President Joe Biden’s campaign promise to cancel student loans for the first $10,000 in federal college loans has raised debate about the fairness of such lending programs. While more than half of Americans surveyed in a June poll supported forgiving the amount of debt they owe for higher education, 82% said making college more affordable was their preferred method.
But little public attention has been focused on what is statistically, at least — a large, widespread debt crisis in our country: An estimated 100 million people in the United States, or 41% of all adults, have health care debt, compared to 42 million who have student loans.
Millions of people burdened with 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, medical expenses are usually not something we can consider in advance and decide — yes or no — to take on. They are thrust upon us by sickness, accident, and misfortune. Medical treatment generally has no predictable upfront cost and no cap on what we may owe. And, given the cost of our health care system, the cost of a hospital stay can exceed the value of a family’s home.
When it was time for my kids to choose a college, I already knew how much it would cost. We can decide which of the various tuitions are “worth it”. We made a payment plan using bank accounts, money saved in a college savings plan, some financial aid, a student job, and some money borrowed from a grandparent. (Yes, we had enough resources to make financially considered choices.)
Think about how different educational loans are from those spent on health care. In one case, profiled by KHN, the parents of twins, who were born at 30 weeks, faced an out-of-pocket bill of nearly $80,000 for neonatal intensive care 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 an intestinal obstruction that required multiple surgeries. They had to declare bankruptcy and lose their home. Even small bills lead to trashed credit ratings, cash in retirement accounts, and second jobs; In the survey, half of US adults said they didn’t have enough cash to pay an unexpected $500 medical bill.
In “medical debt,” patients simply sign the vague financial agreement that has become ubiquitous in American health care: “I agree to pay for charges my insurance does not cover,” arriving at an emergency room or doctor’s office, presented with a stack of forms to be signed. . But no one can fully consider options or say “no” to care during pain or medical distress, or even agree to pay precisely unknown amounts.
Student debt causes hardship because it hits people who are just starting careers, with salaries at the bottom of the pay scale, forcing them to delay life choices, such as buying a home or starting a family. But medical debt often comes with medical problems: In a KFF poll, 1 in 7 people with health care debt said they’ve been denied care by a provider because of unpaid bills. Sometimes a bill as small as a few hundred dollars can turn into a collection nightmare.
Meanwhile, the federal government is stepping in to help student loan borrowers. It suspended 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 that it would no longer contract with outside debt collectors and instead deal with defaulters and potential defaulters to better “support borrowers.”
Medical debt collection has generally been outsourced to aggressive private agents and the lucrative medical debt collection industry; There are a few guards. Recently, consumer credit reporting agencies said they would no longer place small medical debt on credit reports and would remove discharged 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 medical debt is sometimes largely discharged by charities, such as RIP Medical Debt and church groups, that will pay pennies on the dollar to make patients’ outstanding medical debt disappear. The absurdity of this fix was shown when comedian John Oliver, in a late-night stunt, cleared the American’s $15 million debt after buying it for $60,000.
But medical debt is no joke and now affects a wide swath of Americans. Governments can act in the short term to relieve this uniquely American type of suffering by buying up the debt at a fraction of the cost. And then, it needs to address its underlying cause: a health care system that denies millions of people adequate care while still being the most expensive in the world.
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