A scandal of the U.S. health system may be far worse than imagined, with the medical debt sold to collection agencies alone amounting to a staggering $140 billion.

The $140 billion estimate came from researchers who published in a medical journal and found that such unpaid sums had increased significantly from an $84 billion calculation in a similar 2016 study, the New York Times reported (see excellent chart, courtesy of the newspaper).

The newspaper noted the debt estimate is an ugly number hanging over the finances of tens of millions of patients who are too often poor and uninsured — debtors who could benefit significantly, if politicians in their states had expanded Medicaid coverage for them as allowed under the Affordable Care Act:

“This new [study] took a more complete look at which patients have outstanding medical debts, including individuals who do not have credit cards or bank accounts. Using 10% of all credit reports from the credit rating agency TransUnion, the paper finds that about 18% of Americans hold medical debt that is in collections. The researchers found that, between 2009 and 2020, unpaid medical bills became the largest source of debt that Americans owe collections agencies. Overall debt, both from medical bills and other sources, declined during that period as the economy recovered from the Great Recession. ‘If you think about Americans getting phone calls, letters, and knocks on the door from debt collectors, more often than not it’s because of the U.S. health care system,’ said Neale Mahoney, a health economist at Stanford University and the paper’s lead author.”

The study’s findings were disturbing, the newspaper reported:

“The $140 billion in debt does not count all medical bills owed to health care providers, because it measures only debts that have been sold to collections agencies. The increasing number of lawsuits that hospitals file against patients to collect debt, which can lead to legal fees or wage garnishments, are not included in the figure. Nor are the medical bills that patients pay with credit cards or have on long-term payment plans. Some of the difference between the new estimate and the older, smaller one may reflect differences in how different credit rating agencies categorize debts. The new paper does not include data during the coronavirus pandemic, which is not yet available.”

Medicaid expansion and medical debt

Medicaid, and specifically its expansion under Obamacare, would be a boon to the poor and uninsured in averting the grinding, bankrupting consequences of medical debt. It is unavoidable, and, thus, unlike other financial obligations that consumers saddle themselves with, the study’s authors noted.

Alas, politicians have fought Obamacare and especially its effort to increase health insurance coverage to the poor, the aged, children, and those with chronic physical and mental illness. A dozen states, including Texas, Wisconsin, and Florida, have refused to expand Medicaid. The disparities this has created in medical indebtedness are stark, the New York Times reported:

“The states that have declined to expand Medicaid — particularly in the South — started out having more medical debt before Obamacare passed, and since other states have expanded Medicaid, the chasm has grown wider. In 2020, Americans living in states that did not expand Medicaid owed an average of $375 more than those in states that participated in the program, roughly a 30% increase from the gap that existed the year before enactment.”

The data from the economists’ fine study only starts to capture the needless cruelty of medical debt for the poor and uninsured. The government safety net coverage, the New York Times noted, would resolve almost automatically many of the kinds of medical bills that make patients debtors.

Ending draconian medical debt collection

Further, for providers, it would end a cruel charade. As other experts have pointed out, doctors and hospitals often stick the poor and uninsured with the highest possible charges for services. They don’t always tell them what they are supposed to about charitable care and financial alternatives that might ease their burdens.

They also know that medical debts are among the toughest to collect. As the newspaper reported, poor patients put a priority with their few available dollars to paying for essentials like food, rent, and utilities — not medical bills. So, providers end up turning to collection outfits that aggregate and sell medical debt, with these companies aware that they eventually will snag just pennies on the dollar.

In the meantime, the unpaid bills can crush the credit and finances of the poor and uninsured. Hospitals — which are ever more remote, profit hungry, and ginormous due to consolidation — increasingly have gotten called out for hounding patients with debt collections. They have taxed local courts with lawsuits and lien filings. After media reports and a wave of criticism, the University of Virginia and Virginia Commonwealth health systems recently rolled back their draconian debt collection practices.

In my practice, I see not only the harms that patients suffer while seeking medical services, but also their struggles to access and afford safe, efficient, and excellent health care. This has become an ordeal due to the skyrocketing cost, complexity, and uncertainty of medical treatments and prescription medications, too many of which turn out to be dangerous drugs.

Health care, in the wealthiest nation on the planet, must be a right and not a privilege. It is unacceptable that partisan politicians, as part of their theological opposition to federal involvement in the health care system, target the most vulnerable among us for harsh exclusions from medical care at affordable cost. The brutish conduct is even more unacceptable as GOP politicians defend the $1 trillion-plus tax cuts they shoved through Congress to the benefit of wealthy corporations and the richest among us. U.S. billionaires, by the way, saw their wealth increase by an estimated $1.8 trillion during the pandemic. The $140 billion in medical debt is roughly the sum that innovative mogul Elon Musk saw his net worth increase in 2020.

Democrats in Congress, as part of their push for trillion-dollar packages that address the nation’s needs in infrastructure, health care, and other important areas, are seeking ways to widen and shore up Obamacare, including by ensuring more help for the poor and uninsured in states that have declined to expand Medicaid. This won’t be an easy deal, especially as extremists resist. Just look at Missouri. It has been torn up recently by a coronavirus pandemic surge, but its lawmakers are battling against expanding Medicaid. The state’s Supreme Court has just told the governor and legislators that they are flat wrong, and they must accept the voters’ will, via a ballot measure, to expand Medicaid.

We’ve got a lot of work to do on health care and its access and affordability.