KFF/NYT survey demonstrating the burden of medical debt, even with insurance

The Burden of Medical Debt: Results from the Kaiser Family Foundation/New York Times Medical Bills Survey

Prepared by: Liz Hamel, Mira Norton, Karen Pollitz, Larry Levitt, Gary Claxton and Mollyann Brodie
Kaiser Family Foundation, December 2015

Previous Kaiser surveys have found that about a quarter of people say they or someone in their household had problems paying medical bills in the past year, and a 2014 Kaiser report provided a qualitative look at some of the circumstances and consequences of unpaid medical bills through interviews with people who had sought credit counseling for medical debt. But to date, there has been little research providing a quantitative look at the causes of medical bill problems and the impacts they have on people’s families, their finances, and their access to health care.

To fill this gap, the Kaiser Family Foundation and The New York Times conducted an in-depth survey with 1,204 adults ages 18-64 who report that they or someone in their household had problems paying or an inability to pay medical bills in the previous 12 months.

Prevalence of problems paying medical bills among different groups

Insurance status has a strong association with medical bill difficulties, with over half (53 percent) of the uninsured saying they had problems paying household medical bills in the past year. However, as previous surveys have shown, insurance is not a panacea against these problems. Roughly one in five of those with health insurance through an employer (19 percent), Medicaid (18 percent), or purchased on their own (22 percent) also report problems paying medical bills. In fact, overall among all people with household medical bill problems, more than six in ten (62 percent) say the person who incurred the bills was covered by health insurance, while a third (34 percent) say that person was uninsured. Among those with private insurance (either through an employer or self-purchased), their plan’s deductible makes a difference in ability to afford health care bills, with those in higher deductible plans more likely to report medical bill problems than those in plans with lower deductibles (26 percent versus 15 percent).

To explore these relationships further, we used a statistical technique called logistic regression analysis to isolate which demographic characteristics are the strongest predictors of problems paying medical bills when holding other factors constant. In that analysis, income, insurance status, and all 3 measures of health status (being in fair or poor health and having a disability or chronic condition) had a significant and strong association with problems paying medical bills, even after accounting for the influence of the other demographic factors. Having a private insurance plan with a high deductible also remained a significant predictor, even after controlling for other factors, as did being under age 25 and having minor children at home.

Circumstances leading to problems paying medical bills

Among those who report problems paying medical bills, two-thirds (66 percent) say the bills were the result of a one-time or short-term medical expense such as a hospital stay or an accident, while 33 percent cite bills for treatment of chronic conditions that have built up over time. These shares are similar for people who faced medical bill problems with and without insurance coverage.

Asked which types of bills made up the largest share of what they owed, the most common responses are emergency room visits (21 percent) and hospitalization (20 percent), followed by dental care (12 percent) and diagnostic tests like X-rays and MRIs (11 percent).

Among who say their bill problems were the result of a one-time or short-term medical expense, just under one in five (18 percent) cite an accident as the main cause. Most of the others name illnesses, pain, dental issues, or surgery, suggesting that although most bill problems are caused by one-time events, these events are often acute episodes of illness or expensive surgeries, medications or tests, rather than injuries caused by accidents.

Financial status of those with bill problems

About three in ten (31 percent) of those with medical bill problems say the total amount of the bills they had problems paying was $5,000 or more, including 13 percent who report bills adding to at least $10,000.

Many of those with medical bill problems report struggling with bills of lower amounts, including 24 percent of the insured and 22 percent of the uninsured who say their bills amounted to less than $1,000. While these lower amounts may seem small, even a bill of $500 or less can present a major problem for someone who is living paycheck to paycheck. In fact, when asked to describe their financial situation, about six in ten (61 percent) of those who’ve had problems paying medical bills say they either just meet their basic expenses (43 percent) or don’t have enough to meet basic expenses (18 percent).

Even among the insured, those who have faced medical bill problems are significantly more likely than their counterparts who haven’t had such problems to say they are either just getting by or don’t have enough to make ends meet (55 percent versus 22 percent).

Compared to those without medical debt, those who’ve had medical bill problems are also less likely to say they have a credit card (53 percent versus 77 percent), a retirement savings account (43 percent versus 62 percent), or some other type of savings (17 percent versus 38 percent).

About three in ten (29 percent) say that someone in their household had to take a cut in pay or hours as a result of the illness that led to the medical bills, either because of the illness itself or in order to care for the person who was sick.

Medical bill problems among those with health insurance

While problems paying medical bills are more common among the uninsured, more than six in ten (62 percent) of those who had problems paying medical bills say the person who incurred the bills was covered by health insurance when treatment began.

Of those who were insured when the bills were incurred, three-quarters (75 percent) say that the amount they had to pay for their insurance copays, deductibles, or coinsurance was more than they could afford.

About three in 10 (32 percent) of those who had problems paying medical bills while insured say they received care from an out-of-network provider that their insurance wouldn’t pay for. For many, these bills came as a surprise.

About a quarter (26 percent) of the insured who had medical bill problems say they had a claim denied by their insurance company.

The impact of medical bills on families

Among those with medical bill problems, almost identical shares of the insured (44 percent) and uninsured (45 percent) say the bills have had a major impact on their families.

A few groups among those with medical bill problems are more likely to say the medical bills have had a major impact on their families, including people with bills amounting to $5,000 or more (66 percent), those who say the family member who generated the bills has a disability (57 percent), and those who describe their financial situation as not having enough to meet basic expenses (56 percent).

Sacrifices made to pay medical bills

Even among those with health insurance, people who’ve faced medical bill problems report making various sacrifices in order to pay these bills, including significant changes to their employment, financial situation, or lifestyle. Overall, about seven in ten report cutting back or delaying vacations or major household purchases (72 percent) as well as reducing spending on food, clothing and basic household items (70 percent). About six in ten (59 percent) say they used up all or most of their savings in order to pay medical bills. Substantial shares say that someone in their household took on an extra job or worked more hours (41 percent), borrowed money from family and friends (37 percent), or increased their credit card debt (34 percent). Roughly a quarter (26 percent) say they took money out of a retirement, college, or other long-term savings account. Smaller – but not inconsequential – shares say they changed their living situation (17 percent), took out another type of loan (15 percent), borrowed from a payday lender (13 percent), or sought the aid of a charity or non-profit (12 percent) in order to pay medical bills.

These sacrifices are reported by people in all walks of life, and not just the uninsured or those with precarious financial situations.

Effects of medical bills on ability to get needed health care

Overall, about three in ten (31 percent) of those who faced problems paying medical bills say they had problems getting other health care they needed directly as a result of these problems.

More broadly, many of those with medical bill problems report delaying or skipping health care over the past 12 months because of the cost – at rates 2 to 3 times those of their counterparts who did not have problems paying medical bills, regardless of their insurance status.

Effects of medical bills on household finances and ability to afford basic needs

Medical bills can also lead to problems meeting other financial obligations and paying for basic necessities. Among those with medical bill problems, about six in ten of both the insured (62 percent) and the uninsured (62 percent) say they’ve had difficulty paying other bills as a result of medical debt. Over a third in each group (34 percent of the insured and 39 percent of the uninsured) say they were unable to pay for basic necessities like food, heat, or housing as a result of medical bills.

Most of those with medical bill problems report having other kinds of debt, including credit card debt (56 percent), car loans (46 percent), student loans (33 percent), mortgages (32 percent), payday loans (17 percent), and other outstanding loans (31 percent).

For some of those with problems paying medical bills, medical debt makes up a large share of their total debt. About one in five (22 percent, including 17 percent of the insured and 34 percent of the uninsured) say their medical bills represent all or almost all of their total non-mortgage debt.

The survey also finds that once medical bill problems start, it can be difficult to make them stop, and that for some, medical bills can start a cascade of other bill problems.

While almost half (47 percent) say they’ve also had problems paying other unrelated bills in the past year, medical bills appear to be either the sole problem or the main trigger of bill problems for the other half, including 31 percent who say they’ve only had problems with medical bills, not other types of bills, and 19 percent who say their problems paying other bills started as a result of their medical bills.

Financial consequences of struggling to make payments

Once a person has problems paying medical bills, their insurance status appears to make little difference in their ability to pay bills on time. Among those with medical bill problems, similar shares of the insured and uninsured say they’ve been late on a payment (62 percent and 63 percent, respectively) or missed a payment (55 percent and 61 percent) for a medical bill in the past year.

Likely as a result of missed or late payments, almost six in ten (58 percent) of those with medical bill problems say they’ve been contacted by a collection agency in the past year, mostly because of medical bills alone (25 percent) or a combination of medical bills and some other type of debt (20 percent).

Overall, 11 percent say they’ve declared bankruptcy at some point and that medical bills were at least a partial contributor to their bankruptcy.

From the Conclusion

Insurance features like cost-sharing, provider networks, and confusing billing practices can all lead to medical bill problems among the insured. While higher deductibles and other forms of cost-sharing have helped to keep health insurance premium growth at historically low levels in recent years, the survey highlights the consequences these changes can have for people.

The survey also shows that medical bill problems can have real and often lasting impacts on individuals and families in terms of their standard of living, their financial stability, and their ability to access needed health care. While insurance provides some protection against incurring medical bill problems in the first place, once these problems occur, the effects on individuals and families are often as serious for the insured as they are for the uninsured.

Full report (32 pages):



By Don McCanne, M.D.

These excerpts from the Kaiser Family Foundation/New York Times Medical Bills Survey of adults 18 to 64 confirm once again that our multi-payer health insurance system falls far short in preventing financial insecurity for those with medical needs. This survey expands on our knowledge base by demonstrating the deplorable consequences of the financial hardships created by this system.

These deficiencies cannot be corrected by merely tweaking our current dysfunctional financing system. A massive infusion of funds would be required under the current system if we wish to reduce the negative financial consequences, but the political and policy communities currently oppose any increase in spending. In fact, their current approach is to control spending by increasing barriers to care through unaffordable cost sharing and narrower networks designed to reduce access. Obstructing access to care might reduce spending, but preventing beneficial health care is the opposite of what a health care financing system should be doing.

Think of that. It is bad enough that people have the misfortune to suffer medical disorders, yet we add to that grief by perpetuating a system that dumps personal financial hardship on top of their medical misfortunes.

The efficiencies of a single payer system would save enough to more assuredly enable access to appropriate health care services by removing cost-sharing barriers to care, not to mention the benefit that absolutely everyone would be included. What are we waiting for? The status quo is unequivocally unacceptable.