Medical debt is incredibly easy to accrue. All it takes is an accident or an unexpected bill tacked onto an expected procedure or an out-of-network charge you didn’t know was out-of-network. Nationally, almost 24 percent of nonelderly Americans have past-due medical debt, according to an Urban Institute report published this week.
State-to-state, the debt rates vary widely, from a low level of indebtedness in Hawaii at about 6 percent of the population, to Mississippi at about 37 percent. West Virginia's rate is about 33 percent.
It’s unclear why such a large variation between states exists. The good news is that every state has seen a decline in nonelderly past-due medical debt from 2012 to 2015, according to Kyle Caswell, co-author of the Urban Institute study.
Past-due medical debt is the kind where you miss payments and take a hit on your credit score, while regular medical debt is like having money on your credit card that isn’t due yet.
Caswell wouldn’t speculate on why the level of debt dropped, but the Urban Institute report pointed to another study that looked at the relationship between Medicaid Expansion and financial security. That study, published in 2016, found states that expanded Medicaid saw a reduction in the amount of total debt that went to collection.
“We would argue that our estimates, or what we obtained are not just correlations, not definitively, but strongly suggest the ACA/Medicaid expansions were the cause of the reduction in medical collection and total collections that we observed across these two data sets,” said Robert Kaestner, one of the authors of the study.
Both Kaestner and Caswell said this finding is really important because past-due medical debt creates a LOT of financial instability for low-income families.
“One of the fundamental functions of insurance is to protect us against unexpected medical bills,” said Caswell.
For Kaestner, one of the fundamental functions of insurance is to protect us against financial insecurity, period.
“Everybody focuses on access to care and health,” he said. “But one of the primary purposes of insurance, any type of insurance, is financial security. There’s no reason to expect that health insurance wouldn’t provide such financial security. And, sure enough, the evidence that’s coming in on the ACA – our own and others and previous evidence – is very consistent with the fact that health insurance provides financial security, which has very important implications for lots of aspects of life.”
Despite the improving picture, nearly a quarter of Americans and a third of West Virginians still have past-due medical debt. Isn’t insurance supposed to take care of that? Kaestner pointed out that a lot of people have high deductible plans now. Even a bill of a couple thousand dollars can be too much for some low-middle income families, he said.
The Urban Institute report released this week also found that people who are uninsured continue to have higher rates of past-due medical debt, compared with people who have insurance. So what would happen if Medicaid Expansion were repealed, or people who gained coverage on the ACA lose it? Logically, Kaestner says, folks losing this coverage will be hard hit financially.
Appalachia Health News is a project of West Virginia Public Broadcasting, with support from the Benedum Foundation, Charleston Area Medical Center and WVU Medicine.