A majority of them are among those with the highest rates of medical debt.

“Medicaid expansion is a big deal,” Rae said, “life-changing for people who don’t have coverage and can gain coverage.”

Adriana Belmonte is a reporter and editor covering politics and healthcare policy for Yahoo Finance. You can follow her on Twitter @adrianambells and reach her at

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