Americans owe $ 140 billion in medical debt. Here’s how to avoid it



Key points to remember

  • As of June 2020, 17.8% of people in the United States had medical debts in collection. The debt burden was highest among people living in low-income communities and in the South.
  • States that have expanded Medicaid have seen a reduction in Medicaid spending as well as mental health care in the correctional system.
  • Experts recommend negotiating payment with hospitals and asking for an itemized bill to make sure there aren’t any duplicate or incorrect charges.

A recent study found that nearly one in five people in the United States had medical debts in collection as of June 2020, reflecting the health care bills accumulated before the COVID-19 pandemic. The average amount of debt was $ 429.

Researchers have estimated total medical debts in collection at $ 140 billion based on consumer credit reports. Americans living in low-income communities and in the South, especially in states that did not extend Medicaid, were the most in debt.

“It’s a nationwide problem. Medical debt has become the largest source of debt and collection than all other sources combined, ”Wes Yin, PhD, associate professor of economics at UCLA Luskin School of Public Affairs and co-author of The Luskin School of Public Affairs, told Verywell. ‘study.

“This shows how important the expansion of Medicaid has been to financial security, financial well-being, as well as reducing disparities in these communities,” he said.

Yin adds that when medical bills go unpaid, they can be sent to a debt collection agency, which can report the debt to a credit bureau. This can hurt a person’s credit rating and make it more difficult to qualify for a loan or obtain a credit card.

Marie Dagenais-Lewis, Content Associate at Diversability, was shocked to receive a bill for $ 30,000 for a Holter monitor test. From 2017 to 2020, Dagenais-Lewis, who lives with hereditary multiple exostosis, a genetic condition that affects bone growth, struggled to pay for his medical bills and food.

“I couldn’t even pay for my health care. And I’m sitting here with not the best credit, ”Dagenais-Lewis told Verywell. “It’s hard to get good apartments. It is difficult to find a good place to stay.

A 2016 survey showed that 70% of households who struggled to pay their medical bills reported cutting back on spending on basic necessities, such as food, clothing and household items.

“Society cares more about making money with us than about saving our lives. Our lives are more than a price to pay, ”says Dagenais-Lewis.

Reduce medical debt through policy

Yin explains that one way to reduce medical debt in the United States is to adopt a policy focused on “increasing the US bailout subsidy for Obamacare insurance.” This would allow patients to purchase more affordable insurance plans with a smaller deductible, he says.

In addition to extending grants, Yin stresses the importance of expanding Medicaid. Currently 12 states have declined expansion including Wyoming, South Dakota, Wisconsin, Kansas, Texas, Tennessee, North Carolina, Mississippi, Alabama, Georgia, South Carolina and Florida.

As part of the Medicaid expansion, “the federal government is paying more than what the Medicaid expansion costs,” Yin said. Analysis found that from 2014 to 2017, states that expanded Medicaid saw a 4.4% to 4.7% reduction in state spending on Medicaid and saved on mental health care in the system. penitentiary.

Ways to Avoid Medical Debt Personally

According to Raymond Kluender, PhD, assistant professor of business administration at Harvard Business School and co-author of the study, people can avoid medical debt by negotiating a bill reduction.

“Usually the hospital will be ready to negotiate,” Kluender told Verywell. “Call the hospital billing department and let them know you can’t pay this amount. ”

Patients can also avoid using credit cards or borrowing money to pay a medical bill, Kluender says, which can prevent interest accumulation.

It also stresses the importance of taking advantage of insurance. “Insurance companies have negotiated rates with health care providers. If you don’t have insurance, they will usually invoice you for the sticker price, which is not a price an insured patient will ever pay, ”Kluender explains,

Finally, patients can request an itemized bill and check for unfair or incorrect charges like the following:

  • Duplicate costs (you were billed twice for a procedure or medication)
  • Procedures or medications you did not receive
  • Your insurance was supposed to cover something it didn’t cover
  • The explanation of services (EOB) was missing in the invoice
  • Upcoding, a false declaration of your condition on the invoice

What it means for you

If you’ve received a medical bill, experts recommend calling your provider’s billing department to get a detailed bill and negotiate payment.


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