Sep 19, 2022 - Health

Study: Medical debt threatens people's health, housing

Illustration of a close up of a tower of cards made out of money.
Illustration: Aïda Amer/Axios

Soaring medical debt is setting U.S. adults up for higher risks of eviction, food insecurity and bad health outcomes regardless of insurance or income, a new study found.

Why it matters: Uninsured or middle-to-low-income patients are more likely to get stuck with medical debt while the rich are largely spared. But even private insurance offers little protection against unaffordable bills, according to the study published in JAMA Open Network on Friday.

  • "Private insurance is a defective product. You pay for it and then when you get sick, there's co-payments, there's deductibles, there's out-of-network fees, there's things that aren't covered at all," said Steffie Woolhandler, a physician and public health professor at Hunter College who co-authored the study.

The big picture: More than 100 million Americans live with medical debt, per an investigation by Kaiser Health News and NPR.

  • Mounting costs coupled with stagnant wages can force people into delaying necessary care, taking on multiple jobs, sacrificing essentials like groceries and depleting savings to the point of financial ruin.

Yes, but: People in states that expanded Medicaid reported an average of $3,000 less in medical debt than those in states who hadn’t, signaling a link between comprehensive coverage and lower bills.

  • This echoes a 2021 Stanford study that found medical debt was highest in the South and among lower-income communities in states without Medicaid expansion
  • "The idea that we have medical debt, those are all policy decisions," Woolhandler told Axios.

By the numbers: The average amount of medical debt in 2018 was $21,867, according to the researchers' analysis of the Census Bureau's Survey Income and Program Participation.

  • For those in poor health, the burden rose to nearly $43,000, while uninsured patients had an average debt of more than $38,000.
  • People with medical debt were two to three times more likely to be unable to pay rent or utilities and experience eviction than those without health care bills, per the study.
  • Compared to white households, Black and Latino people were more likely to have medical debt, which can affect credit and the ability to build wealth.

Of note: In April, the Biden administration announced a push to lessen the medical debt burden on Americans.

  • But it doesn't address the impact of not having national health insurance or expanding Medicaid and letting wages determine the level of benefits, said Wes Yin, an economics professor at UCLA who was a co-author of the Stanford study.
  • "The price of health care keeps on rising at dramatic rates and that has to do with provider consolidation and mergers and acquisition. That really hasn't been shown to benefit health outcomes," Yin told Axios.

The bottom line: "Shining the light on hospitals to solve this deeper issue of household financial vulnerability is like patching the holes on a roof. The root causes here are much deeper than that," Yin said.

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