New data tool looks to cure medical debt woes
U.S. Vice President Kamala Harris delivers remarks on medical debt in the South Court Auditorium of the White House on April 11, 2022, in Washington, DC. STEFANI REYNOLDS/AFP via Getty Images)
As state and local governments grapple with the impacts of medical debt on their communities, a new resource looks to help inform strategies aimed at remedying the financial burden.
Last month, Vice President Kamala Harris announced a proposed rule that would prohibit medical bills from being included on Americans’ credit reports as lawmakers across the country grow increasingly concerned about skyrocketing health care costs. An unpaid medical bill can stymie an individuals’ economic mobility, and the expense often falls on state and local governments to cover it using taxpayer dollars.
Medical debt affects 100 million American adults and is growing. As a result, “there is a big demand from state and local governments to know how bad the [medical debt] problem is in their own states, and also how that's changing over time,” said Breno Braga, principal research associate in the Center on Labor, Human Services, and Population at the Urban Institute.
A new data tool from the Washington, D.C., think tank offers users a way to get that information. Policymakers can assess how the amount and share of medical debt among Americans has varied since 2011 at the national, state and county level, as well as how it has impacted communities of color compared to white communities.
The tool also offers information on drivers of medical debt in different communities, such as the prevalence of hospital closures and mergers, residents’ average household income, the share of uninsured individuals and others.
Those insights, Braga said, can help state and local officials gauge the impacts of policies aimed at easing the medical debt burden for residents, particularly to track efforts to reduce health disparities across different populations.
Policymakers can use the tool to assess the impacts of Medicaid expansion on residents’ medical debt, Braga said. Using the resource, for instance, viewers can compare states that have expanded Medicaid with those that have not. In Colorado, which adopted Medicaid expansion in 2014, 0% of residents had medical debt last year, according to researchers. In neighboring Wyoming, lawmakers have not expanded the public health insurance program, and 21% of residents had medical debt in collections in 2023.
Colorado also passed a law in 2023 that prohibited consumer reporting agencies from including an individual’s medical debt on credit reports, making it the first state to do so.
And some municipalities like St. Paul, Minnesota, are leveraging federal funds to purchase and forgive individuals’ debt. But Braga said such initiatives can be expensive for governments to execute, indicating a need for more proactive strategies to keep medical debt at bay such as offering more accessible public health insurance or financial assistance programs.
Major credit bureaus like Equifax, Experian and TransUnion have also stepped in to help Americans drop their medical debt, which can bar individuals from housing and employment opportunities. In 2022, the bureaus limited how unpaid medical expenses appeared on credit reports, and in 2023, they removed medical debt balances under $500 from individuals’ credit reports.
Those changes helped expedite a decadeslong decline in nationwide medical debt. Between 2013 to 2023, for instance, the nearly 20% of Americans with medical debt in collections decreased to 5%, according to Urban Institute. For communities of color, or ZIP codes where people of color comprise at least half the population, the percentage of residents with medical debt dropped from 22.5% to 6.1% in the same time period. For predominantly white communities, 4.6% of residents had medical debt in 2023, down from 18.1% in 2013.
Southern states saw the biggest reductions in debt between 2021 and 2023, said Fredric Blavin, principal research associate in the Health Policy Center at the Urban Institute. In West Virginia, for instance, the percent of residents with medical debt declined from 25.8% to 6.7% in that time period.
To ensure medical debt continues to decrease, the researchers said lawmakers must consider how to effectively prevent and mitigate opportunities for medical debt to accrue, and the data resource is one tool to help inform those decisions.
“Dealing with the problem more upstream will be a better solution,” Braga said.
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