Financial Woes, Care Delays More Common Among Adults with Medical Debt

Adults with medical debt are more likely to delay care and experience additional financial challenges compared to those without debt, according to a KFF analysis.

The analysis used data from the 2021 National Financial Capabilities Survey (NFCS), which provides information on the financial security, experiences, and vulnerabilities of individuals and households.

In 2021, 23 percent of adults in the United States had medical debt, defined as one or more unpaid bills from a medical service provider that were past due. Similarly, KFF’s 2022 Health Care Debt Survey found that 24 percent of adults had one or more medical or dental bills past due or that they could not pay. Additionally, 41 percent of adults had healthcare debt that included debt on credit cards or money owed to family members.

Signs of financial vulnerability were more common among adults with medical debt. For example, 68 percent of people with medical debt said they did not have a rainy-day fund compared to 37 percent of those without debt. In addition, 50 percent of adults with medical debt reported a significant drop in income in the past year compared to just 19 percent of adults without debt.

Adults with medical debt were more likely to view their credit report as bad or very bad, never or rarely have money left at the end of the month, and feel often or always that their finances control their lives. People with medical debt were also more than twice as likely than people without debt to be probable or certain they could not find $2,000 in an emergency.

Medical debt is generally more concentrated among people with low incomes, uninsured individuals, and those who can’t work due to their health. However, over one in five adults with health insurance also have medical debt.

Everyday financial experiences differ for those with medical debt, the analysis found. Adults with medical debt were less likely to have some form of savings account and more likely to overdraw their checking account or make late payments on their student loans than adults without debt.

People with medical debt were more likely to have a credit card balance, be charged a late fee or an over-limit fee on their credit card, and take a cash advance on their credit card. Over half (55 percent) of adults with medical debt have been contacted by debt collection, compared to only 8 percent of adults without debt.

Those with medical debt are more likely to seek help from costly sources when needing loans. For example, 44 percent of adults with medical debt used a pawn shop at least once, compared to 14 percent of adults without debt. Having a short-term payday loan, taking a loan from a retirement account, and advancing on tax refunds were also more common among those with medical debt. These kinds of transactions often have high interest rates or penalties, adding to existing financial stress, KFF noted.

In addition to financial challenges, medical debt impacts care access. Almost half (46 percent) of people with medical debt reported having a medical problem in the last 12 months but did not go to a doctor or clinic due to the cost, compared to 11 percent of people without debt.

Similarly, 42 percent of those with debt skipped a medical test, treatment, or follow-up recommended by a doctor and 37 percent did not fill a prescription due to costs, compared to 9 percent and 8 percent of adults without debt.

These delaying or forgoing care patterns were similar among people with and without insurance who had medical debt. High cost-sharing responsibilities, out-of-network provider visits, and a lack of coverage from health plans all contribute to medical debt.

“Medical debt is often just one component of an individual’s overall financial situation, and it frequently compounds other forms of financial instability they may be experiencing,” the analysis concluded. “This heightened financial instability can result in individuals forgoing necessary medical care due to concerns about the affordability of services.”