We Are at A Tipping Point with Medical Debt and Bankruptcy that Americans Want Major Changes to Our Healthcare System

There are misconceptions about who ends up with medical debt and is often pushed into medical bankruptcy. The quick answer is this group – those facing medical debt and bankruptcy — is Americans of all ages, shades, and educational backgrounds. 

People who are employed and have insurance are often saddled with medical debt. Irresponsible, unprepared people go into medical debt is a stereotype. Studies show most people who have medical debt do not carry any other type of debt except a medical debt. 

In fact, a majority of people who’ve experienced medical bankruptcy (60% of all personal bankruptcies) were employed, college-educated homeowners and nearly 80% had insurance at the time they got sick. 

What about seniors, they must be safe from medical debt because they have Medicare? Wrong. More than one in five U.S. adults ages 65 and older (22%) reported having some form of debt in 2022 as a result of medical or dental bills for their own or someone else’s care, according to the Kaiser Family Foundation (KFF).

No real security with current health system

If people who are employed, insured, on Medicare are all susceptible to incurring nominal to huge amount of medical debt, what’s really happening is we have a false sense of security regarding financial protections and our health under our current health system.

There are endless examples of horror stories with insurance not being the safety net most think it is. For example, a woman who got a heart attack while attending a business conference had to be airlifted to a hospital which was not in her network. She only received partial coverage for hospital care. In addition, she was charged over $50,000 for the airlift. Her insurance agreed to pay only $6,000 of that amount. She had insurance, was employed, thought she was responsible and did all the right things, but ended up eventually filing for medical bankruptcy.  This is just one incident among millions in our American health system that all point to the fact that we really do not have security as we expect.

The reality is the risks of catastrophic out-of-pocket costs is only minimized and depends largely on what kind of medical emergency we have, where it happens, when it happens, in sum, by sheer luck. This is the sobering reality we are dealing with. And the experts in healthcare know this, too. 

Tipping point

Recently the assassination of a healthcare CEO revealed the anger many Americans have over our health insurance system. Of course, the killing is not condoned and has been condemned by most. However, the incident opened wide public discussion over the cost of healthcare insurance, high rates of denial by insurance companies, and the endless ways in which our current system has failed us.  

The Affordable Care Act (ACA) was the last major public policy that attempted to solve some of the nation’s health problems. It has been proven to be grossly inadequate.

So here we are again post-ACA (almost 15 years later), and at a tipping point, that huge sectors of American society are demanding a better healthcare system, one that’s more affordable to average citizens, more accessible and secure in the way that medical debt or medical bankruptcy will not do us in at our most vulnerable time like after a heart attack or amid cancer treatment.

Conditions will only worsen

Americans are angry and know the situation will only worsen.  According to KFF, for a family of four, the average health insurance premium cost is $25,572 in 2024, combining employer and family contributions. How is this affordable?  Furthermore, total health spending is projected to climb from $14,423 per person in 2023 to $21,927 per person in 2032, according to a report from the nonprofit Peter G. Peterson Foundation.  In other words, there is a strong likelihood that medical debt and medical bankruptcies will become more common, and that Americans have less security. 

Employers are finding paying for their employee’s healthcare increasingly difficult and using potential wage increases to instead go towards employee’s health benefits. Many employers are not even offering health insurance in states where that’s allowed.

Medicare-for-All

The ACA was that political bone thrown at Americans demanding Medicare-for-All. The healthcare establishment – insurers, pharmaceutical giants and hospitals – won upon the ACA’s implementation because it was business as usual for them for the most part with added compliance, red tape and concessions. To many healthcare providers the ACA transformed healthcare for the worse. To millions of Americans, the ACA hasn’t been the antidote to healthcare access or security. 

The healthcare giants not only want ACA canceled, but they’ve been working to transform Medicare into a privatized model as Medicare Advantage Part C is now becoming the standard and Original Medicare losing its original foundational purpose. This is perhaps why increasingly more seniors are also gripped with medical debt.

The big question now is – are Americans ready for round 2 in the continued fight for Medicare-for-All and join the rest of developed nations? Under such a system, as stated by Public Citizen, there would be no bills, no paperwork, no deductibles, no insurance companies to deal with, no ‘patient statements’ from hospitals, and no risk of going bankrupt or incurring medical debt.

Or will Americans continue to do more of the same with the same health care model for another 30, 50, 75 years? If so, healthcare “security” could foreseeably just be for multimillionaires (not hyperbole) and the rest of the population chewing on an already brittle ACA bone.

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