There’s no epidemic of medical bankruptcy

There’s no epidemic of medical bankruptcy

An estimated 100 million Americans have healthcare debt, according to polling released this month by the Kaiser Family Foundation. The problem is so dire, Kaiser says, that it’s pushing millions of people out of their homes or into bankruptcy.

But a closer look at the data reveals that medical debt, while burdensome for many, is no crisis. The Kaiser survey found that 11% of respondents with current or past healthcare debt had declared personal bankruptcy “at least partially” because of their medical debt. It’s a stretch to say that medical debt “caused” their bankruptcy. Consider that three-quarters of medical debtors owe less than $5,000. That’s a fraction of the more than $90,000 the average U.S. resident holds in debt, ranging from student loans to mortgages to credit card bills.

Most of Kaiser’s respondents, both with healthcare debt and without, reported they’d be able to manage an unexpected $500 medical bill. 30% said they’d pay the bill right away. Another 20% said they’d put it on a credit card and pay it in full at the next statement, avoiding interest entirely. And 21% said they’d put it on their credit card and pay it off over time.

In other words, most Americans aren’t in a healthcare debt crisis. Over half of Kaiser’s survey respondents said that it was easy for them to afford healthcare. And that’s despite the fact that there were more than twice as many people who had had medical debt in the poll than people who had been debt-free.

Put in context, Kaiser’s survey data aren’t indicative of a widespread medical bankruptcy catastrophe — nor are they a reason to contemplate the socialization of medical debt by counseling a government takeover of the healthcare system.

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