Underinsurance and Medical Debt

Relentless growth in health insurance premiums and out-of-pocket costs over the last number of years has made paying for health care a challenge even for people with insurance. For many Americans, rising costs means that health care is consuming an ever-growing share of their family budgets - forcing them to make difficult sacrifices in other areas so that they can make ends meet.

For many hard-working families, the burden of these health care costs has become too great to bear. A growing share of Americans report having trouble with medical bills: One in four adults with insurance reports that they are in the process of paying off medical debt or are having trouble paying their medical bills. The problem is even worse for people who are in plans that have high premiums, that charge hefty cost-sharing, or that offer limited benefits. When the burden of health care costs becomes too great, the consequences can be catastrophic. Faced with medical debt, families often have no choice but to consider drastic changes in lifestyle and, eventually, bankruptcy.

Fast Facts on Underinsurance and Medical Debt 

• More than 50.7 million insured Americans are in families that will spend more than 10 percent of their pre-tax family income on health care costs this year.
• 13.5 million insured Americans are in families that will spend more than one-quarter of their pre-tax family income on health care costs this year.
• More than three out of five adults who report having problems paying their medical bills had insurance at the time they incurred their debt.
• 78 percent of those with private insurance and medical debt work full-time.
• Plans with high deductibles are burdensome for American families. Half of adults enrolled in plans that have a yearly deductible of $500 or more struggle to pay medical costs.
• Higher out-of-pocket costs are driven, in part, by the rising number of services that are excluded from coverage. Those with medical debt were less likely to have prescription drug coverage, dental coverage, vision benefits, or mental health coverage than were others with private coverage.
• Insured adults who report having medical debt are four times more likely than insured adults without medical debt to postpone medical care due to cost.
• More than a third (35 percent) of insured people with high health care costs had to take substantial financial risk-such as running up high levels of credit card debt or taking out a loan or mortgage against their home-to pay medical bills.
• Bankruptcy is often the last resort for families with high medical costs. About half of all personal bankruptcy cases are due, at least in part, to medical costs. And, among those whose illness led to bankruptcy, more than three in four had insurance at the onset of the illness.