Posted by Bill Sandweg on 24 April 2023.
Medical debt is coming to a household near you, unless you are well-off. If you are among the poorer Americans, the chances are high that you are carrying medical debt and that at least some of it is past due.
There can be no question that medical debt is a problem in this country and that it affects all of us, not just those who can’t pay their medical bills. It affects all of us because unpaid medical care isn’t really unpaid at all. Someone has to pay extra to keep hospitals and doctors in business when they don’t get paid for care they provide. Those paying extra are all those who have health insurance or Medicare or who have no insurance but do have the money to pay their medical bills. Charging everyone else extra is a terribly inefficient way to pay for the care of those who have no insurance.
Another way in which medical debt hurts more than just the poor is that it forces some hospitals to close. If a hospital is located in a poor area of town or in a poor, rural area, that hospital is likely to have a disproportionately large number of patients who cannot pay their hospital bills. Those hospitals don’t have the luxury that hospitals in richer areas have of being able to raise the prices for those who do have insurance and who make up the majority of their patient base.
The problem of medical debt is another aspect of the problem caused by our lack of universal health care. I could fill many blog posts with the problems we cause ourselves by not having universal health care. From poor health outcomes to higher than necessary medical bills, the problems caused by our system are many.
A recent survey of Americans between 18 and 64 (so as to exclude Medicare patients) found that 15% of Americans live in a family with past-due medical debt. Nearly 75% of those families owe at least some portion of that debt to hospitals.
The people who carry medical debt are predictably the poorest among us. That also means that, predictably, they are people of color. Of those who had incomes at or below the federal poverty level, 26.4% had medical debt, well over half of which was past due. When viewed by race, 12.8% of white families carry medical debt compared with 25.9% of black Americans and 19.1% of Latinos.
A hard-working family should not be thrown into debt by an unexpected illness that forces a family member to go to the emergency department. You don’t have to be an economist to know that unpaid medical debt incurs interest and lowers credit scores, making it even harder for these families to get credit and to make ends meet. Similarly, you don’t have to be a public health expert to know that uninsured people stay away from doctors and hospitals as long as they can so that when they are finally forced to go, they are often much sicker than they were earlier. It tends to take more medical care to fix them than if they had come in when the problem began to develop.
Hospitals, many of which are non-profit entities, should not be predators in their communities. While they are required by their non-profit status to provide free or reduced cost care to those who need it, many make it difficult for people to find that care or to take advantage of those programs. They act like for-profit businesses and pay their executives high salaries. Here is a link to an article discussing how non-profit hospitals get billions more in tax breaks than they spend on free or reduced cost care for the poor.
Even if we are going to insist on maintaining our present fee for service system supported by private health insurance, we can do a far better job of caring for our poorer and more needy neighbors. It is the right thing to do.