Industry Voices—Medical debt isn't about money. It's about health

There is no shortage of unjust elements in the U.S. healthcare system. But one in particular deserves far more attention and action than it is currently receiving—namely, medical debt.

Yes, there is something inherently unjust about loading people up with debt for simply seeking healthcare treatment. But, when you home in on the problem, it’s clear that medical debt itself often becomes a significant driver of long-term poor health outcomes. For this reason, we encourage healthcare leaders and stakeholders to take action to end this troubling consequence of our healthcare system.

Despite the fact that more than 90% of Americans have health insurance, nearly one-third of the population carries medical debt, to the tune of at least $195 billion total. This amounts to nearly $2,000 for each person burdened by such debt, and 25% of the group carries more than $5,000 of debt.

Statistics show that medical debt is also an undeniable issue of equity. Black and Hispanic adults are 50% and 35% respectively more likely than white adults to carry medical debt.

Unfortunately, we know debt and health are inherently connected. According to the Consumer Finance Protection Bureau, people who carry medical debt avoid further medical care, resulting in even greater physical and mental health burdens over time. Indeed, a new report from the Federal Reserve reveals that 28% of adults didn’t seek medical care last year because they could not afford it.

As healthcare leaders, we believe there is a moral obligation to take action to reduce the burden of medical debt, and there are obvious levers to help.

Education is key. Medicaid provides high-quality, free or very low-cost coverage to over 70 million Americans, yet as many as 28 million people who may be eligible for Medicaid or other financial assistance do not apply in large part due to lack of awareness about these options. The knowledge gap also impacts households with higher earnings and those who already have coverage.  Many companies offer insurance plans with high deductibles, which can cause individuals who are covered to get bills they cannot afford to pay. In fact, nearly 70% of individuals with medical debt across all income levels expected their insurance company to cover their bills.

Lawmakers also have a role to play in untangling the medical debt web. In Oregon, the state legislature recently passed a bill that requires nonprofit hospitals to offer assistance to people before they receive a bill and demands that anyone who has already paid their bill receive a full refund. Other states should follow Oregon’s lead.

Additional steps can immediately offer those who are in debt the chance to reestablish themselves financially, physically and emotionally. The organizations that we lead, SCAN Group and CareOregon, recently made grants to RIP Medical Debt, a national nonprofit that acquires medical debts belonging to people who are financially burdened and then abolishes those debts.

A relatively small grant can deliver life-altering impact. For just $345,000, we were able to help an estimated 67,000 people erase $110 million in debt.

One of those people is Jeanne from Ontario, Oregon. After her debt was relieved, she wrote, “I'm a single mother and I have worked extremely hard to overcome addiction and poverty. I cannot express how much this means to me.”

To be clear, our organizations derive no direct benefit from this contribution. In fact, it’s likely that eliminating these debts helps other businesses’ bottom lines. We also had no idea whose debt we were relieving when we made the contributions. We undertook this project simply because it is consistent with our missions to improve the health of people like Jeanne.

It’s easy to think of medical debt as a financial problem. But it’s not. It’s a health problem, and organizations whose missions are to care about the health of the communities they serve should join in our commitment to alleviate the burden of medical debt that plagues too many Americans. But the best way to fill a hole is to stop digging. As healthcare leaders, we must do everything we can to equip people with the products and information to keep them out of debt in the first place.

Sachin Jain, M.D., is CEO of SCAN Group and SCAN Health Plan. Eric Hunter is president and CEO of CareOregon.