The Medical Debt Crisis: The Prognosis Is Still Dire for Americans Struggling to Stave Off Massive Health Care Bills

Recent evidencesuggests that the Affordable Care Act is helping to reduce the burden of medical debt for American consumers. Yet, especially in states that have not expanded Medicaid, millions of Americans still lack insurance and many plans offer thin coverage. The result is that in 2014, 64 million people were struggling with medical debt, the leading cause of bankruptcy in the United States. In my latest Demos report, “Enough to Make You Sick: The Burden of Medical Debt,” I explore how medical debt affects household finances and why we need more aggressive policies to reduce medical debt.

The Bad News

Costly medical procedures can quickly lead to spiraling medical debt, even forhouseholds with insurance. Out-of-pocket costs are frequent contributors to credit card debt. In our survey, dental expenses were the most frequently cited as a contributor to credit card debt; of those respondents who report they experienced  a dental expense, a large share said that the expense contributed to their credit card debt. This is likely due to the fact that many basic insurance plans don’t include dental coverage. Emergency room visits, though rare, frequently contributed to debt; more than half of those who reported the expense said it contributed to credit card debt. More than half of respondents reported purchasing prescription medication, and of those nearly half said that prescriptions contributed to credit card debt. Though hospital stays and emergency room visits were not frequently cited as contributing to medical debt (12 percent and 13 percent respectively), that is because few people reported experiencing them (22 percent for both). Among those who had a hospital stay or emergency room visit, 56 percent and 57 percent respectively reported that these visits contributed to medical debt.

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Medically-indebted households also struggle with more credit card debt overall. On average, medically indebted households had $8,762 in credit card debt, compared with $5,154 for households with credit card debt that did not stem from medical expenditures. In addition, households with medical debt on their credit cards were dramatically more likely to report using their credit card to pay for basic expenses, such as rent or groceries, because they didn’t have enough money in their checking or savings accounts (52 percent versus 29 percent).

Households with medical debt on their credit cards were far more likely to report forgoing health care to reduce medical expenses. In total, 63 percent of those with medical debt on their credit cards reported either postponing or not filling a prescription, not visiting a doctor, or skipping tests, treatments or follow-ups. Among those not carrying medical debt on their credit card, 36 percent reported these behaviors. The most commonly cited expense that was skipped was visiting a doctor or clinic, a behavior reported by 47 percent of those with medical debt on their credit cards and 28 percent of households without medical debt on their credit cards. A cross-national study finds that Americans are more likely than residents of other high-income nations to skip necessary healthcare to save costs.