Medical Debt

One in five Southerners holds medical debt in default, reaching up to 40-50% of residents in some Southern counties.

Share of individuals with medical debt in collections 

December 2020

Source: Urban Institute, Kaiser Family Foundation. Note: Universe is people with a credit bureau record. Debt in collections includes past-due credit lines that have been closed and charged-off on the creditor’s books as well as unpaid bills reported to the credit bureaus that the creditor is attempting to collect.

Before Covid struck, 18% of Americans carried medical debt, with Southerners carrying the highest average medical debt amounts. States that expanded Medicaid by 2014 saw a greater decline in medical debt among their residents than did states that failed to expand Medicaid.1 By December 2020, credit bureau data revealed that 20% of Southerners had medical debt, compared to 13% for non-Southerners. In some Southern counties, 40-50% of individuals have medical debt in collections. Three Southern states topped the list with the highest percent of individuals reporting medical debt: 27% in West Virginia, 25% in South Carolina, and 23% in Louisiana (where Medicaid expansion happened in 2016 — later than other states).

Southern Economic Advancement Project’s (SEAP) November 2021 survey found that more than half of respondents had experienced challenges with debt during Covid.2 Individuals with debt in collections often struggle to get credit for other purchases and are sometimes barred from employment opportunities.3 The largest credit agencies recently announced most medical debt would no longer appear on credit reports.4 This month, the White House announced new efforts to diminish the negative impacts of medical debt, including no longer considering medical debt when individuals apply for federally-backed home loans and by scrutinizing the collection efforts of those medical providers that receive federal funding.5

  1. “Medical Debt in the US, 2009-2020”. Kluender, Mahoney, Wong, et al. JAMA Network. July, 2021. https://jamanetwork.com/journals/jama/fullarticle/2782187  

  2. “Two years into the pandemic, Southern families’ struggle with housing weighs heavy as lawmakers begin ARP spending plans”. The Southern Economic Advancement Project. March, 2022. https://theseap.org/wp-content/uploads/2022/03/ARP-Survey-Release_March_2022.pdf 

  3. "Can Medical Debt on My Credit Report Be Used to Deny Employment?" Mancini. PocketSense. December, 2019. https://pocketsense.com/can-medical-debt-credit-report-used-deny-employment-18379.html 

  4. "Most Paid Medical Debt Is About To Be Removed From Credit Reports: Here's What's Changed". Allen. Health. March, 2022. https://www.health.com/money/medical-debt-credit-report 

  5. "FACT SHEET: The Biden Administration Announces New Actions to Lessen the Burden of Medical Debt and Increase Consumer Protection". White House. April, 2022. https://www.whitehouse.gov/briefing-room/statements-releases/2022/04/11/fact-sheet-the-biden-administration-announces-new-actions-to-lessen-the-burden-of-medical-debt-and-increase-consumer-protection/

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