Americans Owe $140 Billion in Medical Debt. Here’s How to Avoid It

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Key Takeaways

  • In June 2020, 17.8% of individuals in the U.S. had medical debt in collections. The burden of debt was highest among people living in low-income communities and in the South. 
  • States that have expanded Medicaid saw a reduction in Medicaid spending as well as mental health care in the corrections system.
  • Experts recommend negotiating payment with hospitals and requesting an itemized bill to make sure there's no duplicate or incorrect charges.

A recent study found that nearly one in five people in the United States had medical debt in collections as of June 2020, reflecting healthcare bills accrued prior to the COVID-19 pandemic. The mean amount of the debt was $429.

Researchers estimated $140 billion in total medical debt in collections based on consumer credit reports. Americans living in lower-income communities and in the South, especially in states that did not expand Medicaid, owed the highest amount of debt.

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

“It just speaks to how important the expansion of Medicaid has been towards financial security, financial well-being, as well as reducing disparities in these communities," he says.

Yin adds that when medical bills are left unpaid, they can be sent to a debt collection agency, which may report the debt to a credit bureau. It can hurt an individual’s credit score and make it more difficult to qualify for a loan or obtain a credit card.

Marie Dagenais-Lewis, a content associate at Diversability, was shocked to receive a $30,000 bill 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 between affording her medical bills and food.

“I couldn’t even afford my health care. And I'm sitting here with not the best credit,” Dagenais-Lewis tells Verywell. “It’s hard to get good apartments. It’s hard to be able to get a good place to stay.” 

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

“Society cares more about making money off of us than saving our lives. Our lives are so much more than a price tag,” Dagenais-Lewis says. 

Reducing Medical Debt Through Policy 

Yin explains that one way to curb medical debt in the U.S. is through a policy that focuses on "upping the American Rescue Plan subsidies for Obamacare insurance." It would allow patients to purchase more affordable insurance plans with a smaller deductible, he says.

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

Under Medicaid expansion, “the federal government pays more than what Medicaid expansion costs,” Yin says. An analysis found that from 2014 to 2017, states that expanded Medicaid experienced a 4.4% to 4.7% reduction in state spending on Medicaid and saved on mental health care in the corrections system.

Ways to Avoid Medical Debt Personally

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

“Usually, the hospital is going to be willing to negotiate,” Kluender tells Verywell. “Call the hospital billing department and let them know that you’re unable to pay that amount.”

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

He also stresses the importance of leveraging insurance. “Insurance companies have negotiated rates with healthcare providers. If you don’t have insurance, they’ll usually send you a bill for the sticker price, which is not a price that any insured patient will ever pay,” Kluender says, 

Lastly, patients can ask for an itemized bill and look out for unfair or incorrect charges like the following:

  • Duplicate costs (you were charged twice for a procedure or medicine)
  • Procedures or medicine you didn’t receive 
  • Your insurance was supposed to cover something that it didn’t 
  • Explanation of benefits (EOB) was missing from the bill
  • Upcoding, a misrepresentation of your condition on the bill

What This Means For You

If you received a medical bill, experts recommend calling your provider’s billing department for an itemized bill and negotiating payment. 

4 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Kluender R, Mahoney N, Wong F, Yin W. Medical Debt in the US, 2009-2020JAMA. 2021;326(3):250-256. doi:10.1001/jama.2021.8694

  2. Kaiser Family Foundation. The Burden of Medical Debt: Results from the Kaiser Family Foundation/New York Times Medical Bills Survey.

  3. Kaiser Family Foundation. Status of State Medicaid Expansion Decisions: Interactive Map.

  4. The Commonwealth Fund. The Impact of Medicaid Expansion of States’ Budgets.

By Kayla Hui, MPH
Kayla Hui, MPH is the health and wellness ecommerce writer at Verywell Health.She earned her master's degree in public health from the Boston University School of Public Health and BA from the University of Wisconsin-Madison.