Why are 40% of Americans struggling with healthcare debt?

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While much of the attention on debt focuses on mortgages, credit card bills and student loans, a new survey from the Kaiser Family Foundation explains just how pervasive health care debt is in the states -United.

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The KFF Health Care Debt Survey, part of a larger survey released last week by the Kaiser Health Network and NPR, found that more than 100 million Americans are struggling with debt of Health care. This figure includes 41% of American adults.

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Almost a quarter (24%) of respondents said they have medical or dental bills that are overdue or have not been paid at all, while 21% said they have medical or dental bills that are paid over time directly to suppliers. Most of those with medical debt are middle- or low-income Americans, more than half (68%) of whom live in households with annual incomes below $40,000.

As noted by KHN, the investigation uncovers a problem that is “far more widespread than previously reported” – despite recent attention from the White House and Congress. This is primarily because much of the healthcare debt that patients accumulate is hidden in the form of credit card balances, family loans, or payment plans to hospitals and other medical providers.

A quarter of adults with health care debt owe more than $5,000, according to the report. About one in five respondents with debt of any amount said they never expected to pay it back.

“Debt is no longer just a bug in our system. It’s one of the main products,” said Dr. Rishi Manchanda, who has worked with low-income patients in California for more than a decade and served on the board of directors of the non-profit RIP Medical Debt “We have a healthcare system that is almost perfectly designed to create debt.”

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The KFF survey was designed to capture not only bills that patients cannot afford to pay, but also other loans used to pay for healthcare. The research included analyzes of credit bureaus, hospital billing and credit card data conducted by the Urban Institute and other partners, as well as KHN and NPR interviews with hundreds of patients, physicians, leaders health industry, consumer advocates and researchers.

About one in seven Americans with debt said they had been denied access to a hospital, doctor or other provider because of unpaid bills. An even larger share – about two-thirds – have postponed care they or a family member needs because of the cost.

Much of the blame is placed on a health care system that is “massively indebting patients”, the report says. This is the case even after the passage of the Affordable Care Act of 2010. The law extended insurance coverage to tens of millions of Americans, but also “augurated years of solid profits” for the medical industry, which continues to raise prices.

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For many Americans, the law “has failed to deliver on its promise of more affordable care,” according to the report. Instead, many have racked up medical bills totaling thousands of dollars amid a move by health insurers to pass the costs onto patients through higher deductibles.

“Now a very lucrative industry is capitalizing on patients’ inability to pay,” the report said. “Hospitals and other healthcare providers are pumping millions into credit cards and other loans. These stick patients with high interest rates while generating profits for lenders that exceed 29%, according to research firm IBISWorld.

Many Americans have been forced to cut spending elsewhere — including on essentials — to meet medical and health debt. The KFF survey found that 63% of respondents had to cut back on food, clothing and other basics. Nearly half (48%) have used up all or most of their savings to pay their health debts. Nearly three in 10 (28%) have delayed buying a home or paying for school.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who has previously held positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work has also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal, and Business North Carolina magazine. He holds a BA in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting has earned him awards from the North Carolina Press Association, Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A North Carolina native who also writes fiction, Vance’s short story “Saint Christopher” placed second in the 2019 Writer’s Digest short story competition. Two of her short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. Her first novel, Voodoo Hideaway, is published in 2021 by Atmosphere Press.

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