How Medical Debt Makes People Sicker — and What We Can Do About It

JOEL BERVELL: Right now, more Americans have health insurance than ever before — and health insurance is essential — but having health insurance doesn’t guarantee access to affordable health care.

I started thinking about health care affordability after personal family experiences led me to spending of time in the hospital. But I learned quickly that the experience of health care doesn’t end after a hospital visit. Even when someone does get better, it extends back into the home, with worries about bills and payments.

My name’s Joel Bervell, and in the next few episodes of The Dose, I’ll be speaking with experts about how our health care system puts so many patients in medical debt, how the cost of health care exacerbates disparities, and about how we can reshape our system to provide more fair and affordable care.

In late September of this year, the Consumer Financial Protection Bureau embarked on a process to remake the rules about what kinds of medical debt can show up on an individual’s credit report. Nearly 20 percent of Americans report having medical debt, and 62 percent of bankruptcies are related to medical debt. A proposal that removes medical bills from consumers’ credit reports could have far-reaching implications in improving the health of many Americans, especially Black Americans who carry more medical debt, and as the data shows, get worse care and see worse health outcomes. For example, one in three Black adults have past due medical bills compared to fewer than one in four white adults, and 27.9 percent of Black households carry medical debt compared to 17.2 percent of white, non-Hispanic households. Structural racism has made this effect. But now that these facts are finally being acknowledged, how can that be turned around?

My guest today is Berneta Haynes, an attorney with the National Consumer Law Center in Atlanta, and she’s the author of the report on “The Racial Health and Wealth Gap.” It’s true that despite the aims of the Affordable Care Act and policy aspirations of the Biden–Harris administration, medical debt continues to be a crisis. An insidious reality is that medical debt itself actually makes people unhealthier, because folks who owe money for medical care tend to delay and avoid treatments that could add to their debt burden. It’s a vicious cycle that’s overdue to be broken. We’re going to talk about breaking that cycle today and the road ahead.

Berneta Haynes, welcome to The Dose.

BERNETA HAYNES: Thank you for having me here, Joel. I appreciate it.

JOEL BERVELL: So at the open of the show I shared some data about the size of the medical debt problem and the size is a function of historical and structural race issues. Could you start us off here by discussing why Black Americans face this kind of disproportionate medical debt?

BERNETA HAYNES: Yeah, so there’s a long-storied history that really explains why Black Americans are so disparately impacted by medical debt. These gaps in wealth and health are two gaps that kind of intersect and worsen the crisis for Black families. Black families have lower wealth, which means lower ability to pay medical bills when they inevitably arrive, which means these medical bills present much more of a hardship for Black families when they arrive. Black families also have greater rates of chronic conditions and health risk like cancer and heart disease.

So what happens is because you’re Black, you lack the wealth, the savings, the family wealth to tap into to actually pay those bills. So you end up having to put things on credit cards or somehow find a way to pay that medical bill if you don’t have credit cards, which could mean other types of high-interest alternative products. And then that just feeds into this continual cycle of a lack of wealth, and it just goes on and on and on. And on top of it, as you said, folks will often delay health care because they’re worried about medical bills. It is really exhausting to talk about because it is an exhausting cycle to be trapped within.

JOEL BERVELL: Absolutely, and it’s a cycle that started so long ago. I’m curious, is this debt concentrated mostly in the American South? Is it a vestige of Jim Crow, a residue of segregated hospitals, health systems? Where is it mostly concentrated and why is it still here?

BERNETA HAYNES: Yeah, there’s definitely some correlation with past problems with segregation in health care and how that currently affects folks and where we see this debt concentrated. It is definitely a looming issue in the South in particular. This is not to say that medical debt isn’t impacting folks, and Black folks in particular, everywhere in the country, but we have seen from recent reporting that credit scores are worse in the South and that medical debt is a major, major part of that. The South is where most Black people from a sheer percentage standpoint are clustered in this country. And the South is also where states that didn’t expand Medicaid tend to be clustered as well. So what you have is a high rate of uninsured people, many of them Black, clustered in the South, leading to greater amounts of medical debt and a greater concentration of medical debt.

In terms of the connection to Jim Crow segregation in health care, it is very important to recognize that during Jim Crow, the entire country was segregated. Black folks in northern states were often subject to inferior hospitals, hospitals that were less staffed, less technology, and so forth, whereas Black folks in the South may not have had any hospital or any medical services available to them at all. So that’s kind of the difference in how Jim Crow segregation played out based on whether you live North or South. And we still see a little bit of that kind of difference nowadays with Black folks up North still dealing with medical debt, but more likely to have Medicaid coverage because they’re more likely to live in a state that expanded Medicaid, for example, whereas Black folks in the South are often just lacking coverage entirely. So there’s definitely parallels.

JOEL BERVELL: Absolutely, and I’m so glad you brought up expansion of Medicaid. That actually bleeds right into my next question. When I was in college, I actually worked at the Urban Institute when the ACA was being rolled out. We talked a lot about the expansion of Medicaid and what that meant for a lot of populations, specifically Black populations. As of this recording, 41 states have experienced an expansion in Medicaid benefits in the past several years, but a few have not, and the Affordable Care Act has extended health care coverage dramatically: 40 million additional Americans are covered. But those gains in health care, as you are noting, are not the whole picture. So I’m hoping if you could give us a snapshot of what’s happening in Georgia, the state where you’re at right now.

BERNETA HAYNES: Georgia, like many states in the South, have not expanded Medicaid. North Carolina is the recent state in the South to expand Medicaid, and then there’s Arkansas and Louisiana as well. But Georgia has not expanded Medicaid. It is something that advocates here have been fighting for for years now. At my previous organization, Georgia Watch, we certainly work with a lot of partner organizations, local organizations, to fight for Medicaid expansion. But what we’ve seen here is an interest in Medicaid waiver processes, which are a little different in Medicaid expansion and which allow the state to implement certain things within Medicaid that can be great in some cases, but also can be terrible in other cases, like work requirements and things like that.

So Georgia is still one of these states that hasn’t expanded Medicaid. For that reason, we have a very high rate of uninsured people. I believe as of the latest stats, Georgia was I think the fourth, had the fourth-highest uninsured rate, I believe, in the country. Credit reporting issues are constantly a problem in Georgia with FTC stats constantly showing that people are being contacted a lot by debt collectors in Georgia, probably largely related to medical debt because that’s the common trade collection item on people’s credit reports. So we’re still fighting in Georgia, but we have a long ways to go in terms of getting more people covered and out of the coverage gap.

JOEL BERVELL: What would you say is the biggest barrier to having Medicaid expanded in Georgia? For me, I think it looks like a no-brainer. You get more people insured, you get more people going to the doctor earlier, less worried about whether they can pay for bills, able to get care when they need it earlier on. It reduces costs overall for the health care system. But why is it that so many people are resistant to it?

BERNETA HAYNES: I just think there’s the lack of political will here among a lot of our elected officials. It’s not that we haven’t had candidates who’ve made Medicaid expansion a main platform issue. We had Stacey Abrams running for governor making that a platform issue. It’s just that there’s a lack of political will in large part, and unfortunately it’s a common problem throughout this region. So it’s been awesome to watch states like North Carolina figure out how to make this happen despite any of the political backlash and the lack of will among the electeds. Ballot measures go a long ways towards making things like Medicaid expansion a reality. We saw that in one of the Dakotas recently. And I do think it’s also important to note though, that despite the lack of Medicaid expansion, Georgia has made a point to pass other legislation to help reduce some of the medical debt burden, like the Surprise Billing Protection Act that passed here and was implemented here in 2021.

But it’s important to know that coverage isn’t the solution entirely to the medical debt crisis. Just the fact that there’s a lack of financial assistance efforts at these hospitals that are required to provide financial assistance. There’s a lot of just very aggressive debt collection activities, and these affect all people, even if they are actually insured, there are a lot of insured folks who are dealing with medical debt. Some folks are underinsured, they have super high deductibles and things like that, or just very skinny plans that don’t cover much. So I do want to make it clear that while Medicaid expansion is an extremely important part of removing some of the medical debt burden in this region, and especially on Black folks, it is still not the full solution to the problem that we’re seeing.

JOEL BERVELL: So your work also digs into why medical debt makes people sicker, and for Black Americans already facing disparities in care, it’s a compounding factor for so many of us. Eliminating debt, in other words, wouldn’t just make people more financially whole, but it would improve their health. I know we’ve talked about it a little bit, but I was hoping we can dive a little bit deeper into that for how that actually happens, that eliminating debt actually improves health.

BERNETA HAYNES: Black folks in particular are more likely to be uninsured. That’s a racial health gap disparity. More likely to live in states with high numbers of uninsured folks, lower-quality health care, whether they’re insured or not, higher maternal mortality rates, higher rates of all cancers and heart disease, and particularly a higher mortality rate from cancers and heart disease. And so what we see is a community that’s already dealing with these disparate health impacts, this particular racial health gap, and then medical debt makes it all worse because even if they are insured, we’re still dealing with high cost in the health care space. Which means that even just simple visits to a specialist could result in hundreds of dollars in bills that you can’t afford to pay. Keeping in mind, that many people don’t even have $500 for an emergency. So a $700 medical bill could really throw somebody’s financial wellbeing completely out of whack even more than it already is. And as a result of that, folks start delaying health care. “Well, I’m feeling fine. I don’t necessarily need to go to the doctor right now.”

And the more they delay, the more these chronic conditions that they either already have and know that they have or have and don’t realize that they have can worsen, meaning something that may have been much more inexpensive to treat early on later becomes three, four times what it costs to treat, because now it’s become much, much worse due to that delay. It’s just very important to recognize that the cost of health care really does lead a lot of people to forgo very necessary health care that puts their health at risk more and more and more, leads to them skipping all kinds of necessary appointments and so forth. Not to mention avoiding and delaying health care is associated with late diagnosis of disease, which means lower rates of cancer screening as well and reduced survival rate from those diseases, not to mention preventable health complications as well. There are these sacrifices that people make to their health all the time simply because they don’t want to deal with the potential financial outcome of trying to improve their health or keep their health in check by going to the doctor.

JOEL BERVELL: Absolutely.

BERNETA HAYNES: So I’ll stop there because there’s a lot more that can be said, but suffice it to say, that trap that I mentioned earlier where it’s just that people can’t get themselves out of it? It is really glaring in the Black community in particular.

JOEL BERVELL: And I want to spend a minute talking about the process that the federal Consumer Financial Protection Bureau is in now to remake the rules about what kinds of medical debt can show up on an individual’s credit report. As you noted, there’s so many things that get into this cycle, so why is this significant? Why is it happening now? And how can it be helpful overall?

BERNETA HAYNES: Negative credit reporting is one of the biggest pain points for patients with medical debt. We hear all kinds of stories from consumers about how medical debt affects their lives. They often talk about all these consequences of bad credit. Consequences that include being denied housing, being denied the ability to rent a place because your credit’s so bad, being locked out of employment prospects, locked out of lower insurance rates, and all sorts of things, all because you got sick and ended up with a medical bill that you couldn’t pay. It doesn’t make sense that something that inevitably will happen to all of us — inevitably, we will all get sick at some point — and for that to ruin our ability to obtain decent housing, employment, it is cruel. It feels very cruel, and it’s one of these low-hanging kinds of issues that it shouldn’t be a fight about. Removing medical debts from credit reports, it really shouldn’t be a fight.

It’s not removing the debt from folks, by the way. I think it’s very important to clarify that even though these medical debts will be removed from credit reports, folks are still going to have to figure out how to deal with those debts in some way.

JOEL BERVELL: And we just talked about policy problems and some solutions like this one that we just talked about, but are there ways to address this clinically? I know things like charity care exists in the United States and is even required of nonprofit hospitals in order to maintain their tax-exempt status, but few patients are treated in that way. Is the problem that eligibility for care is too stringent or what are other ways that we could be addressing this?

BERNETA HAYNES: Charity care is a huge, huge way to address this problem. Unfortunately, it falls short in practice so frequently. There are a lot of reasons for that too. As we all know here, the Affordable Care Act requires nonprofit hospitals to provide charity care or financial assistance. It kind of leaves it open as to what the eligibility guidelines will be for that financial assistance and so forth. And that kind of creates a no man’s land where one hospital’s financial assistance eligibility requirements may be very narrow and stringent. And then across town, you may be able to actually qualify for financial assistance at this other hospital. So there’s kind of a no man’s land. That is, unless your state actually puts into place a law that sets some threshold floor requirements around financial assistance eligibility. But for a lot of reasons, charity care just doesn’t actually end up succeeding as it’s supposed to, as it is intended to do for the Affordable Care Act.

One reason is that hospitals often fail to inform patients of their eligibility. So even if their eligibility criteria isn’t too narrow, folks may not even know that it exists as an option. There’s a lack of specific guidelines as noted in the ACA and minimum eligibility criteria for financial assistance, which creates that no man’s land I was just speaking about. And there’s an overall lack of effective enforcement and oversight of charity care programs. The IRS is the overseeing entity, the enforcement entity, and there’s just been a very clear lack of enforcement and oversight since this became a requirement.

So because charity care is often not even made available to folks at these hospitals, a lot of people who would qualify still end up stuck with medical debt, and they don’t find out until after the fact that, “Oh, maybe I could have actually gotten this bill canceled in part or entirely.” An example is one individual who came to a meeting when I was in my previous role at Georgia Watch, I produced a guide called the Georgia Consumer Guide for Medical Bills and Debt, and it had a checklist in there about how to obtain financial assistance.

Well, this particular individual got ahold of that guide about a month after it was produced at a meeting and she in the previous year had had a health care emergency while giving a presentation, and it resulted in about $31,000 in medical debt. She had managed to pay off 1,000 or 2,000 of it but did not see any foreseeable way that she could pay it all off ever. She got ahold of this medical debt guy, went to the financial assistance checklist, and followed the instructions about how to obtain financial assistance, and reached out to us a month later telling us that she’d gotten her medical debt — 29,000 or so — canceled fully. She had no idea that financial assistance existed. She didn’t know until she got that guide, and that is such a great example of how financial assistance policies, as they are currently being implemented, how they fail folks. Obviously, they would work if people knew.

Some states have actually tried to take steps to reduce this problem of folks not knowing about financial assistance by actually requiring screening upfront for financial assistance. Connecticut is one of those states. Colorado has recently done something of this nature as well. Screening or presumptive eligibility would definitely go a long way towards making financial assistance work the way that it is intended to work per the ACA. It doesn’t overcome the narrow eligibility problems that we see in some places in some hospitals, but it would certainly help reduce the number of people who just end up not knowing that it even existed.

The last thing I’ll say is that Maryland, instead of doing like Connecticut where the screening is required up front, what they’ve done is they’ve required hospitals to reimburse those who they find out would’ve been eligible for financial assistance if they had been made aware of it up front. So that’s one way to kind of keep hospitals in line and make sure that they follow through on financial assistance policies, but screening up front is probably the ideal solution in this respect.

JOEL BERVELL: Yeah, I’m so happy you talked about all of those different ways to address the problems right now of one, patients not knowing and the burden being on patients to have to know which hospitals are likely to treat you as a charity care patient, to actually say, “Hey, we’re going to make sure that if you actually are eligible, we will get rid of your debt.” Like that one individual, the story you told. I think a lot in medicine and just in health care, about how so much information is held by hospitals and institutions and is not trickling down to the communities that need it the most, that could be actually helped by it, and then they get looked over. And I’m very curious about the scale. I mean, you’ve talked about both Maryland and Connecticut with innovative things they’re doing. Is it possible to replicate that in different states? And if so, what’s keeping us from doing it?

BERNETA HAYNES: Yeah, it’s certainly possible to replicate these particular legislative successes we’ve seen in Maryland, Connecticut, Colorado, and so forth and other states. We actually have a Model Medical Debt Protection Act, that advocates in these states can use and that we’ve actually seen advocates use in various states to bring more financial assistance protections online in their states. It’s really important, I believe, for advocates who are trying to make legislative improvements in their states around financial assistance, aggressive debt collection, and so forth, to look to these other states and connect with those advocates to understand what they did. Is a ballot measured a best approach in your state or is it better to actually draft legislation maybe using our Model Medical Debt Act, and get a sponsor in the legislature for that bill?

It’s really crucial, though, to answer those questions by really connecting with folks who’ve managed to make some headway and have some successes in their states. There’s no reason to reinvent the wheel. Some advocates may think, well, where do I even start in terms of drafting legislation to improve our financial assistance policies? And the answer is A, in those other state examples and also in our Model Medical Debt Act, which we are also in the process of updating currently, and we’ll hopefully have an updated version available this month.

JOEL BERVELL: That’s amazing. And as a final question, I want to ask about private hospitals. I think that’s been on a lot of people’s minds because we think about nonprofit hospitals and how they have to abide by these things within the ACA to remain in compliance. But private hospitals don’t necessarily have to do that to ensure that they’re serving the patients and not taking advantage of patients. What can we be doing to bring those hospitals, private hospitals, into compliance with the ACA?

BERNETA HAYNES: Yeah, I think one very important improvement to the ACA should be to expand its coverage, especially regarding the financial assistance requirements, to include for-profit hospitals and health care facilities. There are a couple of states where for-profit health care facilities outnumber nonprofits. Texas, and I believe Nevada is the other state, and those states, we have a situation then where we have this great, that still needs improvement, federal law that just doesn’t even apply to a vast majority of the hospitals that are there. And then in Texas, we also have this other issue of a lot of emergency rooms and trauma centers being military hospitals, and that’s a whole other can of worms.

So I think the way to improve financial assistance policies at for-profit hospitals, because some, they do have them, they’re just not required to have them. But the way to standardize that is to improve the charity care requirements in the ACA to actually also apply to for-profit health care centers and outpatient clinics and ambulatory surgical centers, just to make sure that all areas are covered. Because people are not able to find any kind of relief in certain states as a result of this particular oversight and loophole.

JOEL BERVELL: Well, Berneta, I want to say thank you so much for all the work that you’re doing. It’s truly saving and changing lives. Thank you for being with us on The Dose and for sharing all this information, and I can’t wait to keep following you along, to keep reading your writing and to keep seeing the change that you’re going to make. Thank you so much.

BERNETA HAYNES: Thank you so much for having me on and keep it up.

JOEL BERVELL: Thank you.

This episode of The Dose was produced by Jody Becker, Mickey Capper, and Naomi Leibowitz. Special thanks to Barry Scholl for editing, Jen Wilson and Rose Wong for art and design, and Paul Frame for web support. Our theme music is “Arizona Moon” by Blue Dot Sessions. If you want to check us out online, visit thedose.show. There, you’ll be able to learn more about today’s episode and explore other resources. That’s it for The Dose. I’m Joel Bervell, and thank you for listening.