Amount of Medical Debt Placed with Agencies Nearly Doubles in Five Years, to $140 Billion: Study

The amount of medical debt being worked by collection agencies across the country is $140 billion, according to a study published yesterday in the Journal of the American Medical Association (JAMA), which is twice as much as was estimated just five years ago.

Unpaid medical debts represent the largest category of debts that Americans owe collection agencies, according to the study, which analyzed data from a sampling of consumer credit reports obtained from TransUnion. In fact, the amount of medical debt is more than the amount of credit card, utility, and auto loan debts combined, according to a published report.

Based on that data, 18% of individuals had a debt that was placed with a collection agency, with an average balance of $429. States that do not participate in the Affordable Care Act’s Medicaid expansion program were found to have individuals with higher balances of unpaid medical debts than those that do participate. People living in states in which Medicaid was not expanded owed an average of $375 more than those who lived in states with expanded coverage.

The actual amount of unpaid medical debt is likely much higher than $140 billion, because that total does not include debts that are being collected by the healthcare facilities on their own.

“When you think about financial distress — debt collectors calling and knocking on doors of households — our research shows that more than half the time now, it is about medical debt,” said Neale Mahoney of Stanford, the report’s lead author, in a published report. “That’s a pretty stunning and uniquely American phenomenon.”

The industry can expect to see reports and more legislation at the state and federal level aimed at attempting to curb the amount of medical debt and how those debts are collected. A number of states have already taken up the issue, and studies like these will likely induce more to do so in the coming months.

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