A new JAMA study finds Americans owed nearly $140 billion in medical debt to collection agencies in 2020—roughly $60 billion more than 2016 research had indicated.
How much debt do patients owe?
For the study, researchers examined 10% of all credit reports between January 2009 and June 2020 from TransUnion, a credit rating agency. They also assessed income data from the 2014 to 2018 American Community Survey. Overall, the researchers reviewed data on nearly 40 million people.
Based on their assessment, the researchers found that nearly one in five Americans owed unpaid medical to collection agencies in June 2020. The average amount of the debt was $429.
Moreover, between 2009 and 2020, medical debt became the largest source of debt owed to collection agencies in the United States, the researchers found.
After taking into account people who did not own credit cards or have bank accounts, the researchers estimated that collection agencies were in charge of $140 billion of medical debt in 2020—a nearly $60 billion increase from what an earlier 2016 study on the topic had found.
However, the researchers said the $140 billion identified in the study does not represent the full burden of medical debt, since it did not include medical bills owed to providers, nor those paid with credit cards or on long-term payment plans.
Additionally, the researchers said, the time period included by the study did not include the coronavirus pandemic, which may have led to higher debt loads.
Which patients owe the most medical debt?
According to the researchers, medical debt owed to collections agencies was more concentrated in states that did not expand Medicaid under the Affordable Care Act (ACA).
What matters (and doesn't) in your patients' financial experience, according to our 1,000-patient survey
Specifically, the researchers found that individuals in states without Medicaid expansion had an average of $375 more in unpaid medical bills owed to collection agencies than did people in other states.
The researchers also found that medical debt was higher in lower-income communities, with people living in the lowest-income ZIP codes owing collection agencies an average of $677 while people living in the highest-income ZIP codes owed only $126 on average.
"If you think about Americans getting phone calls, letters, and knocks on the door from debt collectors, more often than not it's because of the U.S. health care system," Neale Mahoney, a health economist at Stanford University and the study's lead author, said of the findings.
Separately, Amy Finkelstein—an economics professor at MIT, who has conducted research demonstrating how Medicaid coverage can improve the financial and mental health of low-income individuals—said the JAMA study reminds people that health insurance is often a "strong buffer against financial adversity."
Benedic Ippolito, a senior fellow at the American Enterprise Institute, added that medical debt is less likely to be repaid than other types of debt. "If you had to choose between keeping the lights on and paying your mortgage and paying some doctor you're never going to see again, I think a lot of us would make the same decision," he said. (Reed, Axios, 7/21; Kliff/Sanger-Katz, New York Times, 7/21)