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Americans owe $140B+ in medical debt. Here are 5 ways providers can help.

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.

Infographic: The patient financial journey

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).

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)

Advisory Board's take

Financial navigators may ease the storm of medical debt. Here are 5 keys to an effective financial navigation program.

De SauletBy Deirdre Saulet, Expert Partner


These recent reports on medical debt are striking, but not surprising. Given the widening gap in our country between the haves and have-nots, few Americans are able to cover their medical costs, especially those that are unexpected. In fact, less than 40% of Americans say they could pay for a $1000 emergency expense.

For health care providers who want to improve their patients’ financial experience, I would suggest taking a page from cancer programs. For the past decade, many cancer providers across the country have invested in financial navigation, spurred by growing evidence that the cost of cancer care impacts quality of life, heightens risk of bankruptcy, and even increases the likelihood of mortality.

From our research on this topic, there are 5 key elements to an effective financial navigation program:

  1. Comprehensive education on insurance basics and individual financial responsibility

    A foundational element of any financial navigation program is ensuring patients understand the basics of health insurance and their own insurance benefits. In an ideal world, every patient would receive easy-to-comprehend benefits education and out-of-pocket cost estimates for their expected care. The model of having in-person visits with a financial counselor makes sense for cancer centers given the financial toxicity of the condition, but it should be applied more widely. In fact, Advisory Board’s 2018 Consumer Financial Experience Survey  revealed that the majority of patients want financial counselors at the first point of access. This is key, given that the majority of patients surveyed did not have access to a financial counselor at all.

  3. Systematic processes to proactively identify “high-risk” patients

    Beyond baseline education, organizations need systematic ways to identify and intervene with patients who require more comprehensive financial navigation or who experience changes in their financial situation across their treatment, such as the loss of their job. In oncology, this responsibility is typically fragmented between registration staff, social workers, navigators, and clinicians. But organizations should work to create a standardized system that captures patients from multiple channels across time. This can involve hardwiring financial checkpoints at regular intervals across the care continuum and/or creating red-flag indicators, such as Medicare-only, a switch in insurance, or high out-of-pocket maximums.

  5. Expertise to find the best coverage options for individual patients

    For patients who are uninsured or underinsured, it is vital to help them explore possible coverage options. Screen patients for coverage eligibility, understand national and state-specific enrollment restrictions, enhance partnerships with Medicaid Assistance Agencies, and coordinate the start of treatments with clinical teams to align with insurance coverage. This element of financial navigation is often under-resourced and under-leveraged. It is important to invest in staff who own this responsibility—finding optimal coverage for your patients brings benefits to both them and your organization.

  7. Ability to navigate and tap into a wide range of patient assistance programs.

    Best-in-class financial navigation programs leverage several internal and external sources of financial support. This can involve revisiting and improving your charity care policies. But even patients with relatively comprehensive health benefits may experience financial distress, so external sources of support are also key. In oncology, there are myriad funding sources, from patient advocacy groups to pharmaceutical assistance programs, but all have different eligibility criteria and application processes—all of which add to the complex burdens patients already face. Organizations should aim to automate the screening process for patient assistance to make sure they are tapping into all available support and reducing financial navigators’ workload.

  9. Patient-friendly collection processes.
  10. As highlighted in this article and recent news stories about hospitals bringing patients to court, trying to collect the total amount owed by patients can be a poor use of resources and damage an organization’s reputation. At the same time, collecting just a small portion of patients' responsibility can have a big impact on the bottom line. To effectively do this, make sure patients are aware of point-of-service collection, train staff with standard scripting and role playing for point-of-service collections, and build realistic payment plans for patients.

By investing in comprehensive financial navigation, organizations are not only helping patients and their families manage the costs of their care, but they are also improving their own bottom line. And with the new data out revealing higher mountain tops of medical debt, it is time to take on solutions for your organization and the patients you serve.

The patient financial journey is complex, so it's important to both understand that journey and also what matters (and doesn't) along the way. To learn more about financial navigation, check out our post on financial navigation programs amid Covid-19. And for a deep dive into cancer patient financial navigation, you can read through our research report on the topic which includes 17 best practices plus six downloadable templates and worksheets to help patients understand and manage their financial responsibilities, in turn improving your program’s revenue capture.

(Konish, CNBC, 1/22/2021; Park et al. ASCO, 1/30/2018; Ramsey et al., NCBI, 5/15/2013; Ramsey et al., ASCO, 1/25/2016)







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