When I changed employers in 2022, I also changed the health insurance plan for my family from traditional coverage to the "consumer" option: a high-deductible plan with a health savings account option (HDHP/SO). This type of plan used to be called catastrophic coverage because except for certain preventive services, it doesn't cover any health care expenses incurred during the plan year until (in my case) the insured person(s) meets a deductible of over $4000 in claims. The plan makes sense for us because the lower premiums almost exactly offset the deductible over the course of a year, and we have more than enough cash to pay for care expenses less than that amount. But according to the Kaiser Family Foundation's Employer Health Benefits Survey, HDHP/SO type plans now cover 29% of all private sector employees with health insurance. Since 63% of workers are unable to pay a $500 emergency expense without borrowing, it's doubtful that all of the people covered by these plans have $4000 in easily accessible savings. So for them (and for tens of millions of uninsured Americans), an unexpected emergency room visit or hospitalization will likely lead to medical debt.
A recent article in the New England Journal of Medicine reviewed the history of medical debts in the U.S., which "since the 1980s ... have shifted from obligations negotiated by doctors, patients, and hospitals to assets bought and sold by people with no role in patient care." After the Emergency Medical Treatment and Active Labor Act (EMTALA) passed in 1986, requiring hospitals to provide emergency care to patients regardless of their insurance status or ability to pay, hospitals became more aggressive about referring patients with unpaid balances to debt collections, to such an extent that "by 1993, hospitals were the source of more business for debt-collection companies than any other industry."
A Commonwealth Fund survey of working age adults found that 32% had medical or dental debts that they were paying off over time. As one might expect, uninsured persons (41%) and persons who incomes of less than 200% of the federal poverty level (44%) were more likely to be in debt, but 30% of persons with employer-based insurance were also in debt. These debts caused substantial percentages to delay or avoid getting needed health care or prescription drugs (36%), cut back spending on food, heat, or rent (39%), and worry about how they were going to pay off the debt (78%). Rather than making payments to collection agencies or banks, two-thirds of people with medical debt were making payments directly to hospitals or care providers. Similarly, a study of pre-pandemic data from the 2018-19 Medical Expenditure Panel Survey found that 27 to 45 percent of adults younger than age 65 spent more than 10% of household after-tax income on out-of-pocket health care costs, were unable to pay medical bills without going into debt, or went without medical, dental, or prescription drug care because they could not afford it.
In the past, I would have said that having the national uninsured rate fall to a record low of just 7.7% during the first quarter of 2023 would be cause for celebration. But the majority of these gains, which resulted from the COVID-19 pandemic era prohibition of Medicaid disenrollment until the end of the public health emergency, are currently being undone, with many eligible persons having their health insurance terminated due to paperwork errors or misdirected mail notices rather than any change in their economic status. And as I've explained here, having health insurance is no guarantee of protection against medical debt.
Medical debt is a moral failure of our health care non-system. If the fire department comes to put out an accidental fire at my house, I will need to pay for the damage out of my home insurance policy, but I won't incur any fire department debt. If the police respond to a break-in at my office and eventually catch the burglar (or not), my employer won't incur any police department debt. The debt we owe our military veterans for protecting our country is arguably priceless, but you won't ever receive an itemized bill to pay your share in monthly installments of the cost of their domestic or overseas service. Medical debt will only cease being a problem when our country finally recognizes that health care for people younger than age 65 is a community and national responsibility, rather than an individual one.
