Problems Paying Medical Bills Increase for U.S. Families Between 2003 and 2007

Problems Paying Medical Bills Increase for U.S. Families Between 2003 and 2007

1 in 5 Americans Faced Medical Bill Problems in 2007, up from 1 in 7 in 2003

News Release
Sept. 24, 2008

FURTHER INFORMATION, CONTACT:
Alwyn Cassil (202) 264-3484 or [email protected]

WASHINGTON, DC -- The share of Americans living in families that struggled to pay medical bills rose to 19.4 percent in 2007, a notable jump from 15.1 percent in 2003, based on a national study published by the Center for Studying Health System Change (HSC) with funding from The Commonwealth Fund.

This increase means that over 57 million Americans were part of families experiencing medical bill difficulties in 2007 -- a surge of 14 million individuals compared to 2003, according to data from HSC's 2007 Health Tracking Household Survey, a nationally representative study covering information on 18,000 people with a 43 percent response rate.

Although the rate of medical bill difficulties held steady for elderly Americans, a growing number of nonelderly individuals -- whether insured or uninsured -- encountered medical bill challenges in 2007, the research revealed. And while uninsured people experienced medical bill problems at much higher rates, the majority of those facing such issues -- 42.5 million -- actually had insurance coverage.

"Rising difficulties with medical bill payments are hitting not just the groups that have traditionally struggled with healthcare expenses -- low-income and uninsured individuals -- but also a growing proportion of insured middle-income families," noted study author Peter J. Cunningham, Ph.D., an HSC senior fellow.

Roughly 2.2 million individuals who faced medical bill problems belonged to families that declared bankruptcy due to their healthcare debts, and a considerably larger number experienced other financial repercussions, including difficulties affording food and housing. Similarly, people struggling with medical bills -- regardless of insurance status -- reported substantially elevated levels of unmet medical needs in the prior year attributable to costs, compared with those who did not have medical bill problems.

"The rise in medical bill difficulties -- particularly among those with insurance -- is the primary driver behind the increase in people reporting unmet medical needs due to cost in 2007 compared with 2003," Cunningham stated.

The complete findings from this study are presented in a new HSC Tracking Report -- Trade-Offs Getting Tougher: Problems Paying Medical Bills Increase for U.S. Families, 2003-2007.

Additional key findings from the study include:

Primary Causes of Medical Bill Difficulties

Approximately 60 percent of individuals indicated that their medical bill difficulties stemmed from illnesses affecting family members, while 28.6 percent attributed their bill problems to an accident or injury. About 8 percent of people stated that the birth of a child was the source of their medical bill challenges.

Insurance Status and Medical Bill Problems

Nonelderly Americans without insurance were more likely to live in families experiencing medical bill difficulties (34.4%) than their insured nonelderly counterparts (18.3%). Among individuals enrolled in Medicaid or other state-sponsored coverage programs, 28.4 percent reported having problems paying medical bills.

Medical Bill Problems Across Income Levels

The percentage of Americans struggling with medical bills grew across every income bracket between 2003 and 2007, including those with moderate and higher household incomes. On the whole, the prevalence of medical bill difficulties was greater among lower-income individuals -- 31.8 percent in 2007 for those earning below 200 percent of the federal poverty level, equivalent to $41,300 for a family of four in 2007 -- in contrast to 12.4 percent for people in families with incomes at or above 400 percent of the poverty threshold.

How Insurance Impacts Low- Versus High-Income Families

The elevated rate of medical bill problems among low-income individuals reflects both a larger proportion of uninsured people in this group and the reality that having insurance coverage appears to make less of a difference in preventing medical bill problems for those with low incomes. Among low-income Americans, 36.1 percent of the uninsured reported medical bill difficulties compared with 30 percent of those who had coverage. By contrast, among higher-income individuals, uninsured people were three times as likely to experience medical bill problems (32.3%) compared with their insured counterparts (10.7%).

Range of Medical Debt Amounts

The amount of outstanding medical debt varied widely, with roughly one-quarter of those affected carrying debt under $800 and another quarter owing approximately $5,000 or more. Around 10 percent had accumulated medical debt of $12,000 or higher.

Financial Consequences of Medical Bill Problems

In both 2003 and 2007, the vast majority of individuals in families experiencing medical bill difficulties were forced to make significant sacrifices, including two-thirds who had trouble paying for basic necessities like food, clothing, mortgage, or rent, and more than half who deferred major purchases. Additional financial impacts included 62 percent being contacted by a collections agency and over half needing to borrow money to cover their medical expenses.

Provider Assistance Measures for Patients With Medical Bill Problems

Among individuals who reported difficulties paying medical bills, more than half said their healthcare providers proposed a payment plan to help them settle the outstanding charges. Other provider-initiated actions were far less commonly reported: offering a reduced rate (16.2%), directing patients to free care resources (6.8%), informing them about public assistance programs (14.6%), recommending that patients obtain a loan (11.5%), and referring patients to a different provider (7.1%).

Effectiveness of Provider Assistance in Reducing Unmet Needs

When researchers analyzed how these provider assistance measures correlated with unmet medical needs, only one intervention -- being told about sources of free care -- was linked to a lower rate of unmet medical needs attributable to cost. Among those whose provider informed them about free medical care options, 9.2 percent reported unmet medical needs because of cost, compared with 14.7 percent of all individuals experiencing medical bill problems.

The Center for Studying Health System Change was a nonpartisan policy research organization dedicated to delivering objective and timely analysis of the nation's evolving health system in order to guide policy makers and support better health care policy. HSC, headquartered in Washington, D.C., received its primary funding from the Robert Wood Johnson Foundation and was affiliated with Mathematica Policy Research, Inc.

Sources and Further Reading

The Commonwealth Fund — Health Care Costs Research — The Commonwealth Fund co-funded this HSC study and publishes ongoing research on medical bill burdens and health care affordability for American families.

U.S. Census Bureau — Health Insurance Coverage Data — Federal poverty level thresholds and uninsured population estimates referenced throughout this study are derived from Census Bureau data.

CMS — National Health Expenditure Data — Centers for Medicare and Medicaid Services tracks national health care spending growth, the underlying driver of the medical bill problems documented in this research.

Robert Wood Johnson Foundation — RWJF provided principal funding for the Center for Studying Health System Change and the Health Tracking Household Survey used in this analysis.

KFF — Medicaid and Insurance Coverage Research — This study references Medicaid enrollment and insurance status data. KFF publishes extensive research on public insurance programs and their role in reducing medical bill burdens.