By Joseph Burns | Updated Sept. 3, 2025
Tens of millions of Americans carry some level of medical debt, contributing to financial harm and worsening health, according to a June 2025 Lown Institute report: “PAST DUE: How medical debt is harming Americans and the solutions we need now.” The Lown Institute, a nonpartisan think tank based in Boston, advocates for a just and caring health care system.
Building on these findings, the epidemic of medical debt in the United States reflects systemic issues inherent in the health system, including inadequate health insurance coverage, the high cost of care and fragmentation among hospital and other provider systems, the report showed.
“In a profit-driven health care system that pits payers and providers against each other, patients are often caught in the middle, exposing them to high out-of-pocket costs,” the authors wrote in the executive summary.
The Lown Institute report includes data journalists can highlight in their reporting on the prevalence of medical debt, its effect on individuals and families, the factors that contribute to debt accumulation, the systemic issues underlying the problem and recommendations for policymakers. It can also inspire stories about how hospitals, physicians, health centers and all providers will need to provide financial assistance to patients who are uninsured, underinsured or otherwise unable to pay for care. All those who provide care will have stories to tell journalists and are likely to refer reporters to patients in need.
Finding stories on medical debt
When the Lown Institute published the report in June, Congress was working on the megabill that President Trump signed into law on July 4. That bill will make medical debt more common in multiple ways as we reported July 8. Also in June, Lown published a companion report, the Lown Institute Hospitals Index, showing the financial assistance and debt collection policies at 2,500 U.S. hospitals. In a press statement, Lown said this report shows “a chaotic patchwork of practices that leaves patients vulnerable to confusion and medical debt.”
“Patients with identical income and medical needs could receive free care at one hospital, yet face collections or lawsuits at another,” the statement added. All hospitals are expected to provide free or discounted care to patients in need and publish policies explaining how patients can apply for assistance, Lown added. “But in the absence of clear federal standards, hospitals set their own rules for who qualifies and how aggressively they pursue unpaid bills,” the statement said.
“We’re seeing massive disparities in charity care policies between hospitals that are practically around the corner from each other,” said Lown President Vikas Saini, M.D., in the press statement. “Unfortunately, low- and middle-income patients are the ones who deal with the consequences.”
Disparities and hospital finances
Under the megabill, disparities will widen because it will make hospital finances unstable, according to a July report from Undue Medical Debt (formerly RIP Medical Debt). In that report, Undue Medical Debt cited data from Third Way showing that medical debt will increase by about $50 billion, or 15%. Among all hospitals, rural hospitals will struggle the most because they have thin profit margins and rely heavily on Medicaid reimbursement, and four in 10 rural hospitals will close, the report noted, citing a June report from KFF.
Researchers warn that about 4 in 10 rural hospitals could close despite a small “Rural Health Transformation Fund” included in the bill. OBBBA also significantly limits retroactive Medicaid coverage (the ability to have medical expenses covered if applying for Medicaid after receiving care), leading to more uncompensated care for hospitals and potentially increasing overall medical debt.
Medical debt is common and costly
Between 8% (about 21 million) and 41% (about 108 million) of American adults have medical debt, and many owe $2,000 or more. In 2021, the estimated total medical debt in the United States ranged from $88 billion to $220 billion, reflecting the challenge of obtaining precise figures.
“While research shows a gradual downward trend in medical debt in recent years, rates of medical debt are still alarmingly high, undermining the financial security of tens of millions of Americans,” the authors wrote.
Most Americans with medical debt are white, employed and have health insurance, the report noted. Survey data suggest that the typical American with medical debt is a middle-aged, white, working-class woman in the South who has some form of health insurance.
Seven of the 10 states that have not expanded eligibility for enrollment in Medicaid since the Affordable Care Act went into effect in 2014 are in the South: Alabama, Florida, Georgia, Mississippi, South Carolina, Tennessee and Texas. The other three non-expansion states are Kansas, Wisconsin and Wyoming.
Other demographic groups make up a smaller proportion of the U.S. population that has medical debt, and those Americans have a higher risk of taking on such debt, the report showed. “Studies show that Black, Hispanic, and Native Americans, uninsured Americans, and adults living with a disability have elevated rates of medical debt,” the authors explained.
Financial insecurity and worse health
“Medical debt is associated with a range of adverse financial and health outcomes, including food or housing insecurity, personal bankruptcy, increased credit card debt, delayed access to care, anxiety, and overall mortality,” the authors wrote. They added, however, that more research is needed into whether medical debt leads to these outcomes.
What is known, however, are the factors that lead to increased medical debt, such as:
- Inadequate health insurance coverage and cost-sharing for high deductibles and copayments.
- A lack of health insurance, especially in the 10 non-expansion states.
- High prices for care, particularly in hospitals and for emergency medical services, prescription drugs and lab tests.
- Provider billing practices such as a lack of financial assistance, failure to implement financial assistance policies widely, confusing bills and difficult appeal processes.
- Broader social and economic forces such as wage stagnation, income and wealth inequality, health care consolidation and a fraying social safety net.
Solutions are needed
To reduce medical debt, policymakers, researchers and community advocates have proposed the following policies to reduce the financial burden of medical debt:
- Expand health insurance coverage through a single-payer or other universal-coverage model, Medicaid expansion and the protection of existing Medicaid coverage, a public insurance option, premium subsidies and a mandate for employers and individuals.
- Address systemic issues in health care that drive high out-of-pocket costs by improving price transparency, limiting cost sharing, setting price controls and establishing payment models that incentivize value over volume.
- Hospital-focused regulations, such as uniform and widespread financial assistance standards, required screening of patients who may need financial assistance, reporting requirements on such screening and limits on debt collection.
- Regulations that restrict automatic claim denials and that make appeals easier and less complex.
- Relief for medical debt, such as removing such debt from consumers’ credit reports.
Resources
- “Medical Debt Is a National Crisis. It Is Going to Get Worse,” Undue Medical Debt, Aug. 11, 2025
- “The One Big Beautiful Bill Act & Credit Reporting Rule – What You Need to Know,” Undue Medical Debt, July 25, 2025
- “The ‘One Big Beautiful Bill,’ Now Law, Does Not Protect Rural Hospitals,” Carole Johnson, Health Affairs, July 23, 2025
- “What Are the Implications of the 2025 Budget Reconciliation Bill for Hospitals,” KFF, June 12, 2025.
Editor’s note: This article was updated on Sept. 3, 2025, to include new information.