In the first quarter of 2023, US household debt rose to $17.5 trillion. showing a sharp increase over the last decade. The rise in debt is thought to be partly due to cost growth outstripping income growth, so many Americans will need to borrow more to pay for housing, higher education, and consumer goods. For example, one study found that since 1980, college costs have increased by almost 170%, while average earnings for young people (ages 22-27) have only increased by 19%. Middle-class Americans carry much of this debt, and many are living on their paychecks.
Medical debt, caused by a patient’s failure to pay some or all of their medical bills, is a type of debt that many Americans carry. Health insurance is intended to be the primary mechanism for protecting patients from unexpected or unaffordable medical expenses, but for too many patients it is either unaffordable or inadequate. .
Trends in health insurance coverage have resulted in an increase in medical liability. This includes inadequate comprehensive health insurance coverage and high out-of-pocket and reduced health plans that intentionally push more costs onto patients. These coverage gaps make individuals financially vulnerable when seeking medical care.
- There are still too many uninsured Americans. Affordable comprehensive medical insurance is the most important protection against medical debt. The U.S. healthcare system has achieved better coverage over the past decade, but gaps remain and major new threats are on the horizon. One persistent gap is that some states have decided not to expand Medicaid, and the most immediate threat is that as the COVID-19 public health emergency ends, Millions of people nationwide could lose Medicaid coverage.
- High deductibles leave many Americans with costs they cannot afford. High deductible plans are specifically designed to increase a patient’s financial exposure through a higher cost burden at the expense of lower monthly premiums. However, many people on plans with high deductibles feel they have no control over the amount they have to pay for their health plans. According to a recent Federal Reserve report, 37% of adults said he could not prepare for a $400 emergency, which is higher than the average annual deductible for a single employer-sponsored policy. He is $1,000 less.
- Skinny health plans often have insufficient perks and startling gaps in coverage. Short-term, time-limited medical plans and health-sharing ministries have fewer targeted benefits and include little or no consumer protections, such as mandatory pre-existing coverage or out-of-pocket limits. Patients with these types of plans often pay all medical expenses themselves without the help of their medical plan, including essential services such as emergency care and oncology care. Such denial can lead to: accumulate a large medical debt.
We must address the root of the health care debt problem. This means ensuring that all individuals have access to comprehensive health insurance at an affordable cost. The AHA encourages policy makers to consider the following policy actions:
4 solutions to address health care debt
- Requires health insurance, the entity that determines the costs payable by members, to directly collect the cost contributions imposed by the health care insurer, removing health care providers entirely from the collection of cost contributions. This approach completely eliminates the need for most patient bills from healthcare providers.
- Restricting the sale of expensive deductible health care plans to individuals who have demonstrated the ability to afford the associated costs.
- Prohibits the sale of Ministry of Health endorsements products and short-term or time-limited plans that offer coverage for more than 90 days.
- We will reduce the maximum copayment amount.
Hospitals and health systems have long been strong proponents of comprehensive insurance and will continue to drive solutions that make care and insurance more affordable and accessible for all patients. Medical insurance must do its job by ensuring that the insurance it offers provides protection against unpaid bills and medical debt.
