Survey: Medical Bills Drive Patients Deep Into Debt – Even With Health Insurance
Unpaid medical bills are driving Americans further into debt, leading many to sacrifice their financial well-being for their physical health. For some patients, medical debt is holding them back from reaching financial goals – and 37% of those with medical debt are struggling to pay bills, according to a May 2023 US News survey.
Between May 5 and 9, US News surveyed 1,205 Americans who have unpaid medical debt. We asked respondents a series of questions to find out how their finances are impacted by having medical debt, such as what procedures caused them to go into debt, whether they tried to negotiate their medical bills and how they are working on repaying that debt. Here’s what we found:
- Patients are driven into medical debt to pay for essential health care services, led by emergency care (45%), diagnostic tests (29%), surgery (18%), mental health care (18%), prescription medication (18%) and planned doctor or specialist visits (18%). One in four respondents (25%) have unpaid medical debt from receiving dental care.
- Four in five patients with medical debt owe a total balance of at least $1,000, and nearly half (48%) owe $5,000 or more. The survey also found that respondents who have a chronic or long-term illness carry much more medical debt than those who don’t.
- Most respondents (81%) had health insurance when they received services, yet still went into debt. Among them, the most common response was that their plan only covered a portion of the costs (48%).
- The majority of respondents (59%) are paying interest or fees on their medical debt. While many patients worked out a payment plan with their health care provider (45%), others took on credit card debt (30%), used a medical credit card (15%) or borrowed a medical loan (11%). Some (12%) used a buy now, pay later service.
- More than two-thirds (69%) of those with medical debt have avoided seeking health care due to financial reasons. Furthermore, more than half (53%) say they knew they would go into debt when they received medical services, while 49% say they didn’t feel that they received an accurate cost estimate before electing to receive medical services.
- Most of those with medical debt (81%) say it’s holding them back from reaching other financial goals. More than a third (37%) are struggling to pay their bills, and 32% are struggling to repay other debts like a mortgage or credit cards. For some respondents, medical debt is getting in the way of meeting savings goals (28%) and buying or selling a home (15%).
- The vast majority of those with medical debt (90%) are at least somewhat stressed about repaying it. and nearly a quarter (23%) report being “extremely” stressed. Those with a chronic or long-term illness experience more stress about their medical debt – 28% are extremely stressed about repaying it, compared with 20% of those without an illness.
- Over half of respondents (52%) didn’t try to negotiate their medical bill before paying it. Among those who did attempt to negotiate, 79% were successful in some form by having their bill reduced or certain charges or fees dropped.
Patients Owe Thousands in Medical Debt Stemming From Vital Health Care
Medical debt can be a fairly ubiquitous problem for Americans receiving health care, whether they planned ahead for treatment or had an unexpected medical expense. That being said, emergency care was the most common medical service that caused respondents to go into debt. Nearly half (45%) say their medical debt stemmed from emergency care, including urgent care.
Still, 29% say their medical debt was caused by lab fees or diagnostic tests, such as MRIs and X-rays. A quarter of patients (25%) say they were driven into debt from dental care. Other common procedures that led to medical debt were surgery (18%), planned doctor or specialist visits (18%), mental health care (18%) and prescription medication (18%).
The vast majority of patients (80%) owe at least $1,000 worth of medical debt, while nearly half (48%) have a current balance of $5,000 or more. What’s more, medical debt balances are much higher among those who report having a chronic or long-term illness. A third of them (35%) owe $10,000 or more in unpaid medical debt, compared with 23% of those without an illness.
Chronically ill patients are also twice as likely to carry extremely high medical debt balances: 11% of those with an illness owe $20,000 or more, compared with just 5% of those without.
Despite the high balances among those with medical debt, 81% say they had health insurance when they received medical services. About half of those who were insured at the time of service (48%) say their plan only covered a portion of the costs. Additionally, nearly a third (31%) had issues with an out-of-network facility, physician or lab, and a fifth (21%) say their insurance didn’t cover the procedure or medication they needed.
Medical Debt Comes in Many Forms – Often With Interest Paid
When faced with thousands of dollars’ worth of medical bills, it’s no surprise that many patients are unable to pay what they owe in full upfront. Nearly half of respondents (45%) worked out a payment plan with their health care provider to spread the cost of treatment over smaller installments.
The same amount (45%) leaned on a credit card to pay medical bills, including 30% who took on credit card debt and 15% who used a medical credit card like CareCredit. In some cases, medical credit cards allow patients to enroll in a reduced-interest or interest-free repayment agreement, although the consequences can be steep for those who miss a payment.
About one in 10 patients (11%) took out a medical loan, such as an unsecured personal loan used to pay for health care expenses. Unsecured personal loans may give patients fast access to the cash they need, but the interest charged ultimately adds to the total cost of treatment. A smaller number (8%) took out a secured loan, such as a 401(k) loan or home equity loan, to pay for health care services.
Additionally, 12% of respondents used a buy now, pay later, or BNPL, service to cover the cost of medical treatment as an increasing number of BNPL providers branch into the health care sector.
All told, most respondents (59%) are paying interest or fees on their medical debt, and a fifth of them (21%) carry an estimated annual percentage rate of 20% or higher.
For Many Patients, Unpaid Medical Debts Cause Financial Hardship
The decision to seek health care is influenced not only by the immediate need for medical services, but also by the financial implications of receiving those services. Our survey found that patients with medical debt are often left to choose between their physical and financial well-being:
- 69% have avoided seeking medical care due to financial reasons.
- 62% have had an unpaid medical bill sent to collections.
- 53% knew they would go into debt at the time they received health care services.
- 49% say they didn’t feel they received an accurate cost estimate before electing to receive health care services.
- 41% would not have gotten health care services if they knew how much it would cost upfront.
It’s easy to understand why patients are hesitant to go to the doctor, even if they require urgent medical attention. Among those with unpaid medical debt, 90% are at least somewhat stressed about repaying it. Nearly a quarter (23%) are “extremely” stressed about paying their medical bills.
Medical debt is even more stressful for the 44% of survey respondents who have a long-term or chronic illness. More than half of chronically ill patients (54%) are “very” or “extremely” stressed about repaying their medical debt, compared with 38% of those without an illness.
Unpaid medical bills come with real-life financial consequences, potentially fueling high levels of stress and anxiety. The vast majority of patients (81%) say their medical debt is holding them back from reaching their other financial goals, such as building their savings (28%) and buying or selling a home (15%). What’s more, 37% of those with medical debt are struggling to pay their bills, and 32% are struggling to repay their other debts.
Many Patients Didn’t Try to Negotiate Their Medical Bill
More than half of respondents (52%) didn’t attempt to negotiate their medical bill before paying it, with the primary reason (46%) being that they didn’t know it was possible or didn’t know how. Thirty percent simply say they didn’t think they would be successful. Additionally, 11% didn’t understand the charges or their health care coverage, and 10% just didn’t have the time to negotiate with the provider.
However, among those who did try to negotiate their bills, most were successful in some way: 27% saw their bill reduced, 17% had late fees or charges dropped, and 16% deferred their payment due date. About a fifth (19%) were able to enroll in an interest-free payment plan through the provider.
Our survey findings prove that it’s at least worthwhile to try to negotiate medical bills before paying them. If you’ve been left with a hospital bill you can’t afford, here are some tips for negotiating:
- Review the explanation of benefits from your insurer. In some cases, you may have been charged for services that were supposed to be paid for by insurance. Request a summary of benefits and coverage from your insurance provider, and contact your insurer if you believe there’s been an error.
- Request an itemized bill from the provider, and check it for errors. Common errors include double billing, incorrect coding and incorrect information about you or your provider. Some third-party companies will also review your medical bill for errors, but they may charge for this service.
- Negotiate with the provider’s billing department. Be transparent about how much you can afford and why you need help. Take detailed notes about your conversations, including who you speak with and when you call. Make sure to get any payment agreement or discount in writing.
- Offer to pay upfront for a discount. Certain providers may give a discount if you offer to pay in a single lump sum. If you can’t afford a lump-sum payment, see if the provider can enroll you in an agreement to break the payments into smaller installments over time.
- Seek out payment assistance programs. Nonprofit hospitals are required by federal law to offer financial hardship assistance to patients who cannot pay. If you fall within a certain income threshold, you may qualify for reduced-cost care or interest-free payment plans. The specific laws vary from state to state, so research the guidelines where you live or ask the provider for more information.