Over 50% of Americans have a medical debt of $1,000 or more. Groundbreaking research from Stanford economist Neale Mahoney indicates an even grimmer situation. Americans are actually stuck with at least $140 billion in outstanding medical debt.
Annual rates of new medical debt reduced by approximately 50% from 2013 levels in states that extended Medicaid, but just about 10% in states that did not. Importantly, the gap in amounts owed by high-income versus low-income residents widened in states that did not increase Medicaid eligibility under the ACA, while it narrowed in states that did.
There has been a steady increase in medical debt over many years, but it has accelerated recently. This is in part due to COVID. Secondarily, most people do not have medical plans that cover all medical costs. The third impact is a systemic one, America has some of the highest medical costs in the world, and it is not due to having better health services or technologies.
The groundbreaking research from Mahoney found a lot of recent information was either incorrect or misstated regarding medical debts.
In the South, more people have medical debts, and out of 24% of all residents, and the largest average amounts are past due. The Northeast had the lowest debt loads, with just under 11%percent of individuals with medical debt. Generally, those living in low-income areas owed more, and those living in high-income regions owed less.
States that expanded Medicaid in 2014 had declines in the average annual amounts of medical debt through 2020. This turns out to be about 34% more than states that did not expand their Medicaid benefits.
Almost all income groups in non-Medicaid expansion states had their citizens experience a rise in medical debts rises. The poorest communities were often more affected.
By 2020, many people had more medical debt in collections than they had in collections from all other sources combined. This included common debts like credit cards, phone bills, and utilities.
Across the country, almost 18% of people (with a credit report) had medical debt in collections, and 13 percent had added debt in the previous year.
This last point shows that the finances of many Americans are very fragile. Many people cannot pay for a few thousand dollars in medical expenses without ending up dealing with debt collectors.
During the peak of the pandemic, surveys showed that things got worse with medical debt. The pandemic may have reshaped our world, but one thing is for sure: Americans struggle to pay medical bills.
Be sure you shop for your medical insurance every year. Most people go for plans with deductibles which is fine if you are sure you can pay them. They often result in plans with lower monthly premiums. Be sure whatever insurance plan you choose will cover most, if not all, of potentially large expenses like hospitalizations or major surgeries, etc. Even a week in a hospital will result in tens of thousands in medical bills.
You don’t want to find yourself with several thousand dollar deductibles and then find out you are responsible for 30% of your hospital or major medical expenses. This could add tens of thousands of dollars to what you will owe. It would help if you also minimize your health insurance costs.
You can follow these tips to reduce your health insurance premiums:
If unsure, consult professionals in medical insurance and ask others what plans they are using and if they are happy with the coverages and services. Get rid of your medical debt today to avoid complications later.
