Dive Brief:
- Hospitals are a prime source of medical debt in America that hits underserved populations hardest, despite charity care programs and financial assistance policies, according to a new analysis.
- Of the 15% of U.S. adults with past-due medical debt, almost two-thirds owe some or all of that debt to hospitals, according to research from the Urban Institute. That medical debt disproportionately affects underserved populations, such as low-income individuals and people with disabilities, researchers found.
- While medical debt remains a persistent financial burden in the U.S., a new analysis from the Urban Institute highlights how targeting hospital billing could ameliorate the problem.
Dive Insight:
Medical debt in the U.S. has improved since the passage of the Affordable Care Act over a decade ago, but remains a financial burden for consumers. Currently, more than 100 million adults have medical or dental bills to pay off. Some estimates place Americans’ collective medical debt at around $195 billion. Medical debt can cause financial hardship, damaged credit and delayed care due to financial concerns.
As a result, policymakers have increasingly focused on bringing down the high cost of healthcare, including hospital billing. Nonprofit hospitals — which make up about 60% of all hospitals in the U.S. — are required to provide charity care and community benefits in exchange for tax breaks. However, for-profit facilities are exempt, and financial assistance isn’t heavily regulated, which can cause charity care and community benefits to be difficult to access.
The study, which was funded by the Robert Wood Johnson Foundation, used survey data from June 2022 to examine debt burdens in the U.S. Researchers found that, among adults with medical debt, 28% owe all of their debt to hospitals, while 45% owe it to hospitals and other providers.
Most adults with medical debt owed at least $1,000, while more than one in five owed at least $5,000.
Adults with past-due hospital bills were more likely to have significantly higher amounts of medical debt than adults with debt from other providers, the Urban Institute found.
Most adults with overdue hospital bills were contacted by a collections agency. Adults with incomes below 250% of the federal poverty line were no more likely to get discounted healthcare, or be referred to debt collectors, compared to higher-earning people, according to the analysis.
About one-third of adults with overdue bills said they worked out a payment plan with the hospital, but only about one-fifth of adults actually received discounted care.
In addition, adults with disabilities were more than twice as likely to have past-due medical debt than those without disabilities. And, Black and Latino adults were more likely to have past-due medical debt than White adults.
The findings “highlight the persistent challenge of medical debt in America, and the role of hospitals as a key source of that debt,” said Michael Karpman, Urban Institute principal research associate, in a statement.
How debt is concentrated among families with low incomes — and how frequently debt is owed to hospitals — suggests that expanded access to hospital charity care and stronger consumer protections could mitigate the impact of unaffordable medical bills, researchers said.
One action aimed at moving the needle on hospital bills — federal government regulations aimed at protecting consumers from unexpected medical bills— has been tied up in litigation. Last month, the HHS paused arbitration between payers and providers over unexpected bills, after a Texas judge ruled against the government’s reading of the surprise billing legislation.
