EBRI Issue Brief
Bitter Pill: A Demographic Analysis of Unpaid Medical Bills
In this paper, we explore the relationship between past-due medical bills and worker demographics. For comparative purposes, we also look at other forms of debt. We focus on adults of working age, because they experienced an increase in cost sharing in their health benefits. Data from the FINRA Foundation’s 2021 National Financial Capability Study (NFCS) are used for this study. In our analysis, we observe:
- Despite the increase in cost sharing, the percentage of Americans who reported having past-due bills from a health care or medical service provider remained unchanged between 2015 and 2021.
- Since 2015, the percentage of Americans who reported past-due medical bills has remained in the low 20 percent range, down from 26 percent in 2012.
- Compared with other sources of debt, Americans were less likely to report that they had past-due medical bills.
- Women were slightly more likely than men to report that they had past-due medical bills.
- The likelihood of having past-due medical bills increased with age for younger adults but decreased with age for older adults.
- Black adults were more likely than other race/ethnicity groups to report that they had past-due medical bills.
- Adults with a high school degree or less were more likely than those with a college or graduate degree to report that they had past-due medical bills.
- As income increased, the odds of having past-due medical bills decreased.
- Health insurance and living in a Medicaid expansion state reduced the percentage of individuals reporting that they had past-due medical bills.
- Past-due medical bills were highly correlated with a lower level of use of health care services.
- Individuals with past-due medical bills were more likely than those without past-due medical bills to report several other financial challenges.
Although levels of medical debt are often low, there is still the potential for adverse effects as a result of that debt. Medical debt on credit reports can affect one’s ability to obtain a mortgage, get a lease for an apartment, get insurance, get a job, and obtain other forms of credit. Medical debt may also affect credit worthiness, which affects the interest rate that a consumer can get on a loan. Medical debt may also lead to delay or avoidance of health care, which can result in not just higher health care costs in the long term, but also worse health outcomes. Beginning in July 2022, the three major credit reporting bureaus began phasing in changes to the way medical debt is included in credit reports to address some of these adverse effects.