Medical debt hitting Black households hardest
A recent study found that even with insurance, Black populations are carrying a disproportionate amount of debt.
A new report by the Brookings Institute shows striking class and racial inequities in the area of medical debt, where nearly 80% of medical debt is held by households with zero or negative net worth, and Black households have medical debt at a rate of nearly 10 percentage points higher than non-Black households.
The study, which used Census data to gauge levels of medical debt, noted that racial inequities in the labor market has had a significant impact on the health of Black Americans, especially since the beginning of the COVID-19 pandemic. Black workers are more likely to be employed in jobs considered essential, the study noted, including areas such as transit, factories, retail, health care facilities, and childcare. Lack of insurance, or under-insurance—where workers may have some form of medical insurance but face copays or other out-of-pocket expenses that are onerous for low-income workers—continues to be a problem.
Related: Medical debt: The latest post-pandemic crisis?
The Brookings study noted that 30 million Americans had no health insurance at the height of the pandemic in 2020. And research shows that people of color are more likely to be uninsured in the U.S. than Whites.
It all adds up to a crippling debt problem for millions of Americans, the Brookings study found. “Nearly one in five households have medical debt,” the report said. “And most estimates put the number between $81 and $140 billion, although some put it as high as $1 trillion. According to our analysis, 18.5% of households have medical debt.”
In addition, the average amount of medical debt is approximately $20,500. The median amount of medical debt is around $2,000, suggesting that many households carry smaller amounts of debt, but some carry significantly higher amounts of debt.
Low-income and Black households carry much of the nation’s medical debt
The study found that nearly 80% of medical debt is held by households with zero or negative net worth. And race, as well as income, is linked to higher medical debt.
“Black households are more likely to hold medical debt,” the study said. “Twenty-seven percent of Black households hold medical debt compared to 16.8% of non-Black households. These findings corroborate a 2020 Urban Institute report that found medical debt was also higher and more concentrated in communities of color than in White communities.”
In addition, the research showed that even when Black households had health insurance, medical debt was still a problem—suggesting that their insurance options were less able to protect them from things like out-of-pocket expenses and surprise medical billing.
The data showed that 35.1% of non-Black households that lacked insurance held medical debt, while only 16% of non-Black household with insurance held medical debt. For Black households, the numbers for insured and uninsured were nearly even: 26.3% of Black households without insurance held medical debt; 26% of Black households with insurance held medical debt.
Addressing the problem of medical debt
The Brookings analysis concludes with policy suggestions for addressing the problem of medical debt in the U.S. The authors note that the U.S. system of providing health insurance through employers has several features that likely contribute to the medical debt problem, including the reality that low-income jobs often do not offer adequate insurance options.
“Incentivizing employers to sponsor health insurance has only served to widen racial, ethnic, and income inequities in access to health care—a direct result of systemic racism,” the report said. “Low-wage essential and frontline workers are chronically underinsured, often because they work in low-wage jobs that do not provide fringe benefits such as health insurance or paid sick leave. As a result, high out-of-pocket medical costs such as co-payments, insurance premiums, and deductibles disproportionately affect these communities.”
The writers say blame also rests on the fee-for-service model common in the U.S. health system, and the general practice of cost-sharing, which pushes more costs onto consumers, regardless of their level of wealth or income.
The study urges a re-examination of the current U.S. system and said that if the country moves toward universal health coverage, it must change these foundational practices in order to find more equitable solutions to problems such as medical debt.
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