High medical treatment costs create debt common in bankruptcy filings

At least 60 percent of Oregon’s filings in 2019 included health care-related debt

U.S. PIRG

PORTLAND, Ore. — Illness and injuries not only can cause long-term health repercussions, they can also lead to long-term financial woes, including bankruptcy, because of excessive medical costs. On Thursday, OSPIRG — one of about two dozen PIRG state groups — released a report, Unhealthy Debt: Medical costs and bankruptcies in Oregon. The study found at least 60 percent of Oregon’s bankruptcies in 2019 — preceding the COVID-19 pandemic — included medical debt. While the report is Oregon-focused, it offers a microcosm of this national problem.

For the report, researchers analyzed nearly 8,000 bankruptcy records and developed a comprehensive picture of the medical debt burdening bankruptcy filers. Unhealthy Debt also presents policy solutions that could help Oregonians stay healthy without putting their personal finances at risk. Some of those solutions could find success in other states as well.

“High health care costs are leading too many families and individuals into severe economic hardship and even financial ruin,” said OSPIRG High Value Health Care Advocate Maribeth Guarino. “Bankruptcy filings provide a unique window into the extent and severity of medical debt in Oregon. Our state has been working to improve the value of health care for years. If these bankruptcies can happen here, they can happen anywhere.”

This problem doesn’t only afflict uninsured Americans. For example, while 94% of Oregonians have health insurance, because the cost of care is so high, insurance is also costly. To afford monthly insurance premiums, many consumers opt for high-deductible plans that can expose them to large out-of-pocket expenses when they seek care. 

“We have a societal obligation to make sure a broken leg doesn’t break the bank,” said Patricia Kelmar, Health Care Campaigns director for PIRG. “Someone who needs medical care isn’t a consumer who’s accumulated debt with foolish purchases. These folks need a hug and time to recover — not some debt collector harassing them.” 

The report’s topline findings include:

• Sixty percent of Oregon’s bankruptcy filings during 2019 featured medical debt, with a median cost of $2,326.

• Of those bankruptcy filers who had medical debt, more than 15 percent reported they had more than $10,000 in medical debt.

• The most frequently listed creditors were the issuer of a health care-specific credit card, and then big hospital/provider networks. The report includes network-specific debt information.

In states across the country, nonprofit hospital networks have reportedly stepped up aggressive debt collection practices — even though as nonprofits, they’re legally obligated to provide financial assistance for patients struggling with their medical bills. Unhealthy Debt provides additional examples of multi-state hospital systems that are burdening their patients with medical debt.

Based on the data, the report authors make several suggestions — from a public insurance option to legislation that would limit health care industry consolidation — that, while intended for Oregon, could potentially help consumers in other states as well.

“Across America, we desperately need to enact policies that address health care’s skyrocketing costs. Here in Oregon, a public option would go a long way toward making sure that people stay healthy physically, mentally and financially,” said Guarino.

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