Americans owe nearly twice as much medical debt as was previously known, and the amount owed has become increasingly concentrated in states that do not participate in the Affordable Care Act’s Medicaid expansion program.

Research published Tuesday in JAMA finds that collection agencies held $140 billion in unpaid medical bills last year. An earlier study, examining debts in 2016, estimated that Americans held $81 billion in medical debt.

This new paper took a more complete look at which patients have outstanding medical debts, including individuals who do not have credit cards or bank accounts. Using 10% of all credit reports from the credit rating agency TransUnion, the paper finds that about 18% of Americans hold medical debt that is in collections.

The researchers found that, between 2009 and 2020, unpaid medical bills became the largest source of debt that Americans owe collection agencies. Overall debt, both from medical bills and other sources, declined during that period as the economy recovered from the Great Recession.

“If you think about Americans getting phone calls, letters and knocks on the door from debt collectors, more often than not it’s because of the U.S. health care system,” said Neale Mahoney, a health economist at Stanford University and the paper’s lead author.

The $140 billion in debt does not count all medical bills owed to health care providers, because it measures only debts that have been sold to collection agencies. The increasing number of lawsuits that hospitals file against patients to collect debt, which can lead to legal fees or wage garnishments, are not included in the figure. Nor are the medical bills that patients pay with credit cards or have on long-term payment plans. Some of the difference between the new estimate and the older, smaller one may reflect differences in how different credit rating agencies categorize debts.


The new paper does not include data during the coronavirus pandemic, which is not yet available.

The ameliorating effects of Medicaid expansion were not a big surprise to the paper’s authors. Previous research demonstrated how Medicaid coverage can reduce medical debts. In states that have expanded, most low-income adults can get coverage without paying premiums, and with minimal cost sharing. Mechanically, Medicaid tends to eliminate the kinds of medical bills that result in outstanding debts.

But Mahoney said he was shocked to see the widening inequality in medical debt that disparate state decisions appear to have caused. The states that have declined to expand Medicaid — particularly in the South — started out having more medical debt before Obamacare passed, and since other states have expanded Medicaid, the chasm has grown wider. In 2020, Americans living in states that did not expand Medicaid owed an average of $375 more than those in states that participated in the program, roughly a 30% increase from the gap that existed the year before enactment.

Amy Finkelstein, a professor of economics at MIT, was a co-author of an influential study that showed how Medicaid coverage could improve Americans’ financial health. She studied what happened when Oregon used a lottery to randomly offer Medicaid coverage to a share of low-income adults seeking coverage.

The study found substantial improvements in measures of financial health for people who received coverage. It also found improvements in those people’s mental health — increases too large to be explained by new medical treatments alone.

Finkelstein said the new paper was a reminder that health insurance often acts as a strong buffer against financial adversity.


“It’s a misnomer — it’s not just to insure your health,” she said. “It’s actually to protect you economically in the event of poor health.”

Medical debt is unlike other kinds of debts because people often cannot choose whether to incur it. A poorer person may choose to buy a less expensive car than her richer neighbor, but if she has a heart attack and needs surgery, she will get a bill just as big as her neighbor.

The new paper finds that medical debts are higher in poorer neighborhoods. In the lowest-income ZIP codes that researchers studied, people owed an average of $677. Those in the highest-income ZIP codes owed an average of $126. Those figures represent the general population, not just debt holders.

But medical debts are different in another way, too: They are much less likely to be repaid. Prior research suggests that many people with medical debts have other kinds of debt that may be a bigger priority. Failing to pay your utility bills could result in shut-offs, and failing to pay your auto loan could cause your car to be repossessed. Medical debts, in contrast, tend mostly to harm people’s credit reports and peace of mind.

“Debt collections agencies place very low odds on recovering these debts,” said Benedic Ippolito, a senior fellow at the American Enterprise Institute, and a co-author of an earlier paper examining medical debt in America. “If you had to choose between keeping the lights on and paying your mortgage and paying some doctor you’re never going to see again, I think a lot of us would make the same decision.”

Democrats in Congress have recently shown strong interest in providing coverage to millions of low-income Americans who live in the 12 states that do not participate in the Medicaid expansion.


Democrats included the idea in last week’s $3.5 trillion reconciliation package. Legislators are still debating the right policy to fill the coverage gap — if they should provide the uninsured with subsidies to buy private coverage, for example, or work with cities that want to expand coverage locally — as well as how to pay for it.

The most recent proposal comes from Sens. Raphael Warnock and Jon Ossoff of Georgia and Tammy Baldwin of Wisconsin, who represent states without the expansion. Last week, they introduced legislation that would allow the federal government to provide Medicaid coverage in states that decline to do so.

“Expanding Medicaid is the single most effective solution to closing our state’s coverage gap,” Warnock said in a recent call with reporters.

Others see a need for bigger change. In his presidential campaign last year, Sen. Bernie Sanders of Vermont proposed eliminating medical debt altogether — part of a plan to move the country to a single-payer system in which no one pays for medical care directly.

Some have also proposed smaller ways to make medical debt less painful.

Sen. Chris Murphy of Connecticut introduced legislation last year that would require hospitals to publicly report how they collect debt, and cap the interest rates that patients could owe. The law would also require clear communication from hospitals of what debts are owed before they could turn to a collection agency.

“I understand that hospitals have pressures to squeeze every dollar out of their consumers,” Murphy said in a recent interview, “but I think they should refrain from the most aggressive debt collection practices.”