An Overview of Medical Debt in the US Post-pandemic: Staggering Healthcare Costs and a Long-awaited Relief for Indigent Patients

The rise of healthcare prices in the US is simply staggering. No, you can’t justify it with impeccable care, or no wait times. The quality of care has not increased, yet the demand continues to grow even larger with the nation still facing the largest health pandemic in modern history. The Covid-19 pandemic has exacerbated all facets forcing Americans to spend more on the current medical system, which means unpaid bills are sent to collection agencies becoming delinquent medical debts. As a rule, debts are associated with the lesser use of healthcare services by consumers and their deteriorating financial situation in general.

Today, we will look into the US medical debt situation, see how the pandemic has affected it, and find an effective solution to medical debt collections that have become more challenging since the inception of the initial recession.

The State of Medical Debt Post-pandemic: Important Stats

Here are the most essential figures regarding medical debt in the US so far. Obviously, the pandemic notably exacerbated the already massive issue.

• In June 2020, the total medical debt in the US reportedly reached $140 million, significantly overweighing all other personal debt types in the region.
• Nearly every fifth American has medical debt.
• Medical debt is predominantly concentrated in US states that are yet to expand the provided medical aid according to the Affordable Care Act. The level of care services provided before the pandemic became not sufficient at that time.
• As of June 2020, 18% of Americans had medical debt, with an average debt amount of $429.

A Dive into the Situation: How the Pandemic has been Changing Medical Debt

Medical Debt across the U.S.?????

The aforementioned study analyzes the dynamics of medical debt within more than a decade (from 2009 to 2020). The study’s findings show that though the average amount of medical debt has been falling through the years (with an abrupt decrease from 2014 to 2018), it managed to overtake non-medical debt, thus becoming the largest source of debt in collections.

The highest medical debt was reportedly in the South of the US, where almost ? of residents had debt, with an average debt amount of $616. On the other hand, the lowest debt was in the Northeast, where around 10% of residents had debt, with an average debt amount of $167 per consumer.

This gap between regions can be explained by the fact that southern states predominantly didn’t expand their medical aid insurance program, so their lower-income communities were the ones with the most concentrated medical debt. Conversely, the states that expanded their medical aid services had the average debt amount plummet by more than 30% greater than all other states.

And though the Biden administration has increased federal funding for the needy states, 13 of them still have to expand their medical aid program. As of now, every fourth American is covered by Medicaid and CHIP, which makes them the largest sources of health insurance in the US.

The Effect of Covid-19 on Medical Debt

The pandemic caused insurance coverage and income losses, besides new infections. The volatile economic situation forced people to struggle more to pay their bills. According to the survey by the Commonwealth Fund, in 2020, more than a third of insured adults and ? of non-insured ones had difficulty paying off their medical bills.

As of November 2020, almost half of the insured adults had medical insurance coverage that suggested waiving cost-sharing in favor of COVID-19 treatment. At the same time, some insurers continued and some others only began offering premium relief to the clients affected by the pandemic. However, over 70% of patients hospitalized for coronavirus had to deal with out-of-pocket expenses that were not covered by their insurance.

Recent Medical Debt Regulations Aim to Make Medical Care more Affordable and Transparent for Patients

In July of last year, the state of Nevada’s latest medical debt regulations took effect. The new law primarily addresses the issues of low-income and indigent consumers who were often the subjects of collections and even lawsuits due to their inability to pay bills. Per the law, legal actions can no longer be taken against people who earn less than 200% of the poverty line established at the federal level. Besides that, healthcare facilities and other providers are now obliged to annually report on indigent consumers’ financial information to the local human services department.

Under the law, healthcare providers also must check if a patient has health insurance before billing them. The document confirming that the verification was made should be included in the billing statement. Also, the billing statement must include the info about the type of provided services, their amount, and cost so that patients can see exactly what they are billed for.

If the patient doesn’t have health insurance, the provider must inform them about available insurance options and public programs (if those are provided). Finally, if the public program is provided and the patient wishes to apply to it, the provider must guide them through the application process.

Another important legislation is the Healthcare Debt Collections Amendment that has recently been passed in Utah. The amendment clarifies several basic criteria for collectors, including the obligation to give consumers not less than 45 days from the moment of notice to repay the debt. Medicare beneficiaries, on the other hand, must have 60 days to repay the debt. The notice must include debt details, particularly on the amount of debt, and the warning of the following collector’s actions if the consumer fails to pay. However, in Utah, the statute of limitations for medical debt is six years, and the collector must inform the consumer if their debt is within this period if they ask them about it.