Widespread medical debt is a uniquely American problem. According to a survey conducted by the Kaiser Family Foundation, about 40% of American adults have a medical debt of at least $250.
“The history of medical debt is really a history of the changing answer to the question: If the patient can’t pay the bill, who pays it?” said Dr. Luke Messac, an emergency physician at Brigham and Women’s Hospital in Boston who is writing a book on the history of medical debt.
As health care prices have risen over the past 50 years, patients have been asked to pay more out of pocket when receiving care.
There are many complicated reasons for the rise in health care costs, such as not prioritizing preventive care or a lack of price transparency, but one of the biggest drivers of inflation has been the rise of health insurance.
“It was when you got this third-party payer system where the patient doesn’t have to pay all the costs directly, the insurer pays part of it,” he said. Dr. Peter Kongstvedt, a senior member of the faculty of health policy at George Mason University. “That gives you relentless upward pressure on prices because if you’re going to get paid, why not get paid a little more?”
In the early 2000s, federal legislation led to a major restructuring of how insurance plans shared costs, with the Medicare Modernization Act of 2003 sparking an explosion of high-deductible health insurance plans.
A deductible is the amount a policyholder must pay in advance before their health insurance policy takes effect. The average deductible for an individual in 2022 is about $1,760, which is double what it was in 2006, adjusted for inflation.
About 70% of lower-income adults said they wouldn’t be able to afford an unexpected $500 medical bill. Nearly a quarter of those in households with incomes of at least $90,000 also said they wouldn’t be able to afford it right away.
“It doesn’t really take a Nobel Prize in economics to realize that if most people can’t afford a $500 bill, and the average deductible on a health plan someone gets at work is now above $1,500, that that will lead to a problem,” said Noam Levey, senior correspondent for Kaiser Health News. “You can’t walk into an emergency room or a hospital in this country and usually get out for less than a few thousand dollars.”
Look the video above for more information on how medical debt has become so common in the US healthcare system and what we can do to change it.
