SLC Regional Resource | May 2020

A Review of Medical Debt and its Impact on Southern States

Roger Moore

As healthcare costs continue to rise, the financial repercussions for many Americans materialize in the form of expensive and, often, unpaid medical bills. Studies and surveys consistently show that medical debt has a significant impact on millions of people and can influence a number of important financial decisions, such as purchasing homes, borrowing money to pay for care, using credit cards to cover medical expenses and, in worst-case scenarios, declaring bankruptcy after all other measures have been exhausted. It is not uncommon for collection agencies to pursue medical debts that remain unpaid, negatively affecting consumers’ credit reports.

The uninsured — almost 9 percent of the nation’s total population in 2018, according to U.S. Census Bureau data — are vulnerable to high healthcare costs. However, even those with some form of insurance coverage face difficulties covering medical expenses. Due to increasing premiums and deductibles, along with a general lack of transparency that obfuscates the costs of healthcare services and products, the insured also face challenges related to medical billing and expenses. In fact, in many households that experience difficulties paying for medical care, the bills are for an individual who was insured when treatment began.

Studies indicate that people living in SLC states struggle with unpaid, overdue medical bills more than those in other regions. Although numerous circumstances influence an individual’s ability to pay for medical care, the South’s struggles may be connected to three factors:

  1. Lower household incomes;
  2. High out-of-pocket expenses and premium contributions, relative to household income, for employer-sponsored insurance; and
  3. Lower health insurance coverage rates.

This SLC Regional Resource provides an overview of medical debt and details the disproportionate impact it has on Southern states. As affordability challenges continue to dominate the healthcare debate, it is important for policymakers to examine the underlying problems that contribute to medical debt and what actions can be taken to mitigate them.