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Three Statistics That Show How Medical Bills Affect American Families

Sep 12, 2022

How do medical bills affect American families

The economic realities facing American families have become more challenging in recent years, with increasing unemployment and slow income growth potential. To make matters worse, the issues of healthcare coverage and medical bills are becoming a leading cause of financial distress for Americans, with 56% of adults owing some amount of medical debt.  

In fact, many people have more medical debt in collections than they did from the combined debt of credit cards, phone bills, and utilities. It is clear that Americans are spending more on medical bills than ever before. With medical debt causing such a massive financial burden on American families, how are they coping with it? Let’s find out.  

25% Have an Unpaid Healthcare Bill   

According to a recent report by The ACA Huddle, one in four Americans has an unpaid medical bill. And the top reason for Americans having unpaid healthcare bills is the unavoidable and unexpected medical expenses.   

This has become a massive strain on American families, with many having to go into debt over medical expenses, even with health insurance coverage. As a matter of fact, 56% of Americans with health insurance have medical debt when compared to the 59% of uninsured patients with medical debt.   

In many cases, this is due to the prevalence of high-deductible health insurance plans, forcing people to pay more out of their pocket for their healthcare expenses — or, in some cases, ending up with unpaid medical bills.  

20% Are Paying a Medical Bill Over Time  

Many people are unaware of how much they owe until they receive a bill from their doctor’s office, and some cannot pay off the entire amount at once. So they negotiate with internal and external debt collectors to pay it off little by little over time. This has led to 20% of Americans opting for an incremental repayment plan to manage their essential expenses.  

However, despite the periodic payment plans, many still struggle to pay their medical bills and manage household expenses or major financial goals. The AffordableHealthInsurance.com survey conducted in February 2022 found that 46% of Americans with medical debt are unable to buy a home, and 43% aren’t able to save for retirement.   

Medical debt has such adverse effects on Americans to the point where some are unable to pay it off at all.  

10% Have a Medical Bill They Cannot Pay  

The cost of healthcare is skyrocketing, and the fact is that some Americans will never be able to pay off their medical bills. According to The ACA Huddle report, 10% of Americans have a medical bill they cannot pay.  

This is also one of the top reasons why 14% of Americans with medical debt plan to declare bankruptcy this year.  

Many unexpected health emergencies result in mounting medical debts that aren’t humanly possible for some American families to repay. For example, an emergency overnight stay at the hospital may incur high bills due to the many tests and procedures, which may be unexpected by the patient, or worse, affordable. This could push the patients to stop paying medical bills to focus on their essential needs like food and housing.   

Recovering Medical Debt with Consideration for Patients’ Financial Hardships  

Due to the growing burden of medical debt on American families, collection agencies are in a position to strike a balance between recouping the debt and helping the families to manage it. They do this through different payment plans and approaches:  

Early-Out Program  

This program allows the debtors to pay off the debt over time — and at a reduced rate. The idea is that the monthly payments will be structured and customized in a way that’s feasible to the individual so that they can make smaller payments over time until the entire bill has been paid off.  

Discount Negotiations  

Many debt collectors are open to negotiating payment plans or offering a small percentage of discount if the individual can pay off the entire debt in a single payment. This is often offered to debtors who have missed the payments with just a few payment cycles left or small-value delinquent accounts.   

Individuals can also directly negotiate with the debt collection agencies about obtaining discounts for the debt repayment in full.  

Personalized Digital Outreach  

One of the top concerns that many patients have about medical debt is the frequent calls at all hours of the day badgering about repaying debts.   

To put individuals at ease, some debt collection agencies have been using digital communications to reach out. With automated messages and phone calls, the debtors can contact the collection agency back at any time convenient to them through phone calls, messages or emails. In some cases, the collection agencies negotiate payment plans through text messages and emails, which helps the debtors to repay the debt without directly talking to someone over a call.  

At Capital Recovery, we rely on such digital communications to help recover the debt of many healthcare organizations. We have achieved a high recovery rate of over 28%, far above the industry standards for bad debt accounts, with debt collection experts certified in HIPAA, FDCPA, CPAR.  This number increases significantly in our Early Out Product.  

From helping with insurance denials to compliance management, we can help throughout the medical billing and debt recovery process. Contact our team today to know how we can help increase your debt recovery rates.