By Abhishek Singh
The United States is grappling with a profound healthcare affordability crisis, as highlighted by a range of disconcerting statistics. Over the past five years, more than half of US adults have accumulated medical or dental debt, forcing them to make difficult financial decisions. Shockingly, a quarter of adults with healthcare debt owe over $5,000, and a significant proportion (around 20%) believe they will never be able to clear these debts. The burden of medical debt has severe consequences, forcing families to cut essential expenses, leading to evictions, bankruptcies, and exacerbating racial disparities.
(Levey, 2022)
Medical debt is particularly harsh on individuals with chronic illnesses like cancer. Counties with high disease rates experience debt levels three to four times greater than healthier counties, intensifying the burden on those already suffering. Moreover, medical debt prevents Americans from saving for retirement, investing in their children's education, or pursuing traditional avenues for a secure future. Strikingly, adults under 30 bear the brunt of this crisis, with medical debt almost twice as common in this age group compared to those 65 and older.
Despite the introduction of the Affordable Care Act in 2010, medical debt remains a pervasive issue. While the law expanded insurance coverage for millions, it also led to soaring profits for the medical industry. Hospitals, for instance, experienced record profits, with an aggregate margin of 7.6% in 2019. However, the promise of more affordable care eluded many Americans. Rising deductibles shifted costs to patients, resulting in thousands of dollars in bills, exacerbating the debt crisis. Furthermore, a lucrative industry has emerged, capitalizing on patients' inability to pay. Hospitals and medical providers are pushing millions into credit card debts and loans, trapping patients with high-interest rates while generating substantial profits for lenders.
This debt crisis has stark implications. Half of US adults lack the cash to cover a $500 unexpected healthcare bill, leading to a flood of unpaid bills and making medical debt the most common form of debt on consumer credit records. While some medical debts appear on credit reports, others, totalling billions, remain off the radar. Approximately 50 million adults, or 1 in 5, are paying off medical bills through installment plans with hospitals, which do not appear on credit reports unless payments cease. Additionally, 1 in 10 owe money to friends or family members who covered their medical expenses, another form of borrowing not typically measured.
Impacts of Costly Medical Bills
Costly medical bills in the US have widespread repercussions, with 42% of adults concerned about affording essential healthcare in the next year. Medical expenses hinder home purchases for 46% and force Americans to borrow money to cover rising healthcare costs. Additionally, 50% are unaware of emergency room expenses, causing financial strain and leading 41% to avoid necessary visits due to costs.
(Levey, 2022)
Economic anxieties abound, with 77% fearing escalating healthcare costs' impact on the US economy. In 2019, 65 million avoided treatment due to costs, while 12.7 million saw loved ones die for the same reason in 2021. 30% doubted their access to affordable care in 2021, and 28 million borrowed to cope, a 4% increase from 2020. 18% skipped medication to save money, while 40% feared unaffordable medical care in 2020.
(Levey, 2022)
Medical debt in the United States has far-reaching consequences, impacting individuals across all social and economic backgrounds, including those with insurance. This crisis particularly burdens the poorest and uninsured, highlighting significant racial disparities. Black and Hispanic adults are disproportionately affected, emphasizing systemic racial inequalities within the healthcare system.
According to a survey that sampled 3,000 people from the US, Australia, and Canada. Approximately one in six Canadians has debt as a result of medical costs. After the US, Canada came in second place among these nations. It also showed that 17.5% of Canadians were in debt as a result of medical expenses. Even though both Canada and Australia have universal health care, Canadians owe more for healthcare than Australians do. With an average medical debt of US$9,358 among the countries surveyed, Americans bore the greatest burden of medical debt, with those between the ages of 45 and 54 bearing the greatest share. In comparison, Canada ranks second on the list with an average healthcare debt of about US $6,022. Moreover, women in Canada were found to have accumulated medical debt at a higher rate than men, indicating a gender difference in the financial duties associated with healthcare (McCay, 2023).
Medical debt is not just a financial issue; it is a pervasive societal problem that hampers opportunities, stunts economic growth, and perpetuates social disparities. Addressing this crisis requires urgent and comprehensive reforms to ensure accessible and affordable healthcare for all Americans, regardless of their socioeconomic status. While Medicare provides coverage for those aged 65 and above, saving for emergencies remains crucial. Initiatives such as starting businesses or adopting sustainable lifestyles, like green senior living, can offer financial stability amidst rising healthcare challenges.
References:
Levey, N. N. (2022, June 16). 100 million people in America are saddled with medical debt. The Texas Tribune. https://www.texastribune.org/2022/06/16/americans-medical-debt/
Chowdhury, L. (2022, August 30). 49+ U.S. Medical Bankruptcy Statistics for 2022. RetireGuide. https://www.retireguide.com/retirement-planning/risks/medical-bankruptcy-statistics/
McCay, J. (2023, March 22). How much do we value our health? A survey of Australian, Canadian and American adults. How much do we value our health? | Compare the Market. https://www.comparethemarket.com.au/health-insurance/features/how-much-do-we-value-our-health/?utm_source=squamish+chief&utm_campaign=squamish+chief%3A+outbound&utm_medium=referral
Abhishek Singh is a Consultant who has worked as a Business and Market Research Analyst. He holds over 2 years of experience in hospitals, healthcare IT, and the health insurance sector, and possesses expertise in the healthcare domain. Abhishek is also a pharmacist and has earned an MBA in healthcare management. Currently, he is enrolled in the Research Analyst program at Humber College.
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