Summary

The web content discusses the pervasive issue of medical debt in the United States, its impact on American families, and potential ways to mitigate healthcare costs.

Abstract

The article titled "Americans Are Drowning in Medical Debt" highlights the alarming rate of medical debt among Americans, with 17.8% having medical debt in collections as of June 2020. This debt crisis, exacerbated by the complexities of the healthcare system and the high costs of medical care, has been a significant contributor to personal bankruptcies. The impact of medical debt extends beyond financial ruin, affecting individuals' ability to afford basic necessities and forcing them to deplete savings or take on additional debt. The article suggests that understanding health insurance options and maintaining good health are crucial steps in protecting oneself from the burden of medical debt. It also touches on the emotional toll of such debt, inviting readers to share their personal experiences.

Opinions

Medical debt is a leading cause of personal bankruptcies in the U.S., with healthcare costs far exceeding those in other industrialized nations.
The study on medical debt in collections significantly underestimates the true extent of the problem by not accounting for debts not yet in collections or those leading to lawsuits.
Medical debt has far-reaching consequences, including the depletion of savings, inability to pay for basic needs, and delayed life plans.
The healthcare system's complexity, with its various insurance

HEALTHCARE

Americans Are Drowning in Medical Debt

Healthcare costs are killing our finances, and our futures.

Americans are in dire straights from medical debt. (Photo by **Luca Nardone** from **Pexels**)

Politics aside, the healthcare costs in the US are criminally expensive, dissuading many to seek the care they desperately need.

In 2009, then-professor Elizabeth Warren co-authored a paper about the cause of bankruptcies. Medical debt was high on the list, and many people, including the now-senator, have used that to claim that the number one cause of all personal bankruptcies was medical debt.

That claim has been toned down a bit by further research, but medical costs are still elevated far beyond those of other industrialized nations. And real-life experience has taught us to be wary of any medical procedures, knowing that multiple bills from multiple providers will arrive in our mailbox.

But just how bad is it for for American families? Two recent studies have shone some light on the problem, and it doesn’t look good.

Medical Debt is Everywhere

The first study is found in the Journal of the American Medical Association (JAMA) entitled “Medical Debt in the US, 2009-2020”. The goal was to find the “total amount and distribution of medical debt in collections in the US.”

Here is the main finding:

17.8% of individuals in the US had medical debt in collections in June 2020 (reflecting care provided prior to the COVID-19 pandemic).

Let’s unpack that for a minute.

First, 1 in 6 Americans has some form of medical debt in collections prior to COVID.

That blows my mind. That means 5 people in my physical workplace and 208 in my entire company have medical debt in collections.

When you walk down your neighborhood, every 6th house is in medical collections. When you go grocery shopping, every 6th person in line is in medical collections. When you go to church, every 6th person taking communion is in medical collections.

Second, this study just looked at medical debt in collections.

We all know that medical bills take forever to arrive due to processing them through insurance. This is followed by months of notices and reminders to pay your bill. Some providers allow up to 180 days to pay your bill before sending it off to collections.

Having a medical bill that is 4 months late, but not technically in collections, was not included in this study. If a medical bill is unpaid for 4 months, then I would classify that as medical debt.

Additionally, the study did not touch on the increasing number of lawsuits originating with the hospitals themselves.

Omitting these two categories vastly understates the amount of medical debt throughout the nation.

The Impact of Medical Debt

As mentioned earlier, medical debt has been a key driver in a large number of bankruptcies for several years.

Whether the actual cause of the bankruptcy is from overwhelming costs or lost wages due to a medical injury doesn’t really matter. Healthcare costs drive bankruptcies, pure and simple.

But how does this impact everyday Americans?

The second study attempts to quantify that, with research performed during the COVID vaccine rollout.

Among respondents with medical bill and debt problems, 35 percent used up all or most of their savings, 35 percent took on credit card debt, 27 percent had been unable to pay for basic necessities like food or rent, and 23 percent delayed education or career plans.

These results are terrifying, but wholly expected. If you can’t pay your medical bills, then you probably can’t pay your other bills, either.

One of the authors was interviewed by USA Today and expounded on the paper’s findings.

“They suffered ruined credit ratings. They were unable to afford basic life necessities like food, heat or their rent,” said lead author Dr. Sara Collins, Commonwealth Fund’s vice president for health care coverage, access and tracking.

This trend has become a chronic problem in the U.S. health system, she said.

When you can’t cover food for rent, then medical debt will be the last of your worries. Unfortunately, that debt doesn’t just go away, and the health providers and collection agencies will constantly hound you for payment.

The Takeaway

There are two main ways to protect yourself from high healthcare costs and avoid medical debt.

First, you need to understand your health insurance options, both coverage and cost.

You need to know if you have a PPO or HMO; standard plan or high-deductible plan; FSA, HRA, or HSA.

These terms are labyrinthine, but you have to get over it. Learn the language, find out what’s available, and do the math to see which option gives you the most coverage for the least money.

Second, you need to get and stay healthy.

Health is the ounce of prevention that prevents the pound of cure, which costs a small fortune nowadays.

I’m not saying you need to go on a crash diet or anything extreme. Rather, incorporate health into your overall lifestyle and make it part of your everyday routine. Make health who you are, not just something you do.

Lastly, if you have medical debt, I would love to hear your stories about what happened. My own story was just last year when my son was born in January and our Health Savings Account hadn’t loaded up yet.

All of a sudden we have our full deductible of $6,500 due the first month of the year. I was fortunate to work with a 0% interest payment company, but it was a super stressful year.

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This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.