Widespread medical debt is a uniquely American problem, with medical debt totaling at least $195 billion in 2019. It was once thought that the problem was that Americans were largely uninsured, but even those with health coverage can run into problems. Over 90% of the U.S. population has some kind of medical insurance but about 40% of adults say they have at least $250 in medical debt. Watch the video above to learn how we got here and why having health insurance isn’t enough to protect people from medical debt.

Widespread medical debt is a uniquely American problem. The United States has by far the greatest burden of health care bills and individuals. 7.4 percent of US residents faced catastrophic healthcare bills each year. That's more than double the next closest country. 100 million people in this country currently have some kind of health care debt. That's about 40 percent of adults. Us medical debt totaled at least 100 and 95 billion dollars in 2019. Having insurance doesn't always insulate people in the US from debt. Over 90 percent of the US population has some kind of health insurance, but medical debt is still a persistent issue. Basically, our healthcare system is creating debt on an industrial scale. The history of medical debt is basically a history of the changing answer to the following question. When the patient can't pay the bill, who forts it, you've got two things that have been going on, one high prices of medical care and number two patients that have to shoulder more of the burden of paying those bills that 20 or 25 years ago might have been covered mostly or entirely by their health insurance plan. The rise of the insurance industry may have been a catalyst for price inflation. 1965. That's when the bomb inflation bomb was lit. 

That's when it really went off because that just Kickstarter, the third-party payer system. So how did the medical debt crisis begin in the US, and how can we fix it? 

Health carers costs have been climbing for the past century as the system has gotten more complicated. The US was spending nearly seven times as much per capita in 2020 on healthcare than it did in 1970. Before the recent spike in inflation, healthcare spending had consistently outpaced overall consumer prices. It used to be that healthcare was only ten percent of our economy now, it's about 20 percent of our economy. There are many complicated reasons for the rise in the cost of care, such as not prioritizing preventative care or a lack of price transparency. But one thing that Kickstarter inflation that may seem counterintuitive was the introduction of health insurance. It was when you get this third-party payer system where the patient doesn't have to pay all of the cost of it directly. The incur pays a chunk of it that gives you relentless upward pressure on pricing, because if you're going to get paid, why not get paid somewhere more? By the late 1960 s. Most Americans had some form of health insurance, such as a hospital-based plan, a government plan like Medicare or Medicaid, or insurance through their job. 

Medicare at the time had reimbursements that were quite generous and hospitals and physicians took advantage of those they were able to charge them basically what they saw fit. This insurance concept is called fee for service. That means for every service that your doctor delivers to you, that doctor is billing for each individual thing and that can create an incentive called providerinduced demand which is basically that your doctor has an incentive to do more things to you. There are many different ways that healthcare systems are organized around the world, whether the system is more like the UK where it's a government system or more like Germany or the Netherlands. These countries all do one thing that we don't and that is put effective limits on how much a health insurance plan can require people to pay out a pocket when they go to the doctor or the pharmacy or the hospital. 

By the 1980 S there was a push particularly by the Reagan administration and by Congress at the time to re those costs. In a 1983 law passed under Reagan changed the way Medicare reimbursed doctors and hospitals. This made it so hospitals received a fixed rate for care. Rather than getting to build a government whatever they wanted. If they spent below the fixed rate, they made a profit, otherwise they operated at a loss. About ten percent of hospitals closed in a period during the 1980 s, in part due to those declining reimbursements. It was a real period of struggle. Hospitals really were hard up to pay their bills. Some of them turned to much more aggressive medical debt collection and became much less forgiving of patients in debt they would charge patients, and instead of allowing for lenient payment plans or discounted care, they instead said. Please put it on your credit card. The 1990 s was the culmination of this effort to re in costs in Medicare and Medicaid, and then at the same time the growth of the HMO movement and other efforts to reign in the cost of private health insurance. 

Hms or health maintenance organizations are a type of healthcare plan that requires patients to see only specific doctors if they want their insurance to pay for it. There's no out of network coverage and they must get approval to see specialists. The network is much smaller and you have no benefits if you go out of network. You have full benefits if you stay in network and follow the rules if you will. By that nature, the HMO is able to negotiate better prices because they would channel patients towards the contractor. Providers and some other providers were worried about losing patients so they contracted to and accepted those prices. Hms grew rapidly in the 1970 s and 80 s until there was a backlash in the 1990 s. Beginning in the mid 90 s, a lot of people have been put into an HMO by their employer like it or not and we're going to have to change providers. It got really upset and then the media grabbed it and started running. 

An alternative health coverage model called POS or Preferred provider organizations began to take the place of HMS. Ppo plans provide partial coverage to go to out-of- network doctors and also usually don't require patients to get approval to see specialists that shift took place and prices were starting to rise again. Because of it there was less control over because it was a wider network. The insurance industry turned back to something they had started to do already back in the 70 s and early 80 s, which was increasing cost sharing to get people to change their behavior. That was initially the primary motive for cost sharing is to make you think twice about something. 

While healthcare costs continued to rise, patients were being asked to take on more responsibility for a larger portion of the bill at the point of care. In the early 2000 s, federal legislation paved the way for a major restructuring of how insurance plans shared costs. Now I'm honored and pleased to sign. 

This historic piece of legislation, the 2 Thousand and Three Medicare Modernization Act further increased the pressure on patients and on hospitals by helping in the proliferation of high deduce health insurance plans.

A deductible is the amount of policy holder has to pay upfront before their health insurance plan kicks in. The George W. Bush administration said that patients would be better consumers more discerning consumers of health care if they had some skin in the game if they had to pay more upfront at the point of care, a theory touted by many who knew better was going, get skin in the game now, since you're gonna have to pay a lot of this money out of your pocket and there's going to be this big gap in coverage, you're going to pay attention. You're going to be an informed consumer if you're well educated, and it's a kind of a routine thing. Yes, you can do your research. You're having clutch chest pain, you know, or you've been in a crash, or you just don't know. And the doctor says you need this typhunal muctane treatment. 
You, what are you going to do? Say I want to look that up and do my own research. No.

The average deductible for an individual in 2022 is around 1700 and 60 dollars, which is double what it was in 2006 when adjusted for inflation. This dramatic rise in high deductible health insurance predated the Affordable Care Act, but the Affordable Care Act didn't do anything to really arrest that change. More and more of us are ending up in these health insurance plans that require us to pay thousands of dollars out of pocket before our coverage kicks in. Roughly 70 percent of lower income adults said they wouldn't be able to afford a 500 dollars unexpected medical bill. Nearly a quarter of those in households with an income of at least 90 thousand dollars also said they wouldn't be able to immediately afford it. It doesn't really take a Nobel Prize in Economics to realize that if most people can't afford a 500 dollars bill and the average deductible on a health plan that someone gets at work is north of 1500 dollars. Now that's going to create a problem because you can't walk into an emergency room or a hospital in this country and get out usually for less than a few 1000 dollars. 

There's no question. 

That as bad as the medical debt situation in the United States is now, it would be worse if not for the Affordable Care Act. One of the important things that the Affordable Care Act did was it provided federal funding to states to expand Medicaid to working age adults who are not historically covered by this program. But as a result of legal challenges to the Affordable Care Act, the decision of whether to expand eligibility was left up to states and most states have done it. But 11 states still have not expanded eligibility. And if you look at where medical debt is concentrated in this country, it is concentrated. 

In the South, which is where Medicaid expansion is least common, so the effect of the ACA on medical debt was largely through the expansion of Medicaid, but at the same time, that law did allow for patients to purchase high deductible health insurance plans on the marketplace, so it didn't stem the tide of that problem with insurance itself. There's no question that providing health insurance is a critical protection against medical debt. The issue just is whether or not it's adequate. People may also incur debt if they're hit with a surprise bill, meaning they thought their insurance company would cover a specific medical expense, but it didn't. A federal law called the No Surprises Act went into effect January 2022 hoping to address that problem.

Now, people who. Inadvertently go to an out-of network. 

Provider for example by going to an in- network hospital but being seen by an out-of- network doctor. That patient is held harmless and then is's up to the insurance company and the doctor to kind of work out how much it get paid to them. I think it's a little early to know whether the No Surprises Act is working as intended. It doesn't eliminate the problem entirely. It creates a system that is designed to protect patients and force a system of arbitration and negotiation between pairs and medical providers that may be out of network, in large part because the medical industry was so opposed to anything that would actually bar this practice, which I'm not a doctor. But it seems pretty hard to defend the practice of intentionally subjecting patients to medical bills that would surprise them. And yet that quite frankly was a business model for an embarrassingly large number of physicians in this country. Us policy attempts to address medical debt so far have been incremental and piecemeal. There is no one answer. It's going have to be a number of things being done at once. It's going to be painful for somebody, whatever we do. 

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