Diagnosed with Debt: Many Americans face financial hardships from crushing unpaid medical bills

Medical debt is among the highest for families living in low-income communities in the South
Published: Apr. 18, 2022 at 4:24 PM CDT

InvestigateTV - Dialysis. Chemotherapy. A broken arm. Every day Americans make critical decisions about medical care. For some, those decisions lead to thousands of dollars of debt.

More than 17% of Americans had an outstanding medical bill in collections in 2020, according to a new study by the Journal of American Medical Association.

The typical bill for various procedures was more than $2,000 in the last year. Overall, one in three American adults carry some amount of medical debt, according to Healthcare.com

Experts Investigate TV spoke with said medical bills can lead to poor credit scores, wage garnishments, and anxiety.

The anxiety is familiar to Rochelle Jordan, a single mother of four living in Phoenix, Arizona. On her way to work in 2012, Jordan said she suddenly felt dizzy, which led her friend to call the paramedics. An ambulance took her to a nearby hospital for care.

While Jordan said she doesn’t recall what her diagnosis was that day, she didn’t forget the cost of her emergency visit.

“I believe the paper said $3,000,” Jordan said. “I mean just going to the doctor itself, it’s like a lot of money, and it’s like, ‘how can we afford this?’”

According to Affordable Health Insurance, 1 in 4 Americans owes more than $10,000 in medical debt.

Jordan works at a fast-food restaurant to make ends meet for her family. For the next nine years, Jordan said the medical bills hung over her head.

Jordan like many other Americans is trying to make ends meet for her family. For years she had...
Jordan like many other Americans is trying to make ends meet for her family. For years she had thousands in debt following a trip to the emergency room.(Rochelle Jordan)

“I need good credit so that way my kids and myself can have a place to stay,” Jordan said.

Jordan’s concern about unpaid medical bills affecting her credit score was not unfounded – especially if those bills end up in collections. According to the Consumer Financial Protection Bureau, medical debt accounts for 58% of all the bills in collections, which means they are at least 90 days past due.

Debt across the country

Nationally, 14% of Americans have medical debt in collections.

That percentage does not include all medical bills owed to health care providers, just those sold to collection agencies.

Overall, Americans with medical debt in collections owe an average of $700, according to the Urban Institute, a nonprofit research organization that mapped medical debt in the U.S.

The Urban Institute’s map shows data related to credit health measures collected during the...
The Urban Institute’s map shows data related to credit health measures collected during the pandemic from February 2020 to August 2021. This is just a snapshot of what medical debt sent to collections can look like across the country.(The Urban Institute)

CLICK HERE TO EXPLORE THE INTERACTIVE MAP

That analysis shows 15.3% of Arizona residents like Jordan have a medical debt listed on their credit reports as of last August.

The same data shows one in four West Virginians has medical debt in collections.

South Carolina, Oklahoma, Louisiana, and Texas have the highest percentages of debt in collections. In Georgia, it’s 19% of the population.

The U.S. Department of Health and Human Services released a report in February that said that millions of lower-and middle-income Black families enrolled in health insurance marketplaces saw their premiums lowered or eliminated because of the American Rescue Plan of 2021.

In Wyoming, 28.1% of communities of color are likely to accumulate medical debt in collections compared to white communities.

Non-profit relief

Some Americans are finding relief from a non-traditional source – an organization founded by former debt collectors designed to erase the medical debt.

In 2014, Craig Antico and Jerry Ashton – those former debt collectors - started the nonprofit, RIP Medical Debt, which helps pay off medical debt for low-income Americans.

Their debt relief agency uses donations to buy large amounts of medical debt from hospitals and collection agencies with the goal of helping those in financial stress.

“It’s the number one cause of bankruptcy across the country,” said Allison Sesso, executive director of RIP Medical Debt. “It is something that burdens everyday Americans all the time. Nobody is really immune to it.”

According to Sesso, connections in the health care industry help the nonprofit identify hospitals and medical providers holding large amounts of outstanding debt. RIP Medical Debt will then purchase that debt from the hospitals.

Then it randomly selects families in desperate need – those making less than two times the federal poverty level – and abolishes their debt.

Those selected for help don’t know it until they receive a letter in the mail from RIP Medical Debt that says in part that they “no longer have any obligation to pay [their] debt to anyone, at any future time.”

ABOVE: A sample RIP Medical Debt letter families get in the mail after their medical debt has been paid off.

Rochelle Jordan in Arizona received one of those letters.

“It’s like a present, you know like Christmas,” Jordan said. “You don’t know what is until you open it up.”

Because there is no way to apply for help from an organization like RIP Medical Debt, Jordan knows she is one of the lucky ones.

“This is the smile of a person that is happy to be cleared off that debt.”

Since 2014, RIP Medical Debt has paid off about $6 billion.

Campaign contributions

RIP Medical Debt isn’t just a national organization, it is driven by local organizers like Rita Krenz.

As a critical care flight paramedic in Virginia, she knows an unexpected trip to the hospital can leave a person with crushing financial debt.

Krenz works in healthcare as a flight paramedic. She understands the burden families face with...
Krenz works in healthcare as a flight paramedic. She understands the burden families face with medical bills, so she started her own campaign to raise money to help others in Virginia.(InvestigateTV)

“An ambulance is going to send a bill, the emergency department sends a bill, the radiologist who reads your CTs and your x-rays is probably going to send a bill,” Krenz said.

She said she is proud of the health care system in this country, but understands what a financial burden it can be. In her home state of Virginia, 16% of people have medical debt in collections.

Krenz said that’s when she decided to do something about it.

“I started learning about exactly how big of an impact just a little debt can have,” Krenz said.

After spending months researching, Krenz said she learned RIP Medical Debt helps people like her start local campaigns in selected areas across the country where they want to help eliminate medical debt.

Krenz’s campaign launched in September 2020 with a goal to raise $15,000.

RIP Medical Debt lets local communities create their own campaigns with set goals in mind....
RIP Medical Debt lets local communities create their own campaigns with set goals in mind. Individuals can create campaigns to hit areas across the country.(RIP Medical Debt)

At first, she thought that number was too large. But family, friends, and anonymous donors helped her soar past that initial amount, and to date she has raised almost $32,000. The donations have helped wipe substantial amounts of debt in several counties she works in: Albemarle, Augusta, Rockingham, Fluvanna, Charlottesville (city), Buckingham, Nelson, and Page.

“I picture them opening the mailbox and getting that letter in and maybe feel a little bit of relief. A burden lightened,” Krenz said.

Medical debt advocacy

Chris Van Haren worked for two decades as a pharmacist in Madison, Wisconsin. She saw first-hand the impact medical bills had on her patients.

In 2019, she switched careers and became a medical advocate, opening her own medical advocacy consulting agency “A Better Way Advocacy”. Medical advocates work with families to educate them on how to navigate the health care system.

Van Haren’s primary focus is assisting families with questions about their insurance and how to file an appeal. She said the need for medical advocates has grown exponentially, and the country is in a medical debt crisis.

“When GoFundMe is the main way that people pay for their medical bills, we know we’re in trouble,” Van Haren said.

She said health literacy is where patients suffer the most. She said clients she meets have a tough time understanding their insurance policies and often miss loopholes in their healthcare plan, sometimes even paying a bill unnecessarily.

WATCH: A walkthrough of how to find a medical advocate.

“So what often happens is we get that first bill, and it doesn’t make sense to us. And we set it so overwhelms us that we set it aside and we think I will handle this later,” Van Haren said.

There are new measures being established at the federal level to help with medical debt.

On April 11th, the White House announced a multi-faceted plan with “actions to protect consumers and lessen the burden of medical debt on American families”. Several of the measures are geared towards alleviating the impact medical debt has on credit scores, along with special aid geared towards veterans with outstanding medical debt.

The No Surprises Act implemented in 2021 creates new federal protections against surprise medical bills for families, to provide transparency for patients in case of emergency.

Private health plans are now required to cover surprise medical bills for emergency services, including air ambulance service and in-network and out-of-network bills.

To keep up with these recent changes, Van Haren suggests insured families take time to understand their insurance plans, co-pays, and the hospitals that are in and out of network.

Families unfamiliar with their bills and charges should call the hospital’s billing department or their doctor’s office to speak with someone who can walk them through the process.

Doctors, hospitals, and clinics also have their own contracts with insurance companies. Van Haren suggests asking what the insurance could cover.

Access to advocates

Patient advocacy is a growing profession and there are advocates across the country who can provide answers for families. According to Zippia, a job searching site, more than 51,000 jobs will be created in the next 10 years.

“Be proactive, you really need to be proactive,” Van Haren said. “It’s your health. Unfortunately, nobody is going to take care of it if you don’t. We have laws in place. We have legislation in place. We have patient advocates available.”

In 2018, the Patient Advocate Certification Board created a certification for patient advocates looking to help families navigate the healthcare system.

Organizations like the Greater National Advocates and AdvoConnection Directory can give families access to a network of independent patient advocates. Prices for services can vary state by state.

There are a few pro-bono advocacy organizations as well. The Patient Advocacy Foundation, The Care Partner Project, and the Center for Patient Partnerships at the University of Wisconsin-Madison both provide free advocacy services and resources for families.

Americans spent more than $3.5 Trillion on health care in 2017, according to a California Health Care Foundation report. That same report projects health care costs to jump to $6 trillion by 2027. The impact of outstanding medical debt on people’s credit scores will lessen over the next year. According to a recent press release, in 2023 the three major credit bureaus (Equifax, TransUnion, and Experian) will stop reporting medical collection debt below $500. RIP Medical Debt sees this as critical relief for people who have been “Diagnosed with Debt”. In a statement, they said, “RIP Medical Debt celebrates this change that will help millions – this course correction is welcome and overdue.”