Elizabeth and Nick Woodruff of Binghamton, New York, were sued for nearly $10,000 by the hospital where Nick's infected leg was amputated.
*Heather Ainsworth for KHN and NPR*

Sick and struggling to pay, 100 million people in the U.S. live with medical debt

Elizabeth Woodruff drained her retirement account and took on three jobs after she and her husband were sued for nearly $10,000 by the New York hospital where his infected leg was amputated.

Ariane Buck, a young father in Arizona who sells health insurance, couldn't make an appointment with his doctor for a dangerous intestinal infection because the office said he had outstanding bills.

Allyson Ward and her husband loaded up credit cards, borrowed from relatives, and delayed repaying student loans after the premature birth of their twins left them with $80,000 in debt. Ward, a nurse practitioner, took on extra nursing shifts, working days and nights.

"I wanted to be a mom," she said. "But we had to have the money."

The three are among more than 100 million people in America ― including 41% of adults ― beset by a health care system that is systematically pushing patients into debt on a mass scale, an investigation by KHN and NPR shows.

The investigation reveals a problem that, despite new attention from the White House and Congress, is far more pervasive than previously reported. That is because much of the debt that patients accrue is hidden as credit card balances, loans from family, or payment plans to hospitals and other medical providers.

To calculate the true extent and burden of this debt, the KHN-NPR investigation draws on a nationwide poll conducted by KFF (Kaiser Family Foundation) for this project. The poll was designed to capture not just bills patients couldn't afford, but other borrowing used to pay for health care as well. New analyses of credit bureau, hospital billing, and credit card data by the Urban Institute and other research partners also inform the project. And KHN and NPR reporters conducted hundreds of interviews with patients, physicians, health industry leaders, consumer advocates, and researchers.

The picture is bleak.

Source: Tabulations of the August 2021 Urban Institute credit bureau data. Credit: Juweek Adolphe/Alyson Hurt for KHN and NPR

In the past five years, more than half of U.S. adults report they've gone into debt because of medical or dental bills, the KFF poll found.

A quarter of adults with health care debt owe more than $5,000. And about 1 in 5 with any amount of debt said they don't expect to ever pay it off.

"Debt is no longer just a bug in our system. It is one of the main products," said Dr. Rishi Manchanda, who has worked with low-income patients in California for more than a decade and served on the board of the nonprofit RIP Medical Debt. "We have a health care system almost perfectly designed to create debt."

The burden is forcing families to cut spending on food and other essentials. Millions are being driven from their homes or into bankruptcy, the poll found.

Medical debt is piling additional hardships on people with cancer and other chronic illnesses. Debt levels in U.S. counties with the highest rates of disease can be three or four times what they are in the healthiest counties, according to an Urban Institute analysis.

The debt is also deepening racial disparities.

And it is preventing Americans from saving for retirement, investing in their children's educations, or laying the traditional building blocks for a secure future, such as borrowing for college or buying a home. Debt from health care is nearly twice as common for adults under 30 as for those 65 and older, the KFF poll found.

Allyson and Marcus Ward of Chicago moved across the country to be closer to family after the premature birth of their twins, Milo and Theo, left them with about $80,000 in medical debt. *Taylor Glascock for KHN and NPR*

Perhaps most perversely, medical debt is blocking patients from care.

About 1 in 7 people with debt said they've been denied access to a hospital, doctor, or other provider because of unpaid bills, according to the poll. An even greater share ― about two-thirds ― have put off care they or a family member need because of cost.

"It's barbaric," said Dr. Miriam Atkins, a Georgia oncologist who, like many physicians, said she's had patients give up treatment for fear of debt.

Patient debt is piling up despite the landmark 2010 Affordable Care Act.

The law expanded insurance coverage to tens of millions of Americans. Yet it also ushered in years of robust profits for the medical industry, which has steadily raised prices over the past decade.

Hospitals recorded their most profitable year on record in 2019, notching an aggregate profit margin of 7.6%, according to the federal Medicare Payment Advisory Committee. Many hospitals thrived even through the pandemic.

But for many Americans, the law failed to live up to its promise of more affordable care. Instead, they've faced thousands of dollars in bills as health insurers shifted costs onto patients through higher deductibles.

Now, a highly lucrative industry is capitalizing on patients' inability to pay. Hospitals and other medical providers are pushing millions into credit cards and other loans. These stick patients with high interest rates while generating profits for the lenders that top 29%, according to research firm IBISWorld.

Patient debt is also sustaining a shadowy collections business fed by hospitals ― including public university systems and nonprofits granted tax breaks to serve their communities ― that sell debt in private deals to collections companies that, in turn, pursue patients.

"People are getting harassed at all hours of the day. Many come to us with no idea where the debt came from," said Eric Zell, a supervising attorney at the Legal Aid Society of Cleveland. "It seems to be an epidemic."

In debt to hospitals, credit cards, and relatives

America's debt crisis is driven by a simple reality: Half of U.S. adults don't have the cash to cover an unexpected $500 health care bill, according to the KFF poll.

As a result, many simply don't pay. The flood of unpaid bills has made medical debt the most common form of debt on consumer credit records.

As of last year, 58% of debts recorded in collections were for a medical bill, according to the Consumer Financial Protection Bureau. That's nearly four times as many debts attributable to telecom bills, the next most common form of debt on credit records.

But the medical debt on credit reports represents only a fraction of the money that Americans owe for health care, the KHN-NPR investigation shows.

About 50 million adults ― roughly 1 in 5 ― are paying off bills for their own care or a family member's through an installment plan with a hospital or other provider, the KFF poll found. Such debt arrangements don't appear on credit reports unless a patient stops paying.
One in 10 owe money to a friend or family member who covered their medical or dental bills, another form of borrowing not customarily measured.
Still more debt ends up on credit cards, as patients charge their bills and run up balances, piling high interest rates on top of what they owe for care. About 1 in 6 adults are paying off a medical or dental bill they put on a card.

How much medical debt Americans have in total is hard to know because so much isn't recorded. But an earlier KFF analysis of federal data estimated that collective medical debt totaled at least $195 billion in 2019, larger than the economy of Greece.

The credit card balances, which also aren't recorded as medical debt, can be substantial, according to an analysis of credit card records by the JPMorgan Chase Institute. The financial research group found that the typical cardholder's monthly balance jumped 34% after a major medical expense.

Monthly balances then declined as people paid down their bills. But for a year, they remained about 10% above where they had been before the medical expense. Balances for a comparable group of cardholders without a major medical expense stayed relatively flat.

It's unclear how much of the higher balances ended up as debt, as the institute's data doesn't distinguish between cardholders who pay off their balance every month from those who don't. But about half of cardholders nationwide carry a balance on their cards, which usually adds interest and fees.

Bearing the burden of debts large and small

For many Americans, debt from medical or dental care may be relatively low. About a third owe less than $1,000, the KFF poll found.

Even small debts can take a toll.

Edy Adams, a 31-year-old medical student in Texas, was pursued by debt collectors for years for a medical exam she received after she was sexually assaulted.

Adams had recently graduated from college and was living in Chicago.

Police never found the perpetrator. But two years after the attack, Adams started getting calls from collectors saying she owed $130.58.

Edy Adams of Austin, Texas, was pursued for years by debt collectors over a $130.68 bill for a medical exam she received after being sexually assaulted in Chicago.
*Julia Robinson for KHN and NPR*

Illinois law prohibits billing victims for such tests. But no matter how many times Adams explained the error, the calls kept coming, each forcing her, she said, to relive the worst day of her life.

Sometimes when the collectors called, Adams would break down in tears on the phone. "I was frantic," she recalled. "I was being haunted by this zombie bill. I couldn't make it stop."

Health care debt can also be catastrophic.

Sherrie Foy, 63, and her husband, Michael, saw their carefully planned retirement upended when Foy's colon had to be removed.

After Michael retired from Consolidated Edison in New York, the couple moved to rural southwestern Virginia. Sherrie had the space to care for rescued horses.

The couple had diligently saved. And they had retiree health insurance through Con Edison. But Sherrie's surgery led to numerous complications, months in the hospital, and medical bills that passed the $1 million cap on the couple's health plan.

When Foy couldn't pay more than $775,000 she owed the University of Virginia Health System, the medical center sued, a once common practice that the university said it has reined in. The couple declared bankruptcy.

Sherrie Foy of Moneta, Virginia, had her retirement plans upended when surgery to remove her colon left her with nearly $800,000 in bills and forced her and her husband, Michael, into bankruptcy. *Carlos Bernate For KHN and NPR*

The Foys cashed in a life insurance policy to pay a bankruptcy lawyer and liquidated savings accounts the couple had set up for their grandchildren.

"They took everything we had," Foy said. "Now we have nothing."

About 1 in 8 medically indebted Americans owe $10,000 or more, according to the KFF poll.

Although most expect to repay their debt, 23% said it will take at least three years; 18% said they don't expect to ever pay it off.

Medical debt's wide reach

Debt has long lurked in the shadows of American health care.

In the 19th century, male patients at New York's Bellevue Hospital had to ferry passengers on the East River and new mothers had to scrub floors to pay their debts, according to a history of American hospitals by Charles Rosenberg.

The arrangements were mostly informal, however. More often, physicians simply wrote off bills patients couldn't afford, historian Jonathan Engel said. "There was no notion of being in medical arrears."

Today debt from medical and dental bills touches nearly every corner of American society, burdening even those with insurance coverage through work or government programs such as Medicare.

READ MORE