Medical debt

Percentages of persons in families with selected financial burdens of medical care: United States, January–June 2011. From National Health Interview Survey.

Medical debt is an especially notable phenomenon in the United States. According to the poll from the Pew Research center, American citizens are much more worried about health care issues as a top public matter and concern, especially medical expenses rather than the economy and terrorism.[2]

In less developed nations those on low income in need of treatment will often avail themselves of what ever help they can from either the state or NGOs without going into debt, and in most developed countries public coverage of healthcare costs are comprehensive. But in the US, even when the patient has insurance coverage, including coverage under the Patient Protection and Affordable Care Act of 2010, considerable medical costs remain the patient's responsibility. Consequently, medical debt has been found by a 2009 study to be the primary cause of personal bankruptcy.[3][4] One of the surveys that has been conducted by the Kaiser Family Foundation showed that the amount of debt that incurred by individuals for the health care costs is likely to cause personal bankruptcy. The study involving adults with employer-sponsored insurance found that while 20% of those surveyed have been approached by agencies, almost 9% of people declared their bankruptcy due to the health expenses.[5]

A 2007 survey had found about 70 million Americans either have difficulty paying for medical treatment or have medical debt.[6] According to the research that done in 2019, especially adults who are between 18–64 years and those lacks of health insurance coverage are familiar with medical financial hardship in the USA.[7] Studies have found people are most likely to accumulate large medical debts when they do not have health insurance to cover the costs of necessary medications, treatments, or procedures—in 2009 about 50 million Americans had no health coverage.[3] However, about 60% of those found to have medical debt were insured.[6] Health insurance plans rarely cover any or all health-related expenses; for insured people, the gap between insurance coverage and the affordability of health care manifests as medical debt. As with any type of debt, medical debt can lead to an array of personal and financial problems—including having to go without food and heat plus a reluctance to seek further medical treatment.[6][8] Aggressive debt collecting has been highlighted as an aggravating factor.[9] A study has found about 63% of adults with medical debt avoided further medical treatment, compared with only 19% of adults who had no such debt.[10]

In the United States, one of the largest concerns of medical debt stems from the high medical costs present.[11][12] For example, in a 2011 study of fees paid to physicians for office visits and hip replacement procedures across the United States and several other wealthy countries, the patients in the United States paid 27% or more for office visits and 70% or more for the hip replacement procedures.[12] Similarly, the United States charges an average of $75,345 for a heart bypass operation whereas the same operation in other wealthy countries such as the Netherlands and Switzerland costs $15,000 to $36,000 on average.[13] These are just a couple examples of many, and due to this, data has shown that individuals in the United States pay nearly double the amount of money on healthcare in their lifetime than those in other wealthy countries.[14] As these healthcare costs continue to rise, a lack of insurance or insurance that does not cover all fees causes a rise in out-of-pocket expenses.[15] In addition, the danger and the number of people, those with collected medical debts may increase in the future vis-à-vis the positive trend in higher patient cost-sharing and rising health care costs.[16]

According to a study conducted in 2012 by Demos, it was determined that among indebted households 62% cited out-of-pocket medical expenses as a contribution to their debt.[17] As these medical fees continue to rise and out-of-pocket expenses continue to grow, Americans are at much higher risk of falling into medical debt whether insured or not.[18]

Accordingly, the concern related to medical debts is largely unthinkable for individuals in Western Europe, Japan and Australia. The examination of international health insurance systems by the Los Angeles Times shows that about 1 of 35 people those were surveyed in Great Britain, Sweden, France, Germany and Japan had the hazard rate of medical bills which would pressure their economic security while tens of millions of Americans have to make a balance between medical expenses and other basic needs.[19] Moreover, a recent analysis of the World Health Organization dedicated to the spending of patients in 36 countries found that only 1 out of 90 households can be threatened in the Netherlands and be faced catastrophic medical expenses.[20] According to another report by the Los Angeles Times, countries such as Britain and Canada that possess government health plans, as well as Germany and Netherlands that bank on private insurers have tight limits on the amount of patients may be charged. Furthermore, the significant portion of individuals in those countries does not struggle to afford medical expenses. Based on the data from 2018 available, the research indicated that the amount of catastrophic health care spending by individuals in the USA (7.4%) lagged behind other developed European states such as France where the only 1.9% of people faced concerns regarding medical bills, Germany (2.4%), the UK (1.4%), the Netherlands (1.1% and other non-European countries such as Australia (3.2%) and Japan (2.6%) The LA Times delivers that although health care expenses are cheaper in other countries in comparison with the US, it may strive tradeoffs in the health sector as hospitals of Great Britain, for instance, are usually overcrowded and patients in Canada are facing considerable delays for the health care.[21]

Medical debt is considered as a non-priority unsecured debt in Chapter 7 bankruptcy. In other words, medical debts are paid only after assets are applied to the debt of creditors who hold priority debt, and thus medical debts are often discharged in their entirety at the conclusion of the bankruptcy process. If the bankrupt estate has sufficient assets such that a part of the medical debt is repaid through bankruptcy, any remaining outstanding medical debt that is included in the bankruptcy case will be discharged.[22]

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• Health care in the United States
• Health economics
• Health insurance
• Underinsured