Study: Health Care Has Become America’s Largest Source of Debt

The population of the United States owes nearly twice as much debt to medical care providers as was previously known, with a preponderance of such debt appearing to be focused on states that do not participate in the Medicare expansion codified in 2010’s Patient Protection and Affordable Care Act (ACA). This is according to new research published by researchers from Harvard Business School, Stanford University, the National Bureau of Economic Research and the University of California at Los Angeles (UCLA). The research was reported on by the New York Times.

“[The new research finds that] collection agencies held $140 billion in unpaid medical bills last year,” the Times report about the research reads. “An earlier study, examining debts in 2016, estimated that Americans held $81 billion in medical debt.”

The research aimed to take a broader look at people who hold such debt, expanding its scope to include people who have neither bank accounts or credit cards, the Times says based on the report.

“Using 10% of all credit reports from the credit rating agency TransUnion, the paper finds that about 18% of Americans hold medical debt that is in collections,” the reporting says. “The researchers found that, between 2009 and 2020, unpaid medical bills became the largest source of debt that Americans owe collections agencies. Overall debt, both from medical bills and other sources, declined during that period as the economy recovered from the Great Recession.”

The research, however, does not include data from the period after the onset of the COVID-19 coronavirus pandemic, as that data is too recent to be included in the full report. Medical debt is different from other forms of debt, the reporting says, because incurring it is not often a choice on the part of the person who owes. Debt also appears to be more concentrated in ZIP codes which correlate to lower incomes, the reporting says.

“In the lowest-income ZIP codes that researchers studied, people owed an average of $677,” The Times report reads. “Those in the highest-income ZIP codes owed an average of $126. Those figures represent the general population, not just debt holders. But medical debts are different in another way, too: They are much less likely to be repaid.”

This is because for some people who have other kinds of debt requiring payments, those are often prioritized over medical debt with more immediate concerns. One example is utility bills, where failing to pay can often result in services like water or electricity being shut off.

Read the story at the New York Times, and the research in the Journal of the American Medical Association (JAMA).

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