Rising healthcare costs and the burden of medical debt are not just straining personal finances; they are impacting health outcomes and quality of life. As many Americans grapple with these challenges, healthcare affordability is now a national crisis.
This alarming trend underscores a deepening problem for millions of citizens. Even those with insurance are not immune to devastating financial and health-related impacts.
Making America Sicker
Data from the Commonwealth Fund’s first-ever Health Care Affordability Survey presents a stark picture of this healthcare crisis.
For most uninsured, the cost of healthcare services is a hopeless barrier to obtaining timely treatment. Yet, many insured individuals and families alike are also delaying or altogether forgoing health care or prescription drugs because they cannot afford them. Even more unsettling is that despite being covered under various plans or programs, more than half of adults who put off or skipped receiving treatments said a health problem had gotten worse as a result.
Medical debt, and even the fear of medical debt, is also leading many to delay or avoid seeking care or filling prescriptions, regardless of insurance status. Furthermore, nearly 40% of those with debt say they have cut back on basic necessities like food, heat, or rent.
One in four have taken up additional jobs or increased working hours to settle outstanding debts. The psychological toll is equally concerning, with a devastating 78% of individuals with medical debt experiencing anxiety and stress.
These liabilities also have lasting financial consequences. In addition to using up all or part of their savings to pay debts off, some also suffer from an adverse credit rating.
Earlier in 2023, the Commonwealth Fund released disturbing statistics on the state of the U.S. healthcare system. The nation’s expenditure, in terms of per capita spending and the percentage of GDP, remains significantly higher compared to other affluent nations.
Despite this, the U.S. stands alone among these countries in not offering universal health coverage. It records the shortest life expectancy at birth, the highest mortality rates from conditions that are preventable or curable, and the highest numbers of maternal and infant deaths, as well as some of the highest suicide rates.
Furthermore, it has the largest population with numerous chronic health issues and an obesity rate that is nearly double the average of other OECD countries.
An Affordability Crisis
It would be hardly surprising to most that many Americans face difficulties affording healthcare. However, according to the affordability survey, a shocking number of insured Americans, close to half of all people enrolled in employer, marketplace, Medicaid, and Medicaid programs, also feel the pinch.
Even more concerning is that insurance coverage fails to protect many people from incurring medical debt. Approximately one-third of adults with employer coverage or Medicare reported incurring debt they were paying over time. Most of these debts are at least $500, while nearly half exceed $2000. As a result, over 30 million working-age adults in the United States bear the burden of medical debts exceeding $2000.
While media coverage often emphasizes sudden health emergencies and emergency room incidents as major causes of significant medical bills, the survey results indicate that a substantial portion of medical debt arises from managing chronic conditions. Approximately 50% of adults burdened with debt reported that it was the result of treatments for ongoing health issues.
Against inflationary and cost-of-living pressures beyond healthcare expenses, Americans are finding little relief elsewhere. Almost two-thirds of working-age adults indicated that widespread price increases over the past year had impacted their family’s capacity to pay for healthcare.
In spite of this, over half of all adults in the workforce still pay at least 10% of their monthly budget for healthcare expenses. Alarmingly, for almost a quarter of working adults, a staggering 25% of their budget is being spent on healthcare costs.
Responses and Strategies
In response to this growing problem, state and federal policymakers are exploring various solutions. These include legislation protecting consumers from aggressive medical debt collection and initiatives to reduce healthcare cost growth. For individuals, understanding and navigating available assistance programs can provide some relief. Additionally, community-based support systems and advocacy groups are playing a crucial role in aiding those struggling with medical debt.
Governmental policies continue to evolve to alleviate the burden of healthcare costs and medical debt. The Biden administration is now holding medical providers and debt collectors accountable for harmful practices while reducing medical debt’s role in determining whether Americans can access credit. The Consumer Financial Protection Bureau recently announced it is formulating new rules to prevent medical debt data from being displayed on consumer credit reports.
Although not mandatory, some states are adopting the Model Medical Debt Protection Act to protect patients in their dealings with medical creditors. It details standards that mandate healthcare providers to permit grace periods for repayments after illness or throughout the appeals process, in addition to halting hospital actions like filing lawsuits against patients, wage garnishment, or placing property liens.
Those grappling with medical debt can employ several strategies. Experts recommend knowing your rights and protections regarding medical bills and collections and checking statements for accuracy. They should check whether they qualify for Medicaid, which provides health coverage for people with lower incomes, or any other financial assistance programs. Negotiating medical costs directly with healthcare providers is another option.
In addition, individuals can consider consolidating medical debt or even seek assistance from a medical bill advocate, who can help navigate the complexities of medical billing and negotiate reductions on one’s behalf.
Calls to Action
The trajectory of healthcare affordability and medical debt in America is a pressing concern. Future projections suggest that without significant policy reforms and industry changes, the burden of medical debt will continue to escalate.
Policymakers, healthcare providers, insurers, and the public must collaborate in finding sustainable solutions. These solutions include expanding coverage, improving cost transparency, and enhancing consumer protections.
The collective action towards a more equitable and accessible healthcare system is not just a fiscal imperative but a moral one, ensuring that financial constraints do not compromise health and well-being.
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Mark Garro is an Aussie former CPA and corporate finance manager turned research writer. After more than two decades simplifying complex analyses for leading companies, including Goldman Sachs, Marks & Spencer, and Tabcorp, he packed up and moved to the Italian Riviera. Now he covers all things related to finance and equity research for a diverse range of publishers and syndicators around the world.
