25+ Medical Bankruptcy Statistics to Know in 2020

The US healthcare system is a bit of a mess, isn’t it?

Our selection of medical bankruptcy statistics that show a worrying picture – the system seems to be working against the consumers.

Don’t believe me?

Look:

AMAZING Medical Bankruptcy Statistics (Editor’s Choice): 

  • 54% of Americans with medical debt have no other debts.
  • Around 530,000 families file for bankruptcy due to medical expenses, every year.
  • Medical bankruptcies represent 62% of all personal bankruptcies.
  • 20% of all medical bankruptcy filers are people over the age of 55.
  • 20.1% of families who file for medical bankruptcy are military families.
  • 48% of those who filed for medical bankruptcy say hospital bill was their largest expense.
  • 70% of Americans with medical bills had to lower their spending on food to avoid bankruptcy.

Wanna know more about how medical debt leads to bankruptcy and why do medical bankruptcies occur?

Dive in!

Medical Debt in the US

Let’s get to the Deep:

1. The average medical insurance premium has increased by 54% in the last decade.

(Source: Kaiser Family Foundation)

While wages have increased by 26% since 2009, the average family premium for medical insurance has more than doubled that number. Today, the average employer-sponsored family premium costs $20,576 per year.

2. 41% of working-age Americans have issues paying medical bills.

(Source: The Commonwealth Fund)

Around 72 million working-age Americans struggle with paying their medical bills. Health care bankruptcies will keep getting more prominent, as health insurance keeps getting less obtainable for the average person. More than 115 million Americans under the age of 65 have had issues with medical bills, have gone without medical care due to its cost, and/or have been uninsured or underinsured for a period of time.

3. 39% of those who have issues with medical bill payments already have employer insurance.

(Source: Best Credit Cards)

Medical debt bankruptcy statistics show that the majority of those reporting issues with their medical bills already have some form of insurance. The majority of them, or 32%, have employer insurance, 16% have public coverage, and 7% are privately insured, as per these credit cards facts.

4. The average unpaid medical debt is $579.

(Source: SingleCare)

According to the credit report data from 2014, the average unpaid medical debt is not that high, at $579.

5. 54% of Americans with medical debt have no other debts.

(Source: Consumer Financial Protection Bureau)

It shouldn’t come as a surprise that medical debt is the leading cause of bankruptcies in the US (more on this later). But bet you didn’t know that more than half of all Americans who have medical debt listed on their credit reports have no other debts!

6. Around 530,000 families file for bankruptcy per year due to medical expenses.

(Source: NASDAQ)

It is estimated that 58.5% of all health-related bankruptcies are caused by medical bills. The inability to work and earn due to illness come second. More than half a million American families are forced to file for bankruptcy every year as they can’t repay their medical debt, medical bankruptcy statistics show.

7. 15% of Americans with medical bills in collection owe at least $10,000.

(Source: Kaiser Family Foundation)

It is estimated that close to a fifth of all consumer credit reports include at least one medical collection. 15% of Americans whose medical bill went to collection say they owe at least $10,000. A third of them also have student loans to think about.

8. 70% of Americans with medical bills had to lower their spending on food to avoid bankruptcy.

(Source: Kaiser Family Foundation)

While doing research on the number of bankruptcies due to medical bills, one can’t help but wonder how do people deal with insane medical bills. Here are some of the most common actions taken by Americans with medical debt:

  • 70% of those with medical debt say they had to cut spending on basic necessities (food, clothes, etc.).
  • 59% say they had to dig into their savings, using most, or all, of it.
  • 41% say they took a second job.
  • 37% say they had to borrow money.

9. 34% of Americans list medical expenses as one of their top financial concerns.

(Source: The ASA Group)

Going bankrupt due to medical bills is one of the main financial worries in America. Americans also worry about retirement (42%), long-term care expenses (35%), and support in case of disability (37%). According to a 2017 survey that this data is derived from, 13% of those surveyed list monthly expenses as one of their top financial concerns.

10. Just 7% of Americans say health care is the most important issue.

(Source: Gallup)

Despite medical expenses being one of the top concerns in the nation, just 7% of Americans find it to be the most pressing issue we’re facing. 22% find that the government dissatisfaction is the most important one, 15% believe its immigration we should worry about the most, while 8% of Americans list racism as the most important issue of our time.

Medical Bankruptcies in the US

How do healthcare-related expenses affect consumer behavior?

11. National health expenditure reached $3.6 trillion last year.

(Source: Centers for Medicare & Medicaid Services)

In 2018, the nation increased its healthcare-related expenditure by 4.6% compared to 2017. Data shows that American health expenditure accounted for 17.7% of the GDP. Medicare spending grew to just over $750 billion, or by 6.4%. Healthcare is clearly more readily available, but let’s see what percentage of bankruptcies are caused by medical bills these days:

12. Medical expenses represent 62% of all personal bankruptcies.

(Source: Investopedia)

The inability to pay for medical expenses has become a crisis in America; a simple injury or a minor medical inconvenience can run you thousands of dollars. As you’ll see further down the list, even those with health insurance can be charged absurd amounts of money. This is the main reason why the percentage of bankruptcies due to medical bills is close to two-thirds of all personal bankruptcies in the US.

13. Job loss is the second most common reason behind personal bankruptcies.

(Source: HuffPost)

Even though there are no exact percentages available, job loss is another big reason behind people filing for bankruptcy. During the first 7 months of 2019, companies in the US had to cut close to 43,000 jobs due to their own bankruptcy, which is a 40% increase compared to 2018.

The top 5 causes of bankruptcy in the US are as follows:

  • Medical expenses.
  • Job loss.
  • Credit card debt.
  • Divorce or separation.
  • Unexpected expenses.

14. The average age of those who file for medical bankruptcy is 44.9 years.

(Source: The American Journal of Medicine)

For all non-medical bankruptcies in the US, the average age of filers is 43.3 years, while the average person who files for bankruptcy is 44.4 years old. For medical-related bankruptcies, the average age is half a year higher.

15. 20% of all medical bankruptcy filers are people over the age of 55.

(Source: the balance)

The average couple that retires at the age of 65 can expect to pay $275,000 in medical bills for the remainder of their life. Even those aware of how expensive retirement is are often shocked by this discovery once they’re met with illness and absurd hospital bills. This is why the number one cause of bankruptcies affects this age group so commonly.

16. 20.1% of families who file for medical bankruptcy are military families.

(Source: The American Journal of Medicine)

Military families seem to struggle with medical debt repayments, as they are involved in over a fifth of all medical bankruptcy cases. Those with Veterans Affairs or military coverage pay the smallest out-of-pocket sum for medical coverage, averaging at $6,545, while the average family that files for medical bankruptcy pays $17,943.

17. $2,586 is the average monthly household income for those who file for medical bankruptcy.

(Source: The American Journal of Medicine)

The number of bankruptcies due to medical bills might be smaller if our income increased at the same rate as medical insurance prices. Keeping in mind the number from the previous stat, we can see that the average family that is forced to file for bankruptcy would have to save 7 months’ worth of their entire income to pay the out-of-pocket insurance premium.

18. 60.3% of those who file for medical bankruptcy have attended college.

(Source: The American Journal of Medicine)

Bankruptcy due to medical bills is surprisingly pronounced among the college-educated population. Close to two-thirds of all people who file for bankruptcy due to medical debt have at least some college education.

19. 48% of those who filed for medical bankruptcy say their largest expense was the hospital bill.

(Source: The American Journal of Medicine)

While some countries have free healthcare and others charge a small fee for the uninsured, the US has gone the opposite way. In Australia, staying in a hospital for a day typically costs $765. The average day in a hospital in the US runs at a whopping $5,220.

Medical bankruptcies in Europe are practically nonexistent for this, and many other reasons. A heart bypass surgery that costs $78,318 in the US is more than 3 times less expensive in the UK, at $25,059.

20. 18.6% of those who filed for medical bankruptcy say prescription drugs were their largest expense.

(Source: The American Journal of Medicine)

The price of drugs is another important factor for those with medical issues. We were all witnesses to the recent insulin price scandal.

Doctor bills are also commonly listed as the biggest expense in medical bankruptcy cases (15.1%), and so are the insurance premiums (4.1%).

Interesting Medical Bankruptcy Statistics

Let’s look at some curious facts about medical bills.

21. There were 250,000 medical GoFundMe medical campaigns last year.

(Source: NASDAQ)

250,000 Americans resorted to crowdfunding on GoFundMe to help them with medical bill payments. Considering the fact that 90% of GoFundMe campaigns fail to reach their goal, the chances are that a significant portion of these campaigners had to file for bankruptcy.

22. Healthcare-related costs cause a bankruptcy every 30 seconds.

(Source: Fraser Insitute)

President Obama said in March 2009 that the cost of healthcare causes a bankruptcy every 30 seconds and that 1.5 million Americans were expected to lose their homes during the year.

Medical bankruptcies since Obama should have gone down, with the Affordable Care Act in place. However, with the new administration reverting some of its fundamentals, this doesn’t seem likely.

23. 32% of adults in the US have postponed visiting a doctor due to the cost.

(Source: Kaiser Family Foundation)

More than a fifth of American adults (aged 18 to 64) have skipped a test or a medical treatment that their doctor recommended, as it was too expensive. Having in mind how many bankruptcies are due to medical bills, almost a third of US adults won’t see a doctor due to the cost of the visit.

24. 62% of people with medical debt say they were insured when starting treatment.

(Source: Kaiser Family Foundation)

As we’ve already established, medical insurance is not a guarantee that you won’t be stuck with a massive bill after your treatment has ended.

26% of those who had insurance when their treatment started and later had issues with paying the medical bill say that their claim was rejected. This shows us that medical bankruptcies with insurance are, unfortunately, still an option.

25. Short-term hospital stays are what causes issues with medical bills in 66% of the cases.

(Source: Kaiser Family Foundation)

Issues with bill payments can stem from various health services. 66% of those surveyed say that a short-term hospital stint had an impact on the payment issue. A visit to a doctor, diagnostic tests, and ER visits are all listed by more than 60% of those questioned.

Conclusion

Gandhi said “It is health that is real wealth and not pieces of gold and silver”, and, looking at the medical bankruptcy statistics listed above, was he right.

Unfortunately, some have decided to take this quote quite literally; Health care has become one of the most lucrative industries, with billions of dollars up for grabs, and millions of people left to struggle. They’ve driven us to become more scared of the financial consequences that treating our illness might have than of the illness itself.

A right to healthcare should not be a privilege, but a basic human right and this topic should not be open for further discussion.

ABOUT AUTHOR

Christo is a bachelor in Economics, but he found a passion for crafting web content. He sees SpendMeNot as an opportunity to create engaging articles and help readers make informed financial decisions.

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