Hidden healthcare affordability issue: Medical debt
Affordability is the buzzword in current news. In our research, workers tell us they are concerned about their ability to afford the medical care they need for themselves and their families. A soon-to-be-released survey of over 2,000 US workers found that nearly a fifth say that cost limits their ability to get needed healthcare. And while some people may be concerned about being able to afford healthcare, others find themselves with medical bills they cannot afford to pay.
Personal medical debt — unpaid medical bills that have been sent to a collection agency — is not a data point employers have for their workers. While you might think that medical debt would be rare among those who are employed and have access to employer-sponsored health insurance, unfortunately, that is not the case. Commonwealth conducted a survey of low- to moderate-income workers and found that 40% had medical debt. While 84% of this group owed less than $5,000 and 62% owed less than $2,500, even relatively small amounts of debt can have strong negative consequences, forcing families to cut back on necessities, including healthcare, as they try to pay down medical bills. Damage to credit ratings can have long-term consequences.
Some actions have been taken to address this problem. As of 2022, the three big credit reporting bureaus announced limits on what would be reported on an individual’s credit report. Some states, including Colorado and New York, have passed legislation to reduce or limit medical debt. Employers have a role as well. More robust health benefits for low- and middle- income workers can have a significant impact on their ability to handle healthcare costs. Strategies specifically for low-paid workers include salary-based premium contributions and HSA funding, where those in the lowest salary band have lower paycheck deductions and/or higher employer contributions into their HSA accounts.
But it’s important to keep in mind that even workers who might not be considered low-paid might be struggling financially. Consider offering a range of medical plan choices to cover different medical and financial situations, including a nontraditional medical plan with a more limited provider network and low out-of-pocket costs. In addition, certain medical conditions, such as cancer, can be a trigger for medical debt. Specialized advocacy or navigation services can help those with serious diagnoses get to the best, most cost-effective care quickly.
This map provides data on individual medical debt by state, and is available down to the county level and can give you an idea of the scope of the problem in your locations. But you can use your own data to uncover the affordability vulnerabilities of your population — demographic data, medical condition information and social determinants of health are all good places to start.
