25+ Medical Bankruptcy Statistics to Know in 2021

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

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

Don’t believe me?

Look:

AMAZING Medical Bankruptcy Statistics (Editor’s Choice):

  • Americans spend an average of $5,000 a year on out-of-pocket healthcare costs.
  • Almost 60% of US adults have had medical debt at some point in their life.
  • 70% of Americans with medical bills had to cut their food expenses to avoid bankruptcy.
  • Two-thirds of all personal bankruptcies are due to medical bills.
  • 20% of medical bankruptcy filers are in the 55+ age group.
  • Almost half of those who filed for medical bankruptcy cite hospital bills as their most considerable expense.
  • 39% of Americans are more worried about medical bills than Covid-19.

Wanna know more about medical costs and debt? Why do healthcare expenses make for the number one cause of bankruptcies in the US?

Dive in!

Medical Costs in the US

1. National health expenditure reached $3.8 trillion in 2019.

(Source: Centers for Medicare & Medicaid Services)

In 2019, the nation increased its healthcare-related expenditure by 4.6% compared to 2018. Data shows that American health expenditure accounted for 17.7% of the GDP. Medicare spending grew to $799.4 billion, or by 6.7%.

The 2020 update is yet to be released. According to CMS estimates, the figure will reach $4.01 trillion. But the Covid-19 health crisis is likely to have an adverse effect on the total amount, just like on the other medical bankruptcies statistics on this list.

2. The average medical insurance premium has increased by over 50% in the past decade.

(Source: Kaiser Family Foundation)

The average annual employer-sponsored family premium was $21,342 in 2020. This is a 4% increase from the previous year. Since 2010, the cost has gone up by 55%.

And the national average premium for a benchmark marketplace plan in 2021 is $452 a month.

3. Americans spend an average of $5,000 a year on out-of-pocket health care costs.

(Source: Bureau of Labor Statistics)

This figure includes insurance, medical supplies, and prescribed drugs. For comparison, in 1984, the typical household spent about $2,500 a year on healthcare. Unsurprisingly, insurance accounts for most of that increase, having skyrocketed by a whopping 740%.

And before you say that the cost of living changes over time in line with the rise of wages, consider this: Income grew at a drastically slower rate since 1984 — 18%. As a result, now 8% of people’s paychecks go to medical costs, as compared to 5% in the mid-80s. Healthcare affordability is decreasing despite government efforts to stop this tendency. Bankruptcies due to medical bills are still a concern for millions of Americans.

4. Drug prices rose 4.2% in the second half of 2020.

(Source: GoodRX)

Not only insurance costs are rising.

The latest GoodRX’s semi-annual update shows that drugmakers have hiked the prices of a total of 589 medications.

The latest increase is slightly lower than in January 2020, when the estimated rise was 6%. Yet, then the changes affected only 463 drugs. Although more subtle, we can conclude that the most recent price jump spread across a wider list of medications, and thus more patients.

5. 66% of Americans fear they won’t be able to afford health care.

(Source: AccessOne)

In the pandemic’s grip and with health insurance getting less obtainable for the average person, the fear of health care bankruptcies is becoming more prominent. And for many these fears are founded.

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.

6. The average cost for hospitalized Covid-19 patients without health insurance is $73,300.

(Source: FAIR Health)

Before you get anxious, note that this is only the cost for uninsured patients or those seeking out-of-network healthcare providers. Otherwise, the estimated amount is significantly lower — $28,221, including both the plan-covered part and the patient’s contribution. So, that’s not necessarily the money you would take out of your pocket.

And even if you’re uninsured, you can negotiate a lower amount with your medical care provider. Apart from that, the government has introduced Covid-19 relief packages to lessen the economic burden.

Just don’t join the people in the following medical bankruptcies statistics, please!

7. 33% of Americans have postponed visiting a doctor due to the cost.

(Source: Gallup)

In 2020, more than a fifth of American adults (aged 18 to 64) skipped a test or a medical treatment that their doctor recommended, as it was too expensive.

Even more disturbing is that 25% of the survey respondents had a serious medical condition untreated due to the cost. This is up from 19% a year ago and the highest in Gallup’s trend.

8. 60% of American patients haven’t tried negotiating the cost of their medical bills.

(Source: Debt.com)

Considering the general attitude toward the healthcare cost in the US, one would expect that more people would try to achieve a lower price and avoid going bankrupt due to medical bills.

Yet, according to a recent survey, only 34% tried to negotiate medical debt payments or their bills on their own, while just under 5% used a medical billing advocate.

A separate study by LendingTree suggests that 93% of those who did negotiate their bill had it either reduced or dropped altogether.

So, consider this option before going deep into medical debt.

Medical Debt in the US

Let’s get to the Deep:

9. Almost 60% of Americans have had medical debt.

(Source: LendingTree)

The slim majority of Americans know exactly what we’re talking about from first-hand experience. Of the total, some 37% currently owe medical debt, while 23% have had such an issue in the past.

And while so many experience financial woes tied to healthcare, just 9% of people prioritize medical bills. In fact, 15% of US adults report at least one member of their household has medical debt that they won’t repay within the next 12 months.

And as we all know, debt piles up and its accumulation is among the top causes of bankruptcies.

10. The average unpaid medical debt is $5,953.

(Source: Credit Karma)

This is the 2020 amount, which marks an 8% increase from the previous year.

The larger outstanding debt could be linked with the historic wave of layoff during the pandemic. According to estimates, some 12 million Americans have lost their health insurance since the Covid-19 outbreak.

Separate data from Statista shows that 43% of US adults had up to $2,000 worth of medical debt in 2020. And 14% of those without health insurance owed $10,000 or more for medical care.

And while the average medical debt per person is in thousands, the amount that becomes a major burden for 26% of Americans is as low as $500, according to Gallup estimates.

11. 65% of Americans list unexpected medical expenses as their top financial concern.

(Source: Kaiser Family Foundation)

Going bankrupt due to medical bills is one of the main financial worries in America.

Americans are also uneasy about health insurance deductible (49%), prescription drug costs (45%), rent or mortgage (42%), transportation costs including gas (40%), monthly health insurance premium bills (40%), utilities (38%), and food (34%).

12. 70% of Americans with medical bills had to lower their spending on food to avoid bankruptcy.

(Source: Kaiser Family Foundation)

While researching 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.

13. 18% of Americans borrowed money to cover health care expenses in 2020.

(Source: Bankrate)

Going into more detail and a specific time frame, a Bankrate survey reveals that almost 1 in 10 had to take on substantial debt in 2020. Meanwhile, 8% had to borrow money from friends or family, and 7% used their retirement savings as a lifebelt.

Some 6% opted to start another job, and 5% sold personal belongings or assets to cover medical expenses. Three percent tapped to their home’s equity, and another 3% sought debt consolidation or declared bankruptcy due to medical bills.

And when none of this is done, eventually collectors step in…

14. 56% of Americans had medical debt sent to collections.

(Source: Debt.com)

Medical bills can drive people from the doctor to the debt collector.

Nearly two-thirds of the survey respondents whose debt has been sent to collections owed under $5,000. But for 5% of the people, the bill exceeded $50,000.

And according to estimates, Americans have a total of $45 billion of medical debt in collections. This makes for an average medical debt per person of $2,200.

15. 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.

Some 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 a possibility.

16. 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. 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!

17. Two dozen hospitals sued up to hundreds of their patients over unpaid medical bills in 2020.

(Source: Axios)

The medical bills subject to these lawsuits ranged from less than $1,000 to almost $126,000.

The legal actions took place despite the government’s $175 billion Covid-19 aid for healthcare providers treating uninsured patients.

Even before the pandemic, aggressive practices to recover medical debt have pushed many Americans into bankruptcy.

And when it comes to bankruptcy…

Medical Bankruptcies in the US

Declaring a Chapter 7 bankruptcy is one of the ways to eliminate medical debt. However, you must first check whether you qualify for one. To do so, you can use a Chapter 7 Bankruptcy Means Test Calculator.

Now:

Do you wonder how often healthcare-related expenses force people into bankruptcy? Read on!

18. Medical costs caused bankruptcy every 30 seconds before the Affordable Care Act.

(Source: Fraser Institute)

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.

In 2010, the Affordable Care Act (also known as Obamacare) was signed into law. The healthcare reform aimed to provide affordable health insurance coverage for all US citizens. And while still a problem, we can’t ignore the decline in medical bankruptcies since Obamacare.

19. Medical bankruptcies represent 66.5% of all personal bankruptcies.

(Source: American Journal of Public Health)

The declining healthcare affordability remains one of the major issues in the US. A simple injury or a minor medical inconvenience can run you thousands of dollars. Even those with health insurance can be charged absurd amounts of money. This is the main reason why two-thirds of all personal bankruptcies in the US are due to medical bills.

More than half a million American families are forced to file for bankruptcy every year as they can’t repay their healthcare-related debt, 2019 medical bankruptcy statistics show.

20. 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.

21. 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 among seniors is healthcare expenses.

22. 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.

23. $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.

24. 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.

25. 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 three times less expensive in the UK, at $25,059.

26. 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.

27. There are 250,000+ medical GoFundMe medical campaigns per year.

(Source: GoFundMe)

Every year more than 250,000 Americans resort to crowdfunding on GoFundMe to help them with medical bill payments. That makes for 1 in 3 campaigns.

Considering the fact that 90% of GoFundMe campaigns fail to reach their goal, there’s no wonder why the percentage of bankruptcies due to medical bills is so high.

28. 39% of Americans are more worried about medical bills than Covid-19.

(Source: VisitPay)

Undoubtedly, medical bills are a source of stress for Americans. The current pandemic has just revealed the extent of this issue.

Most alarming is the fact that 1 in 3 Americans would not seek coronavirus treatment to avoid expenses.

Not just the associated costs make people nervous, though. A separate survey shows that 48% of Americans have already delayed or steered clear of getting medical care due to fear of the new virus. Some 11% of them report their condition worsened because of that.

29. 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.

30. Short-term hospital stays is 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.

31. Just 7% of Americans say healthcare is the most important issue.

(Source: Gallup)

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

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, he was 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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