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America’s Growing Medical Debt Crisis [1]

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Date: 2024-03-06  

The Medical debt crisis in America is unique among advanced economies. Despite enormous spending 72% of Americans believe that healthcare is unaffordable. That is not just vibes: the United States leads the world in spending on healthcare, with healthcare taking up 16% of its GDP, and yet, of the wealthiest nations in the world by GDP per capita , the United States trails most of its peers. The reason for this is simple: whereas its peers offer universal healthcare or very affordable forms of wealthcare thanks to state intervention, the United States’ system is market driven, and costs have skyrocketed over the decades. So, even though 90% of Americans have some form of health insurance, medical debt has ballooned, which, as the Jacobin reports, can be “life wrecking” . The Kaiser Family Foundation (KFF) estimates that 41% of Americans (some 100 million people) have some form of medical debt. There is no solution in sight, and the consequence is that a medical debt crisis has been allowed to build up over the decades.

Although America is characterized by very high medical costs, for poor families, it is not always about the size of the bill. Even a small medical bill can prove crippling. Consider that 39% of Americans cannot afford a $1000 emergency expense, without going into debt. Falling sick becomes a road to debt, because most people cannot afford to pay any meaningful bill. People with cancer, for example, have more debt than people without cancer. The combination of unaffordable deductibles and other types of cost sharing, has led to the sick accruing huge debts, so much so that, according to KFF , they are often forced to cut back on food, clothing and other household items. This leads to a terrible cycle: the sicker you are, the more debt you have, and the more debt you have, the sicker you become.

The reason people with medical debt are likely to get sicker, is because, not only do they have to make the cutbacks on spending we mentioned, but, they are also forced to forgo medical or dental care at higher rates than people without medical debt. One survey found that high-deductible plans “substantially and problematically” result in low-income diabetics seeking care at reduced rates. Children whose families are enrolled in high-deductible plans have worse health outcomes than other children. Medical debt can lead to bankruptcies, with 62% of bankruptcies related to medical debt. This in itself leads to stress-related illnesses. Medical debt collection can be very aggressive, with patients being sued, having their wages garnished, and their homes foreclosed. It is almost as if people are being punished for falling sick. People with medical debt fall into two broad groups: those with chronic conditions, or those who are uninsured. In other words, the most vulnerable members of our country.

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