President Joe Biden’s campaign promise to cancel student loans for the first $10,000 of federal college loans has sparked debate about the fairness of the loan program.
In a June poll, more than half of Americans surveyed supported college loan forgiveness, but 82% said making it more affordable would be the best approach.
Little public attention has yet been focused on what is statistically at least a larger and larger debt crisis: An estimated 100 million people, or 41% of all adults in the country, have health care debt, compared with $42 million in student debt.
Millions of people burdened by medical debt deserve help, because medical debt is a uniquely unfair form of predatory debt and its devastating impact on American families.
Unlike college tuition or other types of debt, out-of-pocket medical expenses are usually not something you can consider upfront and decide whether to take on. It is something that imposes sickness, accidents and bad luck.
Medical treatment usually does not have a predictable initial cost and there is no limit to how much you may owe. And, given the cost of our health care system, if the care includes a hospital stay, the amount can be more than the value of the home.
When it came time for my kids to choose a college, I already knew how much it would cost. We can decide which of the various license plates is “worth it”. We made a plan to pay the bills using a bank account, money saved in a college fund, some financial aid, a student job, and some borrowed money from grandparents. (Yes, we had enough resources to make safe financial decisions).
Educational loans are completely different from healthcare loans. In one case described by KHN, the parents of twins, who were born at 30 weeks, faced nearly $80,000 in out-of-pocket costs for neonatal intensive care charges and other care not covered by insurance.
In another case, a couple ended up owing $250,000 when one spouse went to the emergency room with a bowel obstruction that required multiple surgeries. They had to file for bankruptcy and lose their home.
Even the smallest bill destroys credit history, and these expenses can cost you money in retirement, having to take a second job. In the survey, half of the nation’s adults said they didn’t have enough cash to pay an unexpected $500 medical bill.
When “assuming” medical debt, patients simply sign the vague financial agreement that has become ubiquitous in American health care: “I agree to pay charges not covered by my insurance,” presented in a stack of forms. Room or doctor’s office to sign in emergency.
But no one can fully consider alternatives or say “no” to care when faced with pain or medical distress.
Student loans cause problems because they affect people who are just starting a career, with incomes below the pay scale, forcing them to delay life choices, such as buying a home or starting a family.
But medical debt often comes with all of these and medical issues: In a KFF survey, 1 in 7 people with health care debt said they were denied care by a provider because of unnecessary bills. Sometimes an account of just a few hundred dollars can turn into a nightmare if it ends up with a collection agency.
The federal government is already stepping in to help with student loans. It halted student loan payments during the pandemic, and the Biden administration announced it would forgive student loans for thousands of public sector workers.
Late last year, the Department of Education announced it would no longer hire outside debt collectors, but instead deal with loan defaults to “advanced assistance borrowers.”
Medical debt collection has generally been outsourced to aggressive private agents and the lucrative medical debt collection industry; No Respite Recently, the credit reporting agencies said they would no longer include small medical debt on credit reports and eliminate paid off medical debt.
For many people, this will take years. About 18% of Americans with health care debt say they never expect to be able to pay off their debt.
The irony here is that charities like RIP Medical Debt and religious groups pay pennies on the dollar to make patients’ outstanding medical debt disappear. The absurdity of this arrangement was demonstrated when comedian John Oliver, in a number on his late-night show, paid off the American’s $15 million debt after buying it for $60,000.
But medical debt is no joke and is hurting Americans in a big way right now. Governments can act to alleviate this uniquely American type of suffering in the short term by purchasing debt at a moderate cost. And then it should address the underlying cause: a health care system that denies millions of people adequate care and remains the world’s most expensive.
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Along with policy analysis and polling, KHN is one of the three main operating programs of the KFF (Kaiser Family Foundation). KFF is a non-profit organization that provides health information to the nation.
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