You may have heard about this. President Biden cancelled about $1.2bn in student debt for over 153,000 people in the US a few weeks ago.
In fact, student debt and the forgiveness thereof has been a major focus for the Biden administration for a few years now. Naturally, in this polarised political environment, states objected on the grounds that it was ‘an overreach of his authority and an unfair benefit to college-educated borrowers while other borrowers received no such relief’. The details of Biden’s debt relief plan were such that, under the plan, the US government would forgive ‘up to $10,000 in federal student debt for Americans making under $125,000 who obtained loans to pay for college and other post-secondary education, and $20,000 for recipients of Pell grants to students from lower-income families’. While that original vision has not transpired to plan, he has managed to chip away and provide significant relief to millions of Americans.
Why is this important?
Because the next thing he should do is cancel medical debt for Americans.
In a recent analysis of government data prepared by the Kaiser Family Foundation, it is estimated ‘that people in the US owe at least $220bn in medical debt. Approximately 14 million people (6% of adults) in the US owe over $1,000 in medical debt’.
And about three million people (1% of adults) owe medical debt of more than $10,000.
In a 2019 research article published in the American Journal of Public Health, the authors conducted a survey with a total of 910 respondents who had all declared bankruptcy in the recent past. The results of their research showed that 66.5% of their sample had cited direct medical expenses or medical illness(es) leading to job losses as the reason for their bankruptcy declaration.
And here’s another thing to think about: wage growth has not kept up with medical costs. In other words, the cost of healthcare is growing faster than our incomes. As with all things healthcare-related, it’s one slap in the face after another.
But where is all this debt hidden? You don’t see it. I don’t see it. The Chairman of Federal Reserve doesn’t ever mention it. Is it tied up in personal loans or lines of credit? Credit card bills? Second mortgages? Nope. Of all medical debt in the US, 28% is owed directly to a hospital and 73% of US adults owe some or all of their debt to a hospital.
Yes, the Affordable Care Act helps. Yes, expanded insurance helps. Yes, the use of in-network providers helps. But it’s not enough. Not even close.
Let’s take a step back and frame this medical debt issue. In 2022, the New Zealand government announced a lifetime ban against smoking for anyone born after 1 January 2009, thereby preventing them from ever purchasing cigarettes in New Zealand. The plan has since been repealed by a new government but, at the time, it was hailed as one of the most aggressive public health initiatives ever and, potentially, a model for other countries to quickly replicate.
What does this have to do with medical debt?
Complete medical debt eradication has the same public health potential. We know that communities of colour and low-income families are disproportionately affected by medical debt. It creates inequity. Or, perhaps more aptly, it perpetuates inequity.
I don’t have all the answers. But given that some or all of 75% of US medical debt is owed to federally funded hospitals, there is a potential path to easing the burden. The lost hospital revenue would have to be funded from somewhere else because hospitals are reliant on their customers paying their bills in order to keep the lights on. I get it.
There will be vociferous complaints, like we saw with the student debt relief issue. It will become heavily polarised. And like the student debt relief issue, it may reach the US Supreme Court. Many will cry foul. Many will complain that they get no similar benefit. And we will remind those people that they are not sick. That they have not lost their livelihood. And that they are not saddled with crushing, suffocating medical debt.
That is their benefit.
References are available on request.
This column appeared in the March edition of PME. Read the full issue here.
