Addressing America’s healthcare debt crisis

Health care debt has become a burden and scourge for many American families, and a sensible one healthcare Debt proposal that balances relief with fairness and viability is urgently needed.

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According to the Consumer Financial Protection Bureau, half of all delinquent debts are due to credit reports in the United States medical debt. American households today owe $17.5 trillion in debt, and healthcare-related debt is a troubling and rapidly growing portion of that total.

According to Liz Hamel and her colleagues at the Kaiser Family Foundation, 26 percent of adults in the United States between the ages of 18 and 64 said they or someone in their household either had trouble paying medical bills or were unable to pay medical bills at all to pay last year. A Commonwealth Fund survey of 193.5 million American adults ages 19 to 64 found that 24 percent reported having had trouble or being unable to pay medical bills in the past year.

Among major economies, this is a distinctly American problem because of our equally distinct – and outlier – health care system. Millions of families are uninsured, and those who are are increasingly having deductibles of $3,000 or $5,000. In a country where the Federal Reserve reports that four out of ten adults would struggle to meet an unexpected $400 unplanned expense medical expenses and surprise medical bills can set off a debt chain reaction, leaving a household defaulting on credit cards, car loans, student loans, mortgages, and other debt.

Total healthcare debt is difficult to quantify because it can appear in different loan categories: loans originated by hospitals, credit cards, consumer loans from banks, credit unions, and others. Our best guess is that total healthcare debt ranges from $300 billion to $650 billion.

The benefits of a healthcare debt relief program

I propose a simple solution that could provide $100 billion to $200 billion in relief. The following are some of the general benefits of a healthcare debt relief program:

  1. Reimbursement of selected expenses for low-income patients.This would provide a means-tested program that would allow people with household incomes of less than $85,000 to apply to the government to reimburse them for any debt incurred for a select number of critical healthcare expenses — including procedures for diabetes, cancer, and heart diseases.
  2. Drive better care and health outcomes.The exorbitant price of health care has hidden costs that should be included in the analysis. The struggle to pay medical bills causes many to delay or skip important payments medical procedures. As a result, many health problems that could be solved for thousands of dollars today are made worse by neglect and cost hundreds of thousands of dollars if later treated, whether through Medicare or other means.
  3. Relieve healthcare providers, credit institutions and the economy as a whole.It’s important to note that the program would not only provide relief to low-income households, it would also provide significant relief to healthcare providers and lending institutions. It would also benefit the economy as a whole, in the form of healthier citizens and fewer bad debts.

While debt relief for households earning less than $85,000 can put a lot of pressure on many Americans households, a better and more comprehensive solution would be for the government to introduce a catastrophic health insurance plan as part of an expanded health initiative. This would cover people for a select range of procedures and reimburse them for deductibles. Better yet, the payer plan that many advocate would also solve our country’s stubborn healthcare debt problem. However, it’s worth considering healthcare debt relief proposals that aim for something doable in the short term.

Healthcare costs are a crippling burden on families, communities and our entire economy. Bold programs are needed now to meet this challenge.

The views expressed in this article are those of the author and do not reflect official policy or position of the Commonwealth of Pennsylvania.

About the author

Richard Vague is Secretary of Banks and Securities for the Commonwealth of Pennsylvania. Prior to his appointment in 2020, he was Managing Partner at Gabriel Investments. Previously, he was co-founder, chairman and CEO of Energy Plus, an electric power and natural gas company. Vague was also co-founder and CEO of two banks and founder of economic data service Tychos. He is currently Chair of the Governor’s Woods Foundation, a non-profit philanthropic organization. His new book is The case for a debt anniversary (Polity Press, November 22, 2021). Learn more at

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