The Deadliest Debt: How Medical Bills are Killing Americans

A sinister force is quietly ravaging the lives of millions of Americans. It's not a new virus or an environmental disaster – it's medical debt. This financial burden is pushing people to the brink, forcing impossible choices between health and financial stability. The result? A silent epidemic of preventable deaths and demolished lives. In one year, five times more Americans die from this cause than died during the entire Vietnam War.

Medical Debt: America's Unseen Epidemic

Medical debt affects over 100 million Americans , or 41% of adults. For many, the fear of medical bills surpasses the fear of illness itself . This fear is not unfounded. Medical debt often leads to skipped doctor visits, unfilled prescriptions, and untreated symptoms—all of which can escalate into severe health crises. In a nation where healthcare should be a safety net, it has become a trapdoor and landmine.

Considering the various studies that have been done on financial toxicity and medical debt, a conservative estimate might place the number of deaths at around 250,000 to 300,000 per year in the United States. [Financial toxicity refers to the detrimental impact of high medical costs on patients' health outcomes.]

More Americans fear medical bills than they do serious illness. That fear has deadly consequences. Consider what Justin Leader shared about how the cost of care impacted a loved one:

“As my Aunt lay dying in a hospital due to her inability to take time off work to seek care as well as afford out of pocket expenses, I think about so much of what we are doing and the impact it might have.? She hid symptoms for the past 12 months and then revealed them after a collapse a few days ago.? Turns out unbeknownst to her and our family, she has been bleeding for months.? Turns out, she has stage 4 metastatic cancer and now is hemorrhaging.? Her thoughts 'I was afraid I couldn’t pay my bills.'”

The Real-Life Impact of Medical Debt

Consider the story of Elizabeth Woodruff, who drained her retirement account and took on three jobs after her husband’s amputation led to nearly $10,000 in medical bills. Or Ariane Buck, a young father who couldn’t get an appointment for a serious intestinal infection because of outstanding bills. These stories are far from unique. Across the country, families are making impossible choices between health and financial ruin.

Medical debt doesn't just affect the poor. Even those with insurance are often left with exorbitant out-of-pocket costs. High deductibles and copayments can quickly turn a medical emergency into a financial catastrophe. The burden of these costs forces many to cut spending on essentials like food and housing, borrow from relatives, or sink further into credit card debt.

Imagine beating cancer only to find yourself bankrupt. This nightmare is a reality for over 40% of cancer patients who deplete their entire life savings within just two years of diagnosis . The brutal truth is that in America, surviving an illness can be just as devastating as the disease itself.

The Deadly Consequences of Delayed Care

In the United States, the specter of medical debt looms large, quietly wreaking havoc on millions of lives. This silent epidemic is not just a financial burden; it is a leading cause of delayed or avoided medical care, which can have deadly consequences. Even when it doesn't lead to death, medical debt makes life incredibly difficult, adding stress and misery to individuals already facing severe health challenges.

Skipping necessary medical care due to cost is alarmingly common. A 2018 survey by the West Health Institute and NORC at the University of Chicago found that 40% of Americans delayed or went without recommended medical tests and treatments because of financial concerns. This avoidance can have fatal outcomes. Patients like Justin Leader’s aunt too often pay the ultimate price.

The financial strain of medical debt exacerbates existing health problems and creates new ones. Chronic stress from financial worries can lead to a host of physical issues, from heart disease to weakened immune systems. The mental toll is equally devastating, causing anxiety, depression, and even suicide.

The Healthcare Revenue Cycle Machine

The root of this crisis lies in the healthcare system's “Revenue Cycle Machine” (RCM). RCM is an industry responsible for the financial aspects of patient care, from insurance verification to debt collection. Its true output, however, is medical debt. As healthcare providers optimize revenue, patients are left to navigate a labyrinth of bills, payment plans, predatory lenders and collections, often with little transparency or support. The combination of price-gouging hospitals and profiteering carriers and PBMs devastate working Americans.

In 2022, the U.S. RCM market was valued at $140.4 billion , and is expected to triple by 2032. When factoring in internal RCM operations, the industry's true scale could be as high as $1.29 trillion. [Click on the article link above for more details on this largely unknown industry.] This makes it larger than the commercial banking industry. While RCM drives up costs, it does nothing to improve health outcomes, trapping millions in a cycle of debt and despair.

Not even captured in these staggering figures is how hospitals commonly pressure patients to use financing with brutally unfair terms that also is a way for tax-exempt hospitals to void their requirement to provide charity care (the 501R portion of the ACA that was a partial offset to the many giveaways they received). This article discusses the growing trend of hospitals and medical providers partnering with financial services companies to offer loans to patients for medical debt. While profitable for lenders, these arrangements can be problematic for patients, often resulting in high interest loans on top of their medical bills.

A Ray of Hope: The Rosie Awards

Despite the grim landscape, there is hope and a new day in healthcare. Some health plans are leading the charge in eliminating medical debt and focusing on patient care. The Rosie Awards , presented by Health Rosetta , recognize the best health plans in America. These plans are committed to removing the financial barriers that prevent patients from seeking necessary care.

The impact is greatest when there is a community-owned health plan (i.e., multiple public and private sector employers collectively, but independently, utilizing the same proven solutions). This brief video highlights first responders, teachers and others sharing how different their experience is from devastating, status quo health plans. From an organizational standpoint, the local school district saved more money with a new health plan than the entire school levy in less than a year, and then creating a surplus of over $5 million over two plus years. This success story proves that it is possible to provide excellent care without financial ruin.

Fortunately, from a humble beginning of five employer/unions successes when the Health Rosetta movement began, the move towards high-performance, community-owned health plans is growing exponentially with 1000's of successes in every corner of America. Two years ago, ~250 healthcare change makers gathered to share tips and successes. Over 1000 are expected at RosettaFest 2024. In my TED Talk that helped launch the movement, I said the cavalry isn't coming from DC to fix healthcare. Quite the opposite, for the first time in Health Rosetta's history we have been called to gather in DC to share the path to a restored American Dream that has been crushed by healthcare. [Virtual or in-person registration is available at the link below. Some main stage presentations will also be freely streamed via our LinkedIn event so this information is accessible to all.]

The Call for Change

Most importantly, we need to recognize medical debt for what it is – a public health crisis that's stealing lives, dreams, and the very future of our nation. It's time to pledge to end medical debt which is a national embarrassment with deadly consequences. Because in a country as where we already spent twice or more than most nations, no one should have to choose between their health and their home, between life-saving medication and putting food on the table.

The devastation caused by medical debt demands urgent action. We must shift the focus from revenue optimization to patient health. Health plans recognized by the Rosie Awards show that it is possible to break the cycle of debt and despair. By prioritizing transparency, affordability, and access to care, we can create a healthcare system that truly serves the needs of all Americans.

It's time to move past the devastating status quo and demand better. The stakes are too high to accept anything less. By addressing the root causes of medical debt and following the lead of the best health plans in the country, we can ensure that no one has to choose between health and financial security. The fight against medical debt is not just a financial issue—it's a matter of life and death.

*?? Please note that there are wonderful people inside of hospitals and performing revenue cycle activities, however I invite them to step back and reflect on the RCM consequences. As a good chunk of my career revolved around RCM, the reflection was illuminating. Follow the link below for more.