One of the most dysfunctional aspects of America’s dysfunctional health care system is medical debt. Even insured patients today can find themselves saddled with crushing debt from hospital stays. It’s a problem that will only be solved when America finally joins the rest of the advanced world in creating a true universal health care system. In the meantime, the Biden administration has announced a plan that could somewhat ease the problem.
Most importantly, the administration is eliminating medical debt from consideration when determining creditworthiness for federally guaranteed mortgages. This is an eminently reasonable policy change that the private sector should implement as well. Unlike other forms of debt, medical debt isn’t indicative of irresponsibility — just of having the bad luck to get sick in America. To lump the blameless cancer patient together with the reckless credit-card junkie is outrageous.
Significant personal medical debt is a foreign concept to citizens in most of western Europe, where near-universal, largely publicly funded coverage is the norm. In the U.S., meanwhile, health care for most Americans is treated like just another free-market service — if an unusually expensive one. While the Affordable Care Act, or Obamacare, has eliminated the most egregious aspect of that system by making it illegal for health insurers to deny affordable coverage to people with preexisting conditions, even those with insurance still can rack up five- or six-figure debts just from the patient portions or uncovered services.
One study found that Americans as a whole owe at least $195 billion in medical debt. Some $140 billion of that debt has been referred for collection, more than any other kind of debt. About 16 million Americans owe more than $1,000, and 3 million owe more than $10,000. Some of the hardest hit Americans live in red states like Missouri, which have resisted expansion of Medicaid as called for under Obamacare.
Nothing short of a fundamental transformation of America’s health care system will ultimately solve the debt problem, which arises at the intersection of overpriced medical care, stingy insurance practices and dogmatic politics that label any attempt at reform as “socialism.” And so the wealthiest and most economically powerful country in the history of the world continues tolerating a system in which even financially stable and responsible Americans are just one car accident or cancer diagnosis away from bankruptcy.
Congress is too hobbled by partisanship to meaningfully address the issue, but the White House initiative will help. In addition to taking medical debt out of the equation for federally backed mortgages, the plan would review billing and collection practices, and make it easier for veterans to get medical debt cleared.
These moves nibble around the edges of a massive problem, but until America joins the modern world and starts treating health care like a human right instead of a cash commodity, they’re better than nothing.
