Lower-Income, Younger Americans Faced More Medical Debt Struggles

Healthcare finance struggles plague adults in every generation, with a quarter of Generation Z and Millennial Americans reporting that they skipped their rent or mortgage payments due to medical debt, a survey from HealthCare.com found.

The survey gathered responses online between October 29, 2021, and November 1, 2021, from 2,800 adults across the country aged 18 years and older.

In addition to neglecting housing finances, Americans skipped purchases due to overwhelming medical debt. More than half of Generation Z individuals (53 percent), 44 percent of Generation X adults, and 40 percent of Baby Boomers said that medical debt prevented them from spending money on traveling. Home improvement was the top area that Millennials missed out on due to medical debt.

Around half of Millennials and Gen Z adults also said that their medical debt hurt their credit score.

While individuals in each generation said they are worried about medical debt impacting their ability to save money, Millennials were most likely to say they were somewhat or extremely concerned (67 percent).

People of different generations had different plans for how they planned to address their medical debt. For example, 22 percent of Baby Boomers planned to take from their retirement savings, while 22 percent of Gen Zers said they would use crowdfunding.

Across generations, men and women differed in how they planned to pay their healthcare bills, with men being more likely to use crowdfunding, credit cards, and retirement savings. Men were also more likely to try and negotiate their debt down than women.

The reasons for medical debt varied among the different generations, with 68 percent of Gen Z individuals with health insurance reporting that their health plan did not cover the services they received, whether it was in-network or out-of-network. In contrast, less than half of the other generations said the same.

Nearly a third of Gen Zers and 27 percent of Millennials said that they think their medical debt resulted from a billing error, while Gen Xers (21 percent) and Baby Boomers (20 percent) were less likely to believe that was the case for them.

Additionally, healthcare bills stemmed from different medical conditions for the age groups, the survey found. The most common cause of medical debt for Gen Z and Millennials was seeking care after an accident or injury. For Gen X and Baby Boomers, chronic disease, including cancer and heart disease, was the top cause of medical debt.

Perhaps unsurprisingly, individuals with lower incomes faced more struggles regarding medical debt.

Participants in all income groups responded that their salary was the primary source of funds for repaying medical debts.

One in five Americans who earned between $10,000 and $25,000 per year said that their debt causes extreme stress.

What’s more, 60 percent of adults with incomes below $10,000 and 52 percent with incomes between $10,000 and $24,999 have had their bills sent to debt collectors, the survey found.

The survey results suggest that younger generations in particular face significant struggles regarding healthcare costs and medical debt.

According to past data from Discover Personal Loans, nearly 75 percent of Americans have more than $2,000 in medical debt.

Policymakers and healthcare stakeholder action may help reduce the burden of healthcare bills.

For example, one study showed that Medicaid expansion was associated with fewer medical debt collections. Another study revealed that media exposure, public awareness, and patient advocacy helped reduce patient medical debt lawsuits in Virginia.