Sally C. Pipes: Don’t Buy Progressives’ Medical Debt Myth

According to the CDC, more than 4 out 10 adults have medical debt. Recent research From the Kaiser Family Foundation 

This has led to several states taking action. Arizona voters Recently approved A ballot measure to cap interest rates on medical loans and protect personal property from creditors. New York enacted legislation It is illegal for healthcare providers to place liens on primary residences, or garnish wages to collect debts. Toledo, Ohio lawmakers Plan to use Federal dollars are used to pay off medical debt using the American Rescue Plan Act. 

However, the scale of this crisis is exaggerated. A small percentage of Americans’ total debt burden is due to medical expenses. These bills are not driving people to financial ruin. 

Kaiser research shows that the total U.S. medical loan is at $195 billion 2019 It’s a significant number. However, only a small percentage of people account for the majority of the nation’s total national debt. 

Around one-third (33%) of Americans with medical debt owe Below $1,000. Three quarters owe less that $5,000

The good news is that six out of ten Americans do not have any medical debt.

Moreover, the majority of Americans have plans in place for unexpected medical expenses. Half of the respondents agree They would pay $500 immediately without interest. 21% of respondents said they would put the $500 charge on a credit card and then pay it off over time.

Over one-third of people who have medical debt or are currently in it say that they could pay the $500 unexpected charge outright. Another third would pay it off using a credit or payment plan with a provider.

Important to remember that medical debt is not as common as the other debts Americans freely take on. The typical American has Over $96,000 in debt.

In 2021, the average balance on an auto loan was close to $21,000 According to data Experian, a credit reporting agency. The average personal loan balance was greater than $17,000 while the average mortgage balance was greater than $220,000

Imagine someone with a car loan, mortgage and credit card balance who suddenly finds himself in financial trouble after a unexpected medical bill. We can’t conclude that the medical debt was what drove him to financial ruin when there were many other debts straining his finances. 

I-Vt. progressives haven’t been stopped from presenting a national health debt crisis as evidence that the healthcare system is in serious trouble — and that it is time to reform healthcare. “free” Accessing Medicare for All at the point where you need it is the best way forward.

The Vermont socialist was elected last year Originally called for All medical debts are cancelled. Returned in 2019. He claimed That “500,000 Americans will go bankrupt this year from medical bills.” He asked rhetorically that question the following year. “How barbaric is a system that says, ‘I’m going to destroy your family’s finances because you had cancer’?”

This number is hugely exaggerated. A peer-reviewed study Published in New England Journal of Medicine In 2018, we looked at the percentage of people who have medical bills and declared bankruptcy. This was in contrast to how many bankruptcy filings contained medical debt. What is the conclusion? The bottom line? Bankruptcies: 4% These were the result of hospitalizations.

Even if medical bills were to be the cause of hundreds of thousands of Americans going bankrupt each year in America, there’s no reason for us to believe that more government control would reduce healthcare costs. 

Consider the actual share of people who file for bankruptcy and list medical expenses as contributors went up About 2 percentage points were achieved after Obamacare was implemented. 

Look at Canada. Our northern neighbor has a government-run healthcare system that doesn’t require patients to pay out of pocket for their doctor’s visits. They pay a lot in taxes. An average Canadian family of four makes just over $150,000 per annum. More than $15,800 In taxes for their healthcare. 

Not even “free” Their financial stability is saved by their health care. Canadians are more likely to declare bankruptcy than their American counterparts. That rate was 2.3 for every 1,000 people in 2021, compared with the U.S. rate which is 1.2 for every 1,000 people.

For a small fraction of the U.S. populace, medical debt is a major burden. The scale of the problem is not large enough to justify the government’s intervention or taxpayer spending.

Sally C. Pipes She is the President, CEO and Thomas W. Smith Fellow in Health Care Policy, Pacific Research Institute. Her latest book is False Promise, False Premise: The Tragic Reality of Medicare for All (Encounter 2020). Follow her @sallypipes on Twitter

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