Addressing Medical Debt Is Important. Addressing Its Root Causes Is Just As Essential.

The huge and growing burden of medical debt undoubtedly will be a presidential campaign issue and one that Vice President Harris will highlight. It will be interesting to see what former President Trump will say about it.

What I will be looking for – and encouraging – are solutions not only to the debt crisis itself but to the reasons why we have it in the first place.

Addressing the consequences of medical debt and helping people who are buried under it are important, no question about it. But unless our political leaders recognize and take aim at the sources of medical debt, more and more American families will be affected.

This past June, the White House issued a fact sheet under this long headline, “Vice President Harris Announces Proposal to Prohibit Medical Bills from Being Included on Credit Reports and Calls on States and Localities to Take Further Actions to Reduce Medical Debt.”

It noted that American Rescue Plan funds are being used to eliminate an estimated $7 billion in medical debt for up to nearly three million Americans, and it announced a new action by the Consumer Financial Protection Bureau that would remove medical debt from credit reports of more than 15 million Americans. The White House said that alone would lead to the approval of approximately 22,000 additional mortgages a year.

That’s awesome. But thousands of American families lose the homes they already own every year because of medical debt. Many others also file for bankruptcy, which affects not only the immediate family but generations to come. Parents who might otherwise be able to help send their kids to college or help them buy their first homes won’t be able to do that. 

An estimated 100 million Americans are saddled with medical debt, and the vast majority of those people have health insurance. The problem is that about 20 years ago, health insurers started herding us into health plans with sky-high deductibles and other out-of-pocket obligations. People forget that before that forced migration began, most of us were in managed care plans that had modest and affordable copayments for a prescription, a doctor visit and even a stay in the hospital. 

That forced migration of Americans into high-deductible plans was a reason why I left my career in the insurance business. I could not in good conscience be a cheerleader for what my former colleagues and I euphemistically and deceptively called “consumer-driven” health plans. America’s employers and politicians fell for our propaganda, and now look where we are. 

The Affordable Care Act caps annual out-of-pockets spending, but the maximum goes up every year, and it is outrageously high – currently $9,450 for an individual and $18,900 for a family. There are not many individuals and families in this country who have that much cash in the bank to cover those huge amounts when illness strikes. It’s especially egregious when someone is diagnosed with cancer.

According to a KFF poll a couple of years ago, “about two-thirds of adults with health care debt who’ve had cancer themselves or in their family have cut spending on food, clothing, or other household basics…and about 1 in 4 have declared bankruptcy or lost their homes to eviction or foreclosure.”

This is why I lead a coalition of organizations and businesses called Lower Out-of-Pockets NOW. Last year we sent a letter to members of Congress calling for a $2,000 annual cap on out-of-pockets for prescription drugs and a $5,000 overall cap, starting with people enrolled in Affordable Care Act marketplace plans.

In February, President Biden called for a $2,000 cap for prescription drugs for everybody, not just Medicare beneficiaries. (A $2,000 cap on prescription drugs for people enrolled in Medicare’s Part D program goes into effect next year.)

I hope both Harris and Trump will endorse that and other measures to attack the root cause of medical debt in the country. Let’s all keep an eye on this and pressure candidates at all levels to propose remedies to this growing crisis.