Progressives claim that medical debt leads to financial ruin for hundreds of thousands of Americans each year.
Sen. Bernie Sanders, I-Vt., recently argued that the high cost of health care is pushing so many people into bankruptcy that the government must cancel medical debt. It’s the precursor to his call for a federal takeover of the entire health insurance system so that no one has to pay for medical care directly again.
Medical bills can be onerous. But they account for a minuscule portion of Americans’ debt and are rarely the sole cause of bankruptcy.
Plenty of Americans hold medical debt — about 100 million, according to a recent poll from the Kaiser Family Foundation. Around one-third of them owe less than $1,000. Three-quarters owe less than $5,000. Add those figures up, and Americans’ overall medical debt load could reach $195 billion, according to Kaiser.
It’s a stretch to say debts like these are ruinous. According to that same Kaiser poll, 35 percent of people who have had medical debt say they would pay an unexpected $500 bill out of pocket. Another 41 percent say they would pay it off over time.
Medical debt is a fraction of the other obligations that Americans freely take on. It’s less than one-fourth of the $841 billion in outstanding credit card debt as of the first quarter of this year. And it’s equivalent to less than 2 percent of the $11 trillion in mortgage debt we collectively hold.
In other words, the average American has all sorts of debt that could compound and contribute to bankruptcy. If someone declares bankruptcy, was it the $1,000 medical bill or the roughly $6,000 in credit card debt the average cardholder has that pushed them over the edge? It’s nearly impossible to say.
A 2018 study in The New England Journal of Medicine (NEJM) analyzed the share of people with medical bills who went bankrupt, rather than how many bankruptcy filings included medical debt. The researchers concluded that approximately 4 percent of bankruptcies were caused by hospital medical debt.
About 414,000 people filed for bankruptcy in 2021. If the NEJM‘s analysis is right, hospital medical debt accounted for about 16,000 bankruptcies.
That’s tragic. But it’s no reason for the government to spend billions of taxpayer dollars canceling debt for people who have the ability to pay it off — much less socializing health insurance, as progressives demand.