100 million adults have health-care debt — and 12% of them owe $10,000 or more

For many adults, health-care debt is part of their balance sheet — it just may show up differently than expected, new research suggests.

Overall, an estimated 41% of people — or about 100 million adults — currently face such debt, ranging from under $500 (16%) to $10,000 or more (12%), according to a report from the Kaiser Family Foundation. Using $2,500 as a base level, 56% who carry medical and/or dental debt owe below that amount and 44% owe that much or more. 

More from Personal Finance:
Cost to finance a new car hits a record $656 per month
How to get started building credit as a young adult
Stimulus checks rewired how some Americans see money

However, some of that medical debt may not have shown up in past estimates or surveys. For example, some is on credit cards (17% of adults are paying that way) or is being paid off over time directly to a doctor, hospital or other health-care provider (21%).

“This shows how broad of an impact health-care bills are having on people,” said Liz Hamel, vice president and director of public opinion and survey research at the foundation.

The report was based on a nationally representative survey of 2,375 adults taken between Feb. 25 to March 20 and included 1,292 adults with current health-care debt. (The results were weighted to reflect the U.S. population.) The study was conducted as part of a larger research project with Kaiser Health News and NPR.

The study comes ahead of scheduled changes to the way medical debt shows up on consumer credit reports. As of July 1, if such debt shows up on your history because it went to collections but you’ve since paid it off, the three big credit-reporting companies — Equifax, Experian and TransUnion — will stop including it on your report. Under current practice, it can remain on your record for seven years.

Additionally, consumers will get a year, up from six months, before unpaid medical debt appears on credit reports once it goes to a collection agency. And in the first half of 2023, the credit bureaus will stop including anything that is less than $500.

Credit scores may improve for consumers who are affected by the upcoming changes, which could translate into accessing credit or loans at a more favorable interest rate than they would otherwise get.

“It could have a significant impact for people who are affected by it,” Hamel said.

Research has shown that medical debt is less predictive of a person’s ability to keep up with payments than other types of collection accounts.

Yet the financial consequences of medical debt go beyond credit scores, the Kaiser survey shows. For instance, 63% with current or recent debt (within the past five years) said it caused them to cut spending on food, clothing and other basics — including 51% of those with annual household income above $90,000. Nearly half (48%) with such debt said they used up all or most of their savings to pay it off.

Collectively, medical debt in the U.S. stood at $195 billion or more in 2019, according to Kaiser research. 

One thing that could help prevent consumers from facing outsized bills — at least in some situations — is a federal law that took effect this year.

Historically, one of the biggest causes of unexpected large medical bills was out-of-network providers being involved in your care without you realizing it. Then the bill would come and you’d discover that your insurance didn’t fully cover those charges, if at all.

The idea is that if you’re able to plan ahead, you can compare hospital prices. However, just 14.3% of hospitals were in full compliance with the law as of February, according to PatientRightsAdvocate.org, which reviewed 1,000 of the 6,000-plus accredited hospitals in the U.S.

The Centers for Medicare and Medicaid Services recently issued its first enforcement actions for noncompliance, fining two Georgia hospitals.