100 million Americans carry medical debt. It's the leading cause of personal bankruptcy in the U.S. No other wealthy country has this problem. Here's how medical debt works and why it persists.
Educational content only — not personalized financial, legal, or tax advice.
Approximately 100 million Americans — nearly one in three adults — carry some form of medical debt, according to a 2022 KFF/NPR survey. Total U.S. medical debt is estimated at $220-500 billion depending on measurement methodology. Medical and health-related financial problems are the leading cause of personal bankruptcy filings in the United States — accounting for an estimated 66% of personal bankruptcies in research by Elizabeth Warren and colleagues.
This phenomenon does not exist in any other wealthy country. A German who has a heart attack does not receive a bill. A Canadian with cancer does not face financial ruin from treatment costs. The medical debt crisis is a direct consequence of the U.S. healthcare system's combination of high prices, incomplete insurance coverage, and high cost-sharing.
This connects to why U.S. healthcare costs 2x other countries and the structural causes of high prices](/article/why-u-s-healthcare-costs-2x-other-countries) and to Hospital Billing.
Medical debt can hit even insured Americans:
High-deductible health plans: The average employer-sponsored health plan deductible in 2023 was $1,763 for individual coverage. High-deductible health plans (HDHPs) paired with Health Savings Accounts (HSAs) have grown to cover over 55% of insured workers. Deductibles of $3,000-7,000 are common. A single hospitalization or surgery can expose a patient to thousands in out-of-pocket costs even with insurance.
Out-of-network care: As discussed in the hospital billing article, out-of-network care — emergency situations, non-choice of providers, balance billing — generates unexpected large bills.
Underinsurance: Being insured but having inadequate coverage. A cancer patient in an underinsured plan might face $10,000+ in annual out-of-pocket costs even after insurance pays its share.
The uninsured: Despite ACA expansion, approximately 25-30 million Americans remain uninsured. An uninsured patient hospitalized for three days might face a $30,000-80,000 chargemaster bill, of which they're expected to pay the full amount (minus charity care if they qualify and know to apply).
Credit damage: Until 2023, medical debt appeared on credit reports like any other debt. The three major credit bureaus announced in 2022-2023 that they would remove paid medical debt and medical debt under $500 from credit reports. CFPB has proposed removing all medical debt from credit scoring models.
Collection abuse: Medical debt has historically been aggressively collected — wage garnishment, liens on homes, lawsuit judgments. The CFPB has documented numerous cases of hospitals suing patients for debt immediately after discharge. Some nonprofit hospitals — which receive tax exemptions in exchange for community benefit commitments — have sued thousands of low-income patients.
Forgone care: The most consequential effect. Studies consistently show that medical debt leads patients to delay or forgo necessary care — skipping medications, avoiding follow-up appointments, declining recommended procedures. The short-term financial pressure creates long-term health deterioration and ultimately higher healthcare costs.
Significant reforms have occurred since 2020:
None of these reforms address the underlying cause: a healthcare system with prices high enough to generate catastrophic debt even for the insured.