Medical debt overtakes nonmedical as largest source in collections. COVID-19 may be making it worse.

Dive Brief:

  • Americans’ medical debt may have reached $140 billion last year, significantly higher than past estimates and outweighing all other types of personal debt in the U.S., according to a new study published in JAMA.
  • Researchers analyzed a tenth of all credit reports from rating agency TransUnion to find nearly one in five Americans had medical debt in collections in June last year — more than any other type.
  • Debt was significantly more concentrated in states that had yet to expand Medicaid under the Affordable Care Act. The analysis reflects care provided prior to COVID-19, but early data shows the pandemic has likely only exacerbated the perennial issue of medical debt in the U.S.

Dive Insight:

Due to rising healthcare prices, increased cost-sharing and coverage gaps, the U.S. medical system often leaves patients on the hook for high out-of-pocket costs. If unpaid, those bills are sent to collections and become medical debt, which is associated with reduced healthcare use and an alarming deterioration in mental and financial health.

The study, published Tuesday, analyzed consumer credit reports between January 2009 and June 2020 and found 18% of people in the U.S. had medical debt in collections last June. The mean amount of debt was $429, which can be extrapolated to imply the existence of $140 billion in total medical debt, researchers said.

However, the study authors said there were limitations to generalizability, given the data was pulled from TransUnion credit reports, which may not be identical to debt reported to other credit bureaus and doesn’t include any non-reported debt.

That $140 billion sum comes out to tens of billions more than previous estimates, including one from Credit Karma pegging U.S. medical debt in collections as of April as $46 billion, and another from Health Affairs using 2016 data that arrived at the much higher figure of $81 billion.​

Rebecca Pifer/Healthcare Dive, data from JAMA 


The study found U.S. medical debt was highest in the South, where almost a quarter of residents had medical debt, at an average debt of $616; and lowest in the Northeast, where about a tenth of residents had debt, at an average of $167. Medical debt was significantly more prevalent and the bill steeper in low-income zip codes compared to wealthy ones (a mean of $677, versus $126).

Medical debt became most concentrated in lower income communities in states that didn’t expand the Medicaid safety-net insurance program, the large majority of which are in the South, researchers found.

Between 2013 and 2020, the states that expanded Medicaid in 2014 saw their mean flow of medical debt plummet by 34 percentage points greater than the states that didn’t expand the program. In the expansion states, the gap in the mean flow of medical debt between the lowest and highest zip code income deciles decreased by $145, while the gap increased by $218 in non-expansion states, according to the study.

Despite newly increased federal funding from the Biden administration, 13 states have yet to expand Medicaid, which is now the largest source of health insurance coverage in the U.S. The more generous benefits haven’t nudged the holdout states — Alabama, Florida, Georgia, Kansas, Mississippi, Missouri, North Carolina, South Carolina, South Dakota, Tennessee, Texas, Wisconsin and Wyoming — despite evidence the coverage improves outcomes and lowers costs for some of the neediest Americans, and general public support for the program at a time of great public health need.

The new study doesn’t capture debt incurred during the COVID-19 pandemic, or from any care provided in 2020, due to debt reporting delays. But early indicators suggest the problem has only worsened because of the coronavirus, due to acute infections and coverage and income losses amid widespread economic volatility last year, resulting in an increasing struggle to pay bills.

More than a third of insured adults and half of uninsured adults said they had difficulty paying for a medical bill in 2020, according to a survey released Friday from the Commonwealth Fund.

Many payers waived cost-sharing requirements for coronavirus-related treatments last year, but a May study conducted by University of Michigan and Boston University researchers found more than 70% of patients hospitalized for COVID-19 last year reported out-of-pocket expenses not covered by insurance.