of President Joe Biden election promise to cancel student debt for the first $10,000 owed on federal college loans has raised debate about the fairness of these loan programs. While just over half of Americans surveyed in a June poll in favor of canceling such debt incurred for higher education, 82% said that making college more affordable was their preferred approach.
But little public attention has focused on what is – statistically, at least – a bigger and broader debt crisis in our country: about 100 million people in the United States, or 41% of all adults, have health care debt, compared to 42 million who have student debt.
The millions under the weight of medical debt deserve help, both because medical debt is a particularly unfair form of predatory lending and because of its devastating ripple effects on American families.
Unlike school fees or other types of debt, expenses for medical treatment are generally not something we can plan ahead and decide – yes or no – to take on. They are imposed on us by illness, accidents and bad luck. Medical treatment generally has no predictable upfront cost and there is no cap on what we might owe. And, given the prices in our healthcare system, the amount may be more than the value of the family home if incurred for a hospital stay.
When it was time for my kids to choose a college, I knew in advance almost exactly what it would cost. We could decide which of the different tuition fees was “worth it”. We planned to pay the amount using bank accounts, money saved in college savings plans, financial aid, student employment and loan money from a large -parent. (Yes, we had enough resources to make a financially conscious choice.)
Think about the difference between student debt and health care debt. In one case, described by KHN, parents of twins, born at 30 weeks, faced bills of around $80,000 stemming from neonatal intensive care costs and other care that insurance did not cover. . In another case, a couple ended up owing $250,000 when one spouse went to the emergency room with a bowel obstruction that required multiple surgeries. They had to declare bankruptcy and lost their house. Even smaller bills lead to trashed credit scores, cashing in retirement accounts and taking on second jobs; in polls, half of adults in the United States say they do not have money to pay an unexpected medical bill of $500.
By “assuming” medical debt, patients sign only the kind of vague financial agreement that has become ubiquitous in American health care: “I agree to pay the costs that my insurance does not cover,” featured on the pile of forms to sign. arrived at the emergency room or at a doctor’s office. But no one can fully consider the options or say “no” to care for pain or medical distress or even properly agree to pay an unknown amount.
Student debt causes hardship because it hits people just starting a career, with salaries at the bottom of the pay scale, forcing them to put off life choices, like buying a home or starting a family. But medical debt often comes with all of that, plus medical issues: In a KFF survey, 1 in 7 people with healthcare debt said they had been denied care by a provider because unpaid bills. Sometimes an invoice for as little as a few hundred dollars can turn into a collections nightmare.
Already, the federal government is stepping in to help student borrowers. He suspended student debt payments during the pandemic, and the Biden administration announced that it cancel the student debt of tens of thousands of people public sector workers. At the end of last year, the Ministry of Education announced that it would no longer contract with outside debt collectors, but rather handle defaults and potential defaults itself to better “support borrowers”.
Medical debt collection has typically been outsourced to aggressive private agents and the for-profit medical debt collection industry; there are few guards. Recently, consumer credit reporting agencies have stated that they no longer incur small medical debts on credit reports and remove medical debts that have been paid. For many people, this will take years. Some 18% of Americans with health care debt said they never expected to be able to repay their debt.
The irony here is that medical debt is sometimes paid off en masse by charities, like RIP medical debt and religious groups, which will pay pennies on the dollar to wipe out patients’ outstanding medical debt. The absurdity of this fix was demonstrated when comedian John Oliver, in a late night waterfallerased $15 million of American debt after buying it for $60,000.
But medical debt is no joke and is now hurting a wide range of Americans. The government could act in the short term to alleviate this uniquely American form of suffering by buying up the debts at a low price. And then, he must tackle the underlying cause: a health system that deprives millions of people of adequate care while being the most expensive in the world.
